Commissionerof Income Tax v. Ashok Logani

IN THE HIGH COURT OF DELHI AT NEW DELHI ITA No.557Of 2010ITA No.487 of 2011ITA No.488 of 2011 Reserved on: March 07, 2011.%PronouncedOn: May 11, 2011. 1^ ITA No.557 of 2010 COMMISSIONEROF INCOME TAX. . . APPELLANTthrough:Ms.PremLataBansal,Sr.AdvocatewithMr.DeepakAnand, Avocate.VERSUSASHOK LOGANI. . .RESPONDENTthrough:Mr.C.S.Aggarwal,Sr.AdvocatewithMr.PrakashKumar, Advocate. Reserved On:April 07, 2011PronouncedOn: May 11, 2011 2^ ITA No.487 of 2010COMMISSIONEROF INCOME TAX. . . APPELLANTthrough:Mr.KamalSawhney,Sr.StandingCounsel.VERSUSASHOK LOGANI. . .RESPONDENTthrough:Mr.C.S.Aggarwal,Sr.AdvocatewithMr.PrakashKumar, Advocate. ITA l\los.557/2010,487, 488/2011Page 1 of 2 Digitally Signed By:AMULYACertify that the digital file andphysical file have been compared andthe digital data is as per the physicalfile and no page is missing. 3^ ITA Nq.488 TAX. . . APPELLANT:Mr.KamalSawhney,Sr.StandingCounsel. COMMISSIONEROF INCOME TAX through VERSUS ASHOK LOGANI . . .RESPONDENTthrough:Mr.C.S.Aggarwal,Sr.AdvocatewithMr.PrakashKumar, Advocate. CORAMHON'BLEMR. JUSTICEA.K. SIKRIHON'BLEMR. JUSTICEM.L. MEHTA 1.Whether Reportersof Local newspapersto see the Judgment?2.To be referred to the Reporter or not?3.Whether the Judgment should be reported may be allowedin the Digest? A.K. SIKRI. J. For orders, see ITA No.553 of 2010. MAY 11, 2011pmc (A.K. SIKRI)JUDGE(M.L. MEHTA)JUDGE ITA Nos.557/2010,487, 488/2011 Page 2 of 2 % THE HIGH COyiRT OF DELHI AT IMIEW 'OELHI ITA Mo.553oITA No.557 of 2010ITA Mo.487 of 2011ITA N0..488 of 2011 Reserved on: March 07, 2011.PronouncedOn:'May 11, 2011. 11 ITA Mo,553 of APFElLLAi^T commissionerof imcome tax Ms.PremLataBansal,Sr.Advocatewith ' Mr.DeepakAnand, Avocate. through: VERSUS ASHOCC LOGAIMI through: . „ .respop^deimt .Mr,C.S.Aggarwal,Sr.AdvocatewithIMr.PrakashKumar, Advocate. 21 ITA Mo.557 „ .AP[PE[LLA6MT COMMISSIONEROF INCOME TAX •Ms.PremLataBansal,-Sr.AdvocatevyithMr.DeepakAnand, Avocate. through: VERSUS ASHOK LOGAMI^1T Mr.C.S.AggarwalSr.Advocatewith;Mr.PrakashKumar, Advocate. through: ITA Nos.553, 557/2010, 487, 488/2011 Page 1 of 15 3) ITA 6M0.487 of 2010 „ . AF'IPELLAI . COMMISSIQtWER OF 3EP*DCOi^E through':Mr.KamalSawhney,Sr.StandingCounsel. VERSUS •ASHOK LOGAWI„ . „[^ESPOMDEiNIT through:Mr.I C.S.Aggarwal,Sr.AdvocatewithMr.PrakashKumar, Advocate. 41 ITA Mq.488Off 2010 COMMISSIONEROF IIMCOME through: APPEL Mr.Kama!Sawhney,Sr.StandingCounsel. \/eRSUS ASHOK LOGAMI ESPOINIP3EIMT through:Mr.C.S.Aggarwal,Sr.AdvocatewithMr.PrakashKumar, Advocate. CORAM HOBM'BLEMR. JUSTICESC. SIKRI•HOSM'BLEMR. JUSTICEX. MEHTA 1.Whether Reportersof Local newspapersmay beallowed to see the Judgnnent? 2.To be referredto the Reporter or not? 3.Whether the Judgment should be reportedin the Digest? A.IC. SIKRI, J. ITA Nos.553, 557/2010, 487, 488/2011Page 2 of 15 These appeals are admitted on the following substantialquestionof law: "Whetherthe ITAT was correctin law in settingaside theorder passed by the CIT under Section 263 of the IncomeTax Act?" We heardthe arguments-in detail at the time of admissionitself.I 41 ITA Mq.488Off 2010 COMMISSIONEROF IIMCOME through: APPEL Mr.Kama!Sawhney,Sr.StandingCounsel. \/eRSUS ASHOK LOGAMI ESPOINIP3EIMT through:Mr.C.S.Aggarwal,Sr.AdvocatewithMr.PrakashKumar, Advocate. CORAM HOBM'BLEMR. JUSTICESC. SIKRI•HOSM'BLEMR. JUSTICEX. MEHTA 1.Whether Reportersof Local newspapersmay beallowed to see the Judgnnent? 2.To be referredto the Reporter or not? 3.Whether the Judgment should be reportedin the Digest? A.IC. SIKRI, J. ITA Nos.553, 557/2010, 487, 488/2011Page 2 of 15 These appeals are admitted on the following substantialquestionof law: "Whetherthe ITAT was correctin law in settingaside theorder passed by the CIT under Section 263 of the IncomeTax Act?" We heardthe arguments-in detail at the time of admissionitself.I These two appealspertainto the AssessmentY^ars2003-04and 2004-05.They are filed against the commorordersdated21.01.2005passedby theIncomeTax' AppellateTribunal(hereinafter referred to as 'the Tribunal') in respect of .both theassessmentyears.In these appealsbefore the Tribunal, theassesseehad challengedthe orders of Commissionerof IncomeITax (CIT) passedunder Section263 of the IncomeTax Acti('the Act' for brevity).Since both the orders under Section 253of the Act were passed for these two assessmentyears underidenticalcircumstances,the factsnarratedhereinafterwouldcover both these assessmentyears.A searchunder Section132 of the Act was carriedout in JMDGroupon16.12.2003.Sincetheassesseewasacloseassociateof Mr. Sunit Bedi, MD of JMD Group, searchwas alsocarriedout at theresidenceof assessee.However,his twoconcerns,viz.,M/s,In-StyleExports(Proprietaryconcern)and ITA Nos.553, 557/2010, 487, 488/2011 M/s Pvt. Ltd. in he was a In-Style Exports (company wlii|Ch^Director) were not covered under search/survey,buring thesearch, a sum of ?62,30,300/- was found from thd residence ofthe assessee.in the statementrecordedduringsearch,the .assesseeoffereda sumof ?51.30lacsfortaxationashisundisclosedincome for assessmentyear 2003-04.Subsequently,the assessee filed his return for the assessmentyear2003-04declaringinco,me , of?1,57,24,780/-.Theassessmentwas framedby the AssessingOfficer (AO) underSection153(3)/143(3)oftheActatanincomeofTl,58,10,044/-. Aftercallingthe records,theCIT noticedthatthoughtheassesseehad offereda sum of ?61.30lacs for taxationduringsearchfor assessmentyear 2003-04,but the same was notofferedin'thereturnof incomeand the AO had not examinedthis aspectduringthe assessmentproceedings.Accordingly,he passedthe ordersda'ted31.03.2008under Section263 ofthe Act wherebyhe set aside the order passedby the AO withdirectionto him to examine the same in the light of statementrecordedat the time of search and surroundingcircumistances.Likewise,he foundthatin the assessmentyear 2004-05,theassesseehadofferedasumof ?21lacsonlys gainstthesurrenderedamountof ^61.30lacs at the time(D f search.On Page 4 of 15 this basis, another order on the same date, i.e., 31.03.2008waspassed,underSection263of theAct settingasidetheassessmentorder in respectof AssessmentYear 2004-05alsoto the aforesaidlimited extent and directingthe AO to examine•thesame.Theoperativeportionoftheordersdated31.03.2008,•whichis commonin both the assessmentyears, reads as under; "10.Since,theAssessingOfficer has fail,ed to examine thecash foundat the residenceof the assesseein light of thefactsstatedabove,he madean assessmentorderwhichwas'erroneoustotheextentthathedidnotbringunexplainedcash to the tax, on the basis of the admissionof theassesseeat thetimeof search.'Theassessmentordersofarmedbytheassesseewaserroneousand• prejudicialto the interestof revenue.Further,althoughthe cash of '6.30lacs was offeredas unexplainedincomefor A.Y. 2003-04,in the return of income.filedsubsequentlycash of '21 lacs was offeredas undisclosedincome for A.Y.2004-05.Here also,the AssessingOfficerwas at fault asthe cashwasnot taxedin accordancewiththe statementgiven by the assessee. reads as under; "10.Since,theAssessingOfficer has fail,ed to examine thecash foundat the residenceof the assesseein light of thefactsstatedabove,he madean assessmentorderwhichwas'erroneoustotheextentthathedidnotbringunexplainedcash to the tax, on the basis of the admissionof theassesseeat thetimeof search.'Theassessmentordersofarmedbytheassesseewaserroneousand• prejudicialto the interestof revenue.Further,althoughthe cash of '6.30lacs was offeredas unexplainedincomefor A.Y. 2003-04,in the return of income.filedsubsequentlycash of '21 lacs was offeredas undisclosedincome for A.Y.2004-05.Here also,the AssessingOfficerwas at fault asthe cashwasnot taxedin accordancewiththe statementgiven by the assessee. 11.•Since the assessmentordersof both the AssessmentYears2003-04and 2004-05are erroneousandprejudicialto the interestof revenuethese are set aside on; th|e limitedissue of cash found during the searchproceedings.TheAssessingOfficeris directedto examinethe isr?ue of cashfound at the re^ideqtial preniises of the assessein light ofthestatement'recordedatthetimeof,sea|-chandsurroundingcircumstances.It ,is clarifiedthat assessmentordersfor both. AssessmentYearsare set asidesincetheassesseehas offeredpart of the said cash in A.Y. 2004-05." 7;The assesseefiled appea.lsbefore the Tribunalchallengingtheaforesaidorder in respect of these two assessmentyears.TheTribunalhassetasidetheaforesaidorderoftheCIT.I ITA Nos,553, 557/2010, 487, 488/2011 Page 5 of 15 According to the Tribunal,the AO had exanninedthe. issue andhad even consideredthe statementof the assesseerecordedon 27.05.2005.The assesseehad furnishedthe cash book ofboth of his concernsand had explainedthe cash found at thetime of search/surveyexcept a sum of ?2'i lacs.The cash inhand which was availableas per books of accounts,in the twoconcernsof the assesseewas ?36,95,720/-and after excludingthis cash, the remainingwas only ?25,34,580/-.The assesseehad offered of ?21 lacs for the taxationin the year 2004-05 andthus, only a sum of ^4,34,580/-remainedto be;[ex][ plained.]Itwas explained by the assesseeas cash as per hs ownbooks.Accordingto the Tribunal,afterexaminingthe' claimof theassesseeverifyingthe same from the books of accounts,theAO had acceptedthe claim of the assessee,though there wasno mentionof the samein the assessmentorders.On thisbasis,whilesettingasidethe orderof theCIT, the Tribunalobservedthat order, of theCIT was merelyon surmisesandconjectures.Twoviewswerepossible-one,viz.,thesubsequentexplanationof the assesseewas an afterthoughtandtheother,viz.,.suchanexplanationwasreasonablebecauseit was corroboratedand evidencedby thebooksofaccount duly audited.In a case like this, when the AO had heldthe inquiry,it couldnot be said that his order was erroneous Page 6 of 15 and calledfor any interference.Moreso,when the assesseehad retractedthe statementas well.Thefirstandforemostaspectwhichwouldarisefor;'1.considerationis as to whether the AO had examinedthe issueandsurrenderof ?61.30lacsatthetimeof;;e£ rchinhisstatement'recordedduringthe searchout of an'amountof?62.30lacs found at his residence.Admittedly,there is no discussionabout the same in the ordersof the AO which in fact is even taken note of by the Tribunal aswell.However,accordingto the Tribunal,as per the order-sheet in respect of hearingsheld by the AO, on 24,.08.2005,theAO had asked the assesseeto explainthe cashfoundduringthe course of search.Notings also reveal that the statementofthe assesseewasrecordedon oathon27.05.2005onwhichdate, he had explained that there was cash in'handin thebooks of M/s In-Style Export, of ?18,17,202/7in the books ofIn-StyleExport Pvt. Ltd. of ?1S,78,518/-.The total of these twocomes to ?36,95,720/-.Out of total cash foundin the course ofsearchof ?62,30,300/-,ifcashof thesetwoconcernsareexcluded,the remainingcash is only ?25,34,580/-out of which,theassesseehadincluded?21lacsonthisaccountinthereturn of income filed by him for the assesshientyear 2004-05andhence,theremainingamount,isonly?4,34,580/-wasexplainedby the assesseeas cash as per his own books.On. Page 7 of 15 Page 7 of 15 • thisbasis,the Tribunalconcludedthat the AO had examinedtheclaimandacceptedtheclaimoftheassesseeafterverifying the books of.accounts. No doubt, the order-sheetshows that the AO had asked theassesseeto explaincash found,However,whether the AOhad, in fact,gone into the issue and acceptedthe claim ofthe assesseeor not-isnot discerniblefrom the assessmentorder.No doubt, the AO is not supposedto write the ordersindetailinthesamemannerasaJudicialOfficerissupposedto writethe judgments.At the sametime,itcannot, be ignored that huge cash of ^62,30,300/-was foundat the timeof searchandon that date,the assesseehadsurrendereda sum of ?61.30lacs and offeredthe sanie fortax.Howeverin his incometax return,the assesseehadoffereda. sumof ?21lacsonlyagainstthesurrenderedarnountof ?61.30lacsat the time ,of search..In suchascenario,there shouldhave been at leasta brief discussionrecordinga satisfactionon the explanationoffereeby theassessee.Weareconstrainedtomakethiscibservationbecause of two very importantfeatures, which 'Ivenotein' Ithis case..These are: First, keepingcash of ?62.30lacs, part of which belongstohissoleproprietorshipfirm,but anotherparttoa ITA Nos.553, 557/2010, 487, 488/2011Page 8 of 15 privatelimitedcompanyof whichhe is the Director,atresidence, may raise certain doubts, thoughin his letterdated07.01..2004,he had statedthathe hadkept thecashathisresidencein safecustody,however,thisaspect needed to be properly examined. Secondly, before the Tribunai, the assesseehad given anexplanationthat cashin handsin the books of accountsof M/s In-StyleExport was?18,17,202/-and in the booksof ln-5tyleExportPvt.Ltd.was ?18,78,518/-.Balanceamountof ?4,34,580/-,excluding?21 lacs surrendered,was explainedby the assessee'as cash as per his ownbooks'.Curiously,the explanationfurnishedibeforetheAO, as recordedby the CIT in reply to show;use notice.was altogetherdifferent.In his reply dated18.05.2005,the assesseehad explainedas under: "(i)M/s.In-StyleExports?17,00,000/-(ii)M/s.In-StyleExportsPvt. Ltd.?18,00,000/-(iii)Shri Ashok Logani (Pers. Account)?4,00,000/(iv)Smt. Mala Logani (Pers. Account)?2,30,000-?41,30,000/- The balancecashof ?21lacswas declaredas incomeforthe year ending31.03.2004relevantto A.Y. 2004-05.Theassesseehad also furnishedthe copiesof balancesheet,cashbook,bankstatements,wealthtaxreturnetc.tosubstantiatethe cash balanceof these entities:'Regardingthestatementrecordedatthetimeofsearchitwassubmittedthat the books of accountsof the proprietorshipconcernand the companywere not readilyavailablewiththeassesseeand therefore,theprecisesourceof cashfound during search could not be explained." 11. 12. 13. This may give an impression that it may be an afterthoughtonthe part of the assessee to explain the cash.Under these circumstances,the AO was requiredto go into thisissue in proper perspectiveand could not be perfunctoryin hisapproach.The AO ih the assessmentorder did not discuss thestatementrecorded at the time of search.No doubt, as per theassessee,this statementwas retracted.In a caflike this,itwas necessaryfor the AO' to at least reflect that':he retractionwas proper.Another factor which we have highlightedis thattheentirecashbelongingtotwofirmswasfoundat theresidence. In the aforesaidcircumstances,the CIT held the view that theImatter was not examinedby the AO.We are of the opinionIthat it was a reasonably,fit case for exercisin'g revisionaryjurisdictionunder Section263 of the Act.After-all,CIT gaveanothei^chanceto the assessee to explainthe sourceof cash.• Once we are convincedthat there was no proper considerationof the issue by the AO, the very foundationof the order of theTribunalis knockedoff.Thereafter,the Tribunalhas venturedtoundertaketheexercisebyitselfsatisfyingabouttheexplanationtenderedby the assesseewhichit couldnot do.When the CIT passed the orders under Section263 of the Act,at this stage he was only requiredto find out as to whetlner the ITA Nos.553, 557/2010, 487, 488/2011 In the aforesaidcircumstances,the CIT held the view that theImatter was not examinedby the AO.We are of the opinionIthat it was a reasonably,fit case for exercisin'g revisionaryjurisdictionunder Section263 of the Act.After-all,CIT gaveanothei^chanceto the assessee to explainthe sourceof cash.• Once we are convincedthat there was no proper considerationof the issue by the AO, the very foundationof the order of theTribunalis knockedoff.Thereafter,the Tribunalhas venturedtoundertaketheexercisebyitselfsatisfyingabouttheexplanationtenderedby the assesseewhichit couldnot do.When the CIT passed the orders under Section263 of the Act,at this stage he was only requiredto find out as to whetlner the ITA Nos.553, 557/2010, 487, 488/2011 income has escaped assessment and the order is pijejudicialtotheinterestof Revenue.We wouldliketorep;oducethefollowing aspects highlighted aspects highlighted highlightedby the CIT in the ordersi following aspects highlighted aspects highlighted highlighted "5.Fromthecontentsoftheabovestatementthefollowinginferencescould be made: 5'.1Incontradictionofhisearlierstatementrecordedduring the search on 16.12.2003wherein5h. Ashok Loganicould not explain the source of cash found at his residenceandsurrendered^ei^O.BOO/-fortaxation.;Hehadsubsequentlytried to explain the cash as belongingto histwo businessconcerns. He could not adduce aijiy evidenceto show that the cash foundat his residencebelongedtohisbusinessconcerns.Thus,theletterfiledbyhissubsequently,explainingthe cash found at his residenceisjust an afterthought.• 5.2It may again be mentioned that none of the businesspremiseswas coveredat the time of search.Hence,noactualverificationof the cashlying at thesepremiseshasbeen carriedout. 5.3The statementrecordedduring the courseof searchhadbeengivenvoluntarilybyShri.AshokLoganiasisevident from the flow of the statement.It was given in thepresenceof two witnesseswho wererespectablecitizensfromthesamelocalityi.e.NewFriendsColony.Theassesseehad not obtainedany statementor affidavitfromtheminsupportofthepleathatthestatementwasobtainedunder coercionor by intimidation.The assesseehas' totallyfailedto dischargethe burdenof provingthatfact.No casehasbeenmade out that the statementwasmade under a mistakenbelief of fact or law that too, whenthestatementandadmissionofundisclosedincomeisvoluntary. 5.4During .the courseof searchat the residenceof 5h.AshokLogaini,jewelleryamountingto ?32,21,572/-wasfoundout of which jewelleryamountingto ?9,30,757/-wasseized.However,nojewellerywassurrenderedby theassesseewhichfurthergoesto show thatthe; statementwas recordedvoluntarilywithout any coercionorith 'eat. 5.5In spite of retractinghis statementgiven,lat:thetimeofsearch,theassesseecouldnotofferany .^plausibleexplanationfor cash to the extentof ?21 lacs and offeredthesamehimselffortaxationinA.Y.2.004-05which ITA Nos.553, 557/2010, 487, 488/2011 14. 15. indicatedtlnat in spiteof beingin exportbusiness,theassesses-wasin tnabit of keeping' substantial jamount ofunaccounted cash at his residence. It is also ej/ident fromthefactthatduringA.Y.1998-99,the,assesseehadsurrenderedan amountof ?66lacsduringthe courseofsurvey and offered the same in his return of income." -Sincethesecontentionsweresatisfiedandthematterwas. relegatedto the AO to conduct an inquiry, the Tribunal shouldhave limitedits discussionfocusingon the proprietaryof orderby the CIT invoking his power under Section 263 of the Act andkeepingin view the scope of that provision.In thisiDackdrop, we wouldlike to refer to the judgmentofKeralaHighCourtinthecaseof¥,KunhakannamVs.Commissionerof IncomeTax 219ITIR 235.'In the saidcase, the High Court held that: 14. 15. indicatedtlnat in spiteof beingin exportbusiness,theassesses-wasin tnabit of keeping' substantial jamount ofunaccounted cash at his residence. It is also ej/ident fromthefactthatduringA.Y.1998-99,the,assesseehadsurrenderedan amountof ?66lacsduringthe courseofsurvey and offered the same in his return of income." -Sincethesecontentionsweresatisfiedandthematterwas. relegatedto the AO to conduct an inquiry, the Tribunal shouldhave limitedits discussionfocusingon the proprietaryof orderby the CIT invoking his power under Section 263 of the Act andkeepingin view the scope of that provision.In thisiDackdrop, we wouldlike to refer to the judgmentofKeralaHighCourtinthecaseof¥,KunhakannamVs.Commissionerof IncomeTax 219ITIR 235.'In the saidcase, the High Court held that: "It is true that the Explanationwas insertedand came intoeffectfromApril 1, 1989,thatis, afterthe searchwasmade in this case. ,But,_ the Explanation thereuncer seeks toclarifythenecessaryimportof "themairprovisioncontainedin Sub-section(4) of Section132of|theAct.Itdoesnot changethe substantiveprovisionof-ieAct;nordoes it lay down a differentmethod of using th^ s:atementrecordedunder Sub-section(4) of Section 132 oftneAct.Itpermitsinterrogationof personsnot only in relationto thebooks of account,etc., found as a result of the searchbutalso on any other matter relevantfor any proceedingunderthisAct.Inthisviewof thematter,weholdthattheauthorised.officerhad the power to recordstatementsonoathon all matterspertainingto the suppressedincome.-Thestatementcannotbe confinedonlyto thebooksofaccount.If a partnerof the firm came forward,to discloseabout non-entryof the excess stock in the registersduringthecourseof thesearch,thereisnoreascnwhytheIncome-taxOfficershallnot makeuse of it eventhoughthere-isno actualverificationof thestock.The Tribunalhas clearlyfound that the statementwas made'voluntarily. ITANos.553, 557/2010,487,488/2011 Page 12 of 15 S;!•' - It observedthat the best and independentevidencein thematterwould have been that.of the twd witnessesto thesearch,who are tradersin the'samelocality. The assesseehad not obtainedany statementor affidavitfrom them insupportof the plea that the statementwas obtainedbycoercionor intimidation.So/the assesseehas totallyfailedto dischargethe burdenof proving that fact.In this case,the'assessmenthas been made basedon the statementofthe assessee.Sinceno case has been made out that thestatementwas made under a mistakenbelief of fact or law,andashasbeenheldabove,thestatementbeingavoluntaryone,thereisnoscopefor' theassesseetochallengethe-correctnessof the assessmentas has beendoneinthiscase.A. furthercontentionraisedbytheassesseewasthat,havingrejected-.aportionofhisstatementregardingunaccountedinvestment-ina cinematheatre,there is no justificationto rely on anotherportionof the very same statementfor the purposeof sustainingadditionof unaccountedstock.The additionon accountofunexplainedinvestmentin the cinema theatre \|as rejectednot on the ground that the statementwas taken ifrom theassessee on threat or coercion but on the groujnd that thecinema,theatrewas .ownedonlybythreeof thefourpartnersofthefirmandthatapresumptionthatunexplainedinvestment,if any, was made by the assessee-firm couldnot be made." 16.We have to keep in mind that against the orders passedby the'•!AO, the Revenueis not given right to file an appeal, as there isno suchprovision.Lirhitedjurisdictionis givento the CIT torevise such orders,if he finds that the same is prejudicialto the'interestof Revenue..On the-factsof this case, when it is found• that there was no proper considerationby the AO to the issueat hand, he left many loose ends, that too in a case where hugecash was foundduringsurvey;most of it was surrenderedbygivingstatementat the time of search,though- retractedandsought to be explainedafterwards.It was necessaryfor the AO ITANps.553, 557/2010,487,488/2011Page 13 of 15 16.We have to keep in mind that against the orders passedby the'•!AO, the Revenueis not given right to file an appeal, as there isno suchprovision.Lirhitedjurisdictionis givento the CIT torevise such orders,if he finds that the same is prejudicialto the'interestof Revenue..On the-factsof this case, when it is found• that there was no proper considerationby the AO to the issueat hand, he left many loose ends, that too in a case where hugecash was foundduringsurvey;most of it was surrenderedbygivingstatementat the time of search,though- retractedandsought to be explainedafterwards.It was necessaryfor the AO ITANps.553, 557/2010,487,488/2011Page 13 of 15 to properly adjudicateupon this issue and the assessmentorder shouldhave at least reflectedthat he had satisfiedwiththe explanationdisclosing source of the cash found and thattherewasaproperandvalidretraction.\l\Je'mayalsoreproduce the following observationsof the Gujarat High Courtin the caseof S. Parskh (1995) 215 ITR 81 (GyJ): 'The words "prejudicialto the interestof the;Revenue"hasnot been defined.However,giving the ordinarymeaningtothe wordsusedin the statute,they, mustmean that theordersunderconsiderationaresuchas^renotinaccordancewithlawandinconsequencewhereof,thelawfulrevenuedue to the Statehasnot beenrealizedorcannot be realized.The well settledprinciplein consideringthe questionas to whetheran orderis prejudicialto theinterestsof the Revenueor not is to addressoneselfto thequestionwhetherthelegitimaterevenueduetotheexchequerhas beenrealizedor not or can be realizedornot if the ordersunder considerationare allowedto stand.For arrivingat thisconclusion,it becomesnecessaryandrelevant to consider whether the income in respect of whichtax is to be realizedhas been subjectedto tax or not if it issubjectedto tax,whetherit has been subjectedto tax atthe> rate at whichit couldyieldthe maximumrevenueinaccordancewith law or not.If the incomein questiorihasbeen taxedand legitimaterevenueduein respectof thatincomehadbeenrealized,thoughasaresultofanerroneousorderhavingbeenmadein thatrespect,theCommissionercannotexercisethe powersfor revisingtheorderu/s.263merelyon, thebasisthat the orderunderconsiderationis erroneous.If the materialin that regardisavailableontherecordof theassesseeconcerned,theCommissionercannotexercisehis powerby ignoringthatmaterialwhichlinkstheincomeconcernedwiththetaxrealizationmadethereon.Thetwoquestionsareinterlinkedand the authorityexercisingthe powersu/s.2S3 isunderan obligationto considerthe entirematerialaboutexistenceofincomeandthetaxwhich.isrealizableinaccordancewithlaw and furtherwhat taxhasin factbeenrealizedunder the assessmentorder.",, Page 14 of 15 18. We, thus, answer the question,as formulatedabove,in favourof the Revenueand against the assessee.As a consequence,the Tribunal'sorder is set aside and the order of the CIT passedunder Section263 of the Act is restored.-These appeals are disposed of in the aforesaidterms. 19. 20. ITA No.487 of 2011& ITA Wo.48^ of 20-11 These two appeals are sequelledto the aforesaidtwo appeals.In fact,after the CIT had passedordersunder Section263 oftheAct,theAO' passedafreshassessmentorderdated26.12.2008under Section153A.readwith Section144 and 263•of the Act. Since the originalorder under Section..263of the Actitself was set aside by the Tribunal and the order passed.bytheCIT (A) has been allowed,the matter is relegatedto the CIT (A)todecidetheappealsfiledbytheassesseeagainsttheassessmentorder dated 26.12.2008on merits.These appeals are accordinglydisposedof. of.JOOGE 11/2011pmcITA Nos.553, 557/2010, 487, 488/2011 JUDGE Page 15 of 15