Ita/207/2012 Of Bhagheeratha Engineering Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE SHAJI P.CHALY TUESDAY, THE 8TH DAY OF SEPTEMBER 2015/17TH BHADRA, 1937 ITA.No. 207 of 2012 () ----------------------- AGAINST THE ORDER IN IT(SS)A NO. 28/2007 of I.T.A.TRIBUNAL,COCHIN BENCH DATED08.06.2012. APPELLANT(S)/APPELLANT: --------------------------------------- BHAGHEERATHA ENGINEERING LTD., BANARJI ROAD, KOCHI -682 018. REPRESENTED BY ITS MANAGING DIRECTOR SRI. TOMY C. MADATHIL BY ADVS.SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.TOM THOMAS (KAKKUZHIYIL) SRI.ABRAHAM JOSEPH MARKOS SRI.ABRAHAM VARGHESE THARAKAN RESPONDENT(S)/RESPONDENT: --------------------------------------------- THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1), ERNAKULAM KOCHI- 682 018. BY SRI.P.K.R. MENON, (SENIOR) SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18-08-2015,ALONG WITH ITA. 89/2014, ITA. 99/2014, THE COURT ON 08.09.2015 DELIVERED THEFOLLOWING: P.T.O. APPENDIX APPELLANT'S ANNEXURES: ANNEXURE-AA TRUE COPY OF ORDER UNDER SECTION 158BC DATED 29.10.2004 FOR THE BLOCK PERIOD 01.04.1996 TO 09.10.2002. ANNEXURE-BA TRUE COPY OF THE ORDER DATED 21.03.2007 OF THE COMMISSIONER OF INCOME TAX, KOCHI UNDER SECTION 263. ANNEXURE-CA TRUE COPY OF THE ORDER DATED 08.06.2012 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN I.T.(SS)A NO.28/COCH/2007 DATED 08.06.2012. RESPONDENT'S ANNEXURES: NIL //TRUE COPY// P.S. TO JUDGE St/- ANTONY DOMINIC & SHAJI P. CHALY, JJ. ----------------------------------------------- I.T.A Nos.207 of 2012 & 89 & 99 of 2014-----------------------------------------------Dated this the 8[th] day of September, 2015 JUDGMENT Shaji P. Chaly, J. These appeals filed by the assessee arise from thecommon order of the Tribunal in I.T.(SS)A Nos.28 of 2007,210 of 2005 and 57 of 2008 dated 08.06.2012, respectively forthe block period 01.04.1996 to 09.10.2002. Since the aboveappeals were disposed of by the Appellate Tribunal by acommon order and the questions involved are intrinsicallyconnected, we propose to consider the appeals together andpass a common judgment. 2.I.T.A.No.207 of 2012 is filed against the order ofthe Tribunal which sustained the order of the Commissioner ofIncome Tax passed under Sec.263 of the Income Tax Act,1961 (hereinafter called “the Act”). I.T.A.No.89 of 2014 isfiled against the order of the Tribunal which sustained theregular assessment order of the Assessing Authority after I.T.A Nos.207/12, 89 & 99 of 20142 setting aside the order of the 1[st] Appellate Authority.I.T.A.No.99 of 2014 is filed against the order of the Tribunalwhich dismissed the appeal of the assessee and sustained theorder of the Assessing Officer passed pursuant to the remandorder passed by the Income Tax Commissioner invoking hispowers under Sec.263 of the Act, which order is the subjectmatter of I.T.A.No.207 of 2012. 3.The common facts leading to the above appeals areas follows: The assessee, a public limited Company was engaged in the business of Civil constructions. On receipt of informationfrom Central Bureau of Investigation (CBI), that unaccountedcash was being delivered from the office premises of theassessee in Safdarjung Enclave, New Delhi to one personnamed Anupkumar Saha/Sri Asok K. Singh, who was staying atRoom No.2231, Inter Continental Hotel, New Delhi, searchaction under Sec.132 of the Act was conducted on 9.10.2002at the premises of Anupkumar Saha/Sri Asok K. Singh, at InterContinental Hotel, New Delhi, the office premises of theassessee, and the premisses of the Vice President of theassessee, Sri S.K. Jain. 3.The common facts leading to the above appeals areas follows: The assessee, a public limited Company was engaged in the business of Civil constructions. On receipt of informationfrom Central Bureau of Investigation (CBI), that unaccountedcash was being delivered from the office premises of theassessee in Safdarjung Enclave, New Delhi to one personnamed Anupkumar Saha/Sri Asok K. Singh, who was staying atRoom No.2231, Inter Continental Hotel, New Delhi, searchaction under Sec.132 of the Act was conducted on 9.10.2002at the premises of Anupkumar Saha/Sri Asok K. Singh, at InterContinental Hotel, New Delhi, the office premises of theassessee, and the premisses of the Vice President of theassessee, Sri S.K. Jain. 4.During the course of search conducted at the officepremises of the assessee at New Delhi, various incriminatingdocuments were found and seized. Further, from RoomNo.2231, Inter Continental Hotel, New Delhi, whereAnupkumar Saha was staying, an amount of Rs.14,78,500/-was found and seized. Consequent to the search, a noticeunder Sec.158BC of the Act was issued to the assessee on23.09.2003, requiring the assessee to file a return ofundisclosed income for the block period 01.04.1996 to31.03.2002 and broken period up to 09.10.2002. In responseto the above notice received by the assessee on 23.09.2003,assessee filed a return in Form No.2B on 27.11.2003, declaring'NIL' undisclosed income for the block period. After complyingwith the procedure contemplated under law and after takinginto consideration the sworn statements of Anupkumar Saha,Asok K. Singh, S.K.Jain, and the incriminating documentsseized from the office premises of the assessee at New Delhi,and the explanations offered by the assessee,it was found thatthe assessee had made illegal payments to various officials ofGovernment Agencies which were inadmissible in computing the income of the assessee and therefore the AssessingOfficer held that it has been proved undoubtedly that theundisclosed income of the assessee, which was not recorded inthe books were therefore liable to be assessed as theundisclosed income of the assessee and assessment wascompleted accordingly, which is the subject matter in ITANo.89/2014. 5.Aggrieved by the said order of the Assessing Officer,appellant preferred appeal before the Commissioner of IncomeTax (Appeals), who, after evaluating the facts andcircumstances of the case, held that the order of assessmentpassed pursuant to the search was not in accordance with lawand therefore allowed the appeal and directed the AssessingOfficer to treat the undisclosed income of the assessee for theblock period as nil. 6.Aggrieved by the said order, Revenue preferredappeal before the Tribunal and the Tribunal interfered with thefindings of the 1[st] Appellate Authority and the appeal filed bythe Revenue was allowed. In I.T.A No.89 of 2014, filed by theassessee, the following questions of law are raised forconsideration: “Whether, on the facts and in the circumstancesof the case, i.the addition of the sum of money found inthe possession of Sri.Anupkumar Shah, the onlyoccupant of the room No.2231, Inter Continental Hotel,New Delhi, as the undisclosed income of the appellantin the assessment and confirmed by the Income TaxAppellate Tribunal is valid, justified in law andsupported by section 132(4A) of the Income Tax Act,1961 and material in evidence? ii.the Income Tax Appellate Tribunal is rightin law in holding that the Assessing Officer was notunder any compulsion to necessarily invoke theprovisions of the Section 132(4A) of the Act? iii.the double presumptions indulged in by theAssessing Officer in arriving at an undisclosed incomederived from entries in the loose sheets unsupportedand uncorroborated by anyone in the employment ofthe appellant including the unknown maker of theentries or by the alleged recipients of the payments, isvalid under law? ii.the Income Tax Appellate Tribunal is rightin law in holding that the Assessing Officer was notunder any compulsion to necessarily invoke theprovisions of the Section 132(4A) of the Act? iii.the double presumptions indulged in by theAssessing Officer in arriving at an undisclosed incomederived from entries in the loose sheets unsupportedand uncorroborated by anyone in the employment ofthe appellant including the unknown maker of theentries or by the alleged recipients of the payments, isvalid under law? iv.the Income Tax Appellate Tribunal wascorrect in invoking Section 132(4A) and holding theloose sheets belong to the appellant and the entriestherein are true?” 7.I.T.A.No.207 of 2012, as we have stated earlier, is against a proceeding initiated on the basis of the order passedby the Commissioner of Income Tax under Sec.263 of the Act.Brief facts are as follows: I.T.A Nos.207/12, 89 & 99 of 20146 While the appeal filed against the order of assessment,which is the subject matter in I.T.A. No.89 of 2014, waspending before the Commissioner of Income Tax (Appeals), bynotice dated 27.02.2007, the Commissioner of Income Tax,Kochi proposed to invoke his powers under Sec.263 to revisethe assessment order. In response to the said notice,appellant filed reply urging various contentions but theCommissioner of Income Tax rejected the contentions of theappellant and passed Annexure-B order dated 21.03.2007having found that the block assessment made underSec.158BC r/w Sec.143(3) was erroneous and prejudicial tothe interest of the Revenue and further that the relevantmaterials adverted to by the Commissioner of Income Taxwhich were available at the time of assessment were notconsidered while completing the assessment. Accordingly, theAssessing Officer was directed to re-do the assessment aftergiving due opportunity to the assessee and after considering allrelevant materials. Aggrieved by the said order, assesseepreferred appeal before the Tribunal and the Tribunal foundthat the order passed by the Commissioner of Income Tax waslegal and in order. In the appeal filed by the assessee, the following questions of law are raised: “Whether, on the facts and in the circumstances of the case, i.is the Commissioner of Income Tax legallyjustified in invoking his powers under Sec.263 of the ITAct, 1961, on the facts and circumstance of the case ofthe appellant? ii.is not the order of the Tribunal upholdingthe order passed by the Commissioner of Income Taxunder Section 263 against the provisions of the IncomeTax Act and principles of law and hence arbitrary andwithout the authority of law?” 8.I.T.A. No.99 of 2014 is preferred by the assesseeagainst the order giving effect to the order passed by theCommissioner of Income Tax under Sec.263 of the Act.Proposals were made on the basis of the materials that werefound to have been omitted by the Assessing Officer andmentioned in the order of the Commissioner under Sec.263 towhich the assessee filed objections. Rejecting the objections,additions were made and order dated 31.12.2007 was passedquantifying an amount of Rs.1,01,69,712/-. 9.Aggrieved by the said order, assessee preferredappeal and the same was partly allowed by the Commissionerof Income Tax (Appeals). Aggrieved by the order, both the assessee and Revenue preferred appeals before the Tribunaland the appeal preferred by the Revenue was allowed and theappeal preferred by the assessee was dismissed.Accordingly, this appeal is filed by the assessee and thefollowing questions of law are raised: “Whether, on the facts and in the circumstancesof the case, i.the Income Tax Appellate Tribunal wascorrect in invoking Section 132(4A) and holding theloose sheets belong to the appellant and the entriestherein are true? the Income Tax Appellate Tribunal was 9.Aggrieved by the said order, assessee preferredappeal and the same was partly allowed by the Commissionerof Income Tax (Appeals). Aggrieved by the order, both the assessee and Revenue preferred appeals before the Tribunaland the appeal preferred by the Revenue was allowed and theappeal preferred by the assessee was dismissed.Accordingly, this appeal is filed by the assessee and thefollowing questions of law are raised: “Whether, on the facts and in the circumstancesof the case, i.the Income Tax Appellate Tribunal wascorrect in invoking Section 132(4A) and holding theloose sheets belong to the appellant and the entriestherein are true? the Income Tax Appellate Tribunal was ii.the addition made by the assessingauthority and sustained by the Income Tax AppellateTribunal is valid, justified in law and supported bysection 132(4A) of the Income Tax Act, 1961? iii.the presumption indulged in by theAssessing Officer in arriving at an undisclosed incomederived from entries in the loose sheets unsupportedand uncorroborated by anyone in the employment ofthe appellant including the unknown maker of theentries or by the alleged recipients of the payments, isvalid under law? iv.without any examination of the allegedrecipients on oath, and in absence of any prosecutionunder the Prevention of Corruption Act or anyDisciplinary proceedings against the alleged recipientsof the payments, any adverse inference can be drawnagainst appellant so as to hold that the alleged I.T.A Nos.207/12, 89 & 99 of 20149 undisclosed income derived from entries in the loosesheets related to illegal payments made by theappellant warranting block assessment proceedings?” 10.Heard the learned Senior Counsel appearing for theappellant and the learned Senior Standing Counsel for theRevenue. 11.The thrust of the contentions raised by the learnedSenior Counsel for the assessee, so far as I.T.A No.89 of 2014was concerned, was that the appellant was not provided withsufficient opportunity for cross-examination of the witnesseswhose sworn statements were recorded by the Assessingofficer and therefore the acceptance of evidence andpresumptions drawn as contemplated under Sec.132(4) and(4A), respectively, could not be sustained under law. It wasfurther contended by the learned Senior Counsel that so far asthe recovery of the amount was concerned from the Hotelpremises from Anupkumar Saha, the assessee company hadno manner of connection with the said person or the amountrecovered. It was also contended that merely because theVice President of the Company has stated in the swornstatement that he had acted on behalf of the company in thehanding over of cash, in the absence of an opportunity of I.T.A Nos.207/12, 89 & 99 of 2014 10 I.T.A Nos.207/12, 89 & 99 of 2014 10 cross-examination by the assessee, the statement could nothave been taken into account for the purpose of initiatingaction against the assessee under the Act. It was alsocontended that there was no corroborative evidence at all tosustain the action of the assessing officer to have completedthe block assessment. 12.Learned Senior Counsel has invited our attention tosub-section (4) and (4A) and contended that these provisionscan be invoked and presumption can be drawn only if duringthe course of the search, incriminating materials wereunearthed or recovered from a person who was in control ofthe materials and documents. Learned Senior Counselthereupon contended that in the facts and circumstances of thecase at hand, the cash was recovered from a Hotel premisesand therefore the same could never presumed to be in thecontrol of the assessee. So also, it was contended that heavyreliance placed on certain paper slips recovered from thepremises of the company which contained certain single ordouble digit arithmetical figures and certain initials were neversubstantiated by cogent and reasonable evidence required fortreating the same as evidence so as to attract sub-section (4) I.T.A Nos.207/12, 89 & 99 of 2014 11 of Sec.132 of the Act, According to him, the Assessing Officerbaselessly presumed that these arithmetical figures were inprogression of lakhs. Therefore, in the absence of cross-examination of witnesses whose sworn statements were takenunder sub-section (4A) of Sec.132, no presumption can bedrawn against the assessee. Therefore, it was contended thatthe whole exercise of block assessment done by the AssessingOfficer could not be sustained under law. On that count,learned Senior Counsel contended that the view taken by the1[st] Appellate Authority was correct and in accordance with lawand therefore the Tribunal went wrong in interfering with theorder of the 1[st] Appellate Authority. 13.In this context, learned Senior Counsel has invitedour attention to the judgments in 'Kishinchand Chellaram v.Commissioner of Income-Tax, Bombay City-II' [(1980)125 ITR 713] and 'P.R. Metrani v. Commissioner ofIncome-Tax' [(2006) 287 ITR 209 (SC)]. So far as thejudgments cited supra are concerned, they related toassessment years 1947-1948 and 1981-82 and 1982-83,respectively. Learned Senior Counsel has invited our attentionto last paragraph of the former judgment, wherein it was held I.T.A Nos.207/12, 89 & 99 of 2014 12 as follows: It is to our mind impossible to hold, in the face ofthe application for remittance signed in the name ofTilokchand, that this amount was sent by the assesseeand the finding to that effect reached by the Tribunalmust be held to be unreasonable and perverse. Whatat the highest could be said to be established by thematerial evidence on record is that Tilokchand remittedthe amount of Rs.1,07,350 from Madras and thisamount was received by Nathirmal in Bombay. Even ifwe accept that Tilokchand and Nathirmal wereemployees of the assessee as held by the Tribunal, theutmost that could be said is that an employee of theassessee in Madras remitted the amount ofRs.1,07,350 to another employee in Bombay. But,from this premise it does not at all follow that theremittance was made by the employee in Madras onbehalf of the assessee or that it was received by theemployee in Bombay on behalf of the assessee. Theburden was on the revenue to show that the amount ofRs.1,07,350 said to have been remitted from Madras toBombay belonged to the assessee and it was notenough for the revenue to show that the amount wasremitted by Tilokchand, an employee of the assessee,to Nathirmal, another employee of the assessee. It isquite possible that Tilokchand had resources of his ownfrom which he could remit the amount of Rs.1,07,350to Nathirmal. It was for the revenue to rule out this I.T.A Nos.207/12, 89 & 99 of 2014 13 I.T.A Nos.207/12, 89 & 99 of 2014 13 possibility by bringing proper evidence on record, forthe burden of showing that the amount was remittedby the assessee was on the revenue.” 14.The learned Senior Counsel for the assessee hasbrought to our attention the appeal memorandum preferredbefore the 1[st] Appellate Authority and contended that eventhough an opportunity was asked to cross-examine thewitnesses whose sworn statements were recorded, it wasdeclined and therefore no presumption could be drawn asprovided under Sec.(4A) of Sec.132 of the Act. Learned SeniorCounsel for the assessee has raised a point that since theTribunal only reaffirmed the order of the Assessing Officer,there was no re-appreciation of the pleadings and evidence bythe Tribunal and therefore on that count, the order passed bythe Tribunal was vitiated. 15.In our view, if the assessee was keen in unearthingany issue involved in the case by cross-examining witnesses, itwas free and open for the assessee to make thedemand/request for cross-examination of the witnesses at thetime when the proceedings were pending before the AssessingOfficer. Neither in the assessment order nor in the orderpassed under Sec.263 and the re-done assessment, did we find I.T.A Nos.207/12, 89 & 99 of 2014 14 that any such request made by the assessee. Having not doneso, assessee could not turn around and contend that itsrequest for cross-examination was declined. On a reading ofsub-section (4) of Sec.132, it was clear that during the courseof search and seizure any person found in possession orcontrol of any books of account, documents, money, bullion,jewellery or other valuable article or thing could be examinedon oath and such examination may thereafter be used inevidence in any proceeding under the Act. So also, on areading of sub-section (4A) of Sec.132, any money ordocument etc. etc. were found in the possession or control ofany person in the course of a search may be presumed to bethe money, documents etc. etc. belonging to such person.Therefore, after evaluating the evidence so collected by theIncome Tax Officer during the course of search, what isrecovered could be treated as belonging to the assessee.Therefore, according to us, definitely the burden was on theassessee to prove that those incriminating materials andmoney were not belonging to it. This could have beendischarged either by cross-examining the witnesses or byadducing evidence. I.T.A Nos.207/12, 89 & 99 of 2014 15 16.However, even the grounds incorporated in theappeal memorandum which was handed over to us at the timeof hearing, did not contain a claim that a demand/request forcross-examination was made, but, on the other hand, all thatis stated is that no opportunity was offered to the assessee tocross-examine the above said persons. The relevant ground inthe memorandum of appeal is extracted for ready reference: “3.4 The appellant also take objection that theAssessing Officer has relied upon the statements ofMr.Anup Kumar Saha, Mr.Ashok Kumar Singh and Mr.S.K.Jain, to draw adverse conclusions against theappellant without offering an opportunity to theappellant to cross examine the above said persons”. 17.So far as the latter decision was concerned, learnedSenior Counsel has invited our attention to paragraphs 26, 27,28 and 29 and canvassed for the proposition that thepresumption under Sec. 132 (4A) was available only in regardto the proceedings for search and seizure under Sec.132, andthat such presumption was not available for framing theregular assessment. In this context, we thought it onlyappropriate that paragraphs 29 and 30 are extracted: I.T.A Nos.207/12, 89 & 99 of 2014 16 17.So far as the latter decision was concerned, learnedSenior Counsel has invited our attention to paragraphs 26, 27,28 and 29 and canvassed for the proposition that thepresumption under Sec. 132 (4A) was available only in regardto the proceedings for search and seizure under Sec.132, andthat such presumption was not available for framing theregular assessment. In this context, we thought it onlyappropriate that paragraphs 29 and 30 are extracted: I.T.A Nos.207/12, 89 & 99 of 2014 16 “29. The presumption under section 132(4A) isavailable only in regard to the proceedings for searchand seizure and for the purpose of retaining the assetsunder section 132(5) and their application undersection 132B. It is not available for any otherproceeding except where it is provided that thepresumption under section 132(4A) would be available. 30. In our considered view, the High Court ofAllahabad in Pushkar Narain Sarraf [1990] 183 ITR388 and the High Court of Delhi in Daya Chand [2001]250 ITR 327 have taken correct view in holding thatthe presumption under section 132(4A) is availableonly in regard to the proceedings for search andseizure under section 132. Such presumption shall notbe available for framing the regular assessment.” 18.Learned Senior Counsel for the Revenue, on theother hand, contended that consequent to the introduction ofSec.158BH by the Finance Act, 1995 with effect from01.07.1995, all other provisions of this Act shall apply toassessment made under this Chapter, i.e. Chapter XIV-B andtherefore the block assessment carried out for the period01.04.1996 to 09.10.2002 was concerned, the judgmentssupra cited by the learned Senior Counsel for the assesseewere not applicable. I.T.A Nos.207/12, 89 & 99 of 2014 17 19.We find force in the contention of the learned SeniorCounsel for the Revenue that consequent to the introduction ofSec.158BH, the presumption provided under sub-section (4A)of Sec.132 was available to the Revenue irrespective of theprohibition if any contained under sub-sec.(4A) of Sec.132. Aswe have stated, relying on the judgments of the Hon'ble ApexCourt in 'Kishinchand Chellaram' and 'P.R. Metrani' citedsupra, learned Senior Counsel for the assessee strenuouslyargued before us that the evidence contemplated under sub-section (4) and presumption envisaged under sub-section (4A)of Sec.132 can be taken into account only for the purpose ofsearch operations and therefore the acceptance of evidenceand presumption drawn by the Assessing Officer to concludean assessment order could not be sustained under law.However, in view of the introduction of Sec.158BH to theIncome Tax Act, sub-section (4) and (4A) of Sec.132 areapplicable in the matter of conducting the assessment by theAssessing Officer and therefore there was no illegality orinfirmity on the part of the Assessing Officer to have taken intoaccount the sworn statements of the witnesses taken on oath. I.T.A Nos.207/12, 89 & 99 of 2014 18 20.So also, the learned Senior Counsel for the assesseecontended that since the Appellate Tribunal has only approvedthe findings of the Assessing Officer, there was no re-appreciation of the pleadings, materials and evidence andtherefore the order passed by the Appellate Tribunal wasvitiated and suffered from legal error. To the said contention,learned Senior Counsel for the Revenue has invited ourattention to the judgment in 'S.N. Mukherjee v. Union ofIndia' and specifically invited ourattention to last part of paragraph 35 of the said judgment,which read thus: The need for recording of reasons is greater in a casewhere the order is passed at the original stage. Theappellate or revisional authority, if it affirms such anorder, need not give separate reasons if the appellateor revisional authority agrees with the reasonscontained in the order under challenge.” The need for recording of reasons is greater in a casewhere the order is passed at the original stage. Theappellate or revisional authority, if it affirms such anorder, need not give separate reasons if the appellateor revisional authority agrees with the reasonscontained in the order under challenge.” 21.Therefore, going by the law laid down by theHon'ble Apex Court as extracted above, we hold that merelybecause the findings of the Assessing Officer was approved bythe Appellate Tribunal, the order of the Tribunal could not be I.T.A Nos.207/12, 89 & 99 of 2014 19 said to be vitiated. That apart, on going through the order ofthe Appellate Tribunal, we found that each and everycircumstances pointed out by the assessee during the courseof the arguments were considered by the Tribunal and hasfound that the evidence recorded by the Assessing Officerduring the course of the search was corroborative in natureand therefore were acceptable in law. The Tribunal has alsofound that the amount recovered from the Hotel premises wasproved to be the amount belonging to the company and thisconclusion is corroborated by the evidence taken on oath. Soalso, Tribunal has found that the slips recovered from theoffice premises were not explained by the assessee and alsothat having regard to the quantum of contract workundertaken by the assessee, it would be reasonable topresume that the amounts noted in the seized materialsrepresented amounts in lakhs. Therefore, so far as I.T.A.No.89 of 2014 was concerned, the Tribunal has sustained theorder of the Assessing Officer by correctly verifying andapproving the factual circumstances considered by theAssessing Officer and in our considered opinion, there are noillegalities or infirmities warranting our interference in the I.T.A Nos.207/12, 89 & 99 of 2014 20 findings of the Tribunal. 22.So far as the order of the Tribunal concerning I.T.A.No.207 of 2012 is concerned, the point raised by the learnedSenior Counsel for the assessee was that the Commissioner ofIncome Tax had not found out any incriminating circumstancesenabling him to exercise the power under Sec.263 of the Act.It was also contended that Tribunal was only approving thefindings entered by the Commissioner of Income Tax withoutre-appreciating the evidence and the law involved. 23.Learned Senior Counsel for the Revenue, on theother hand, contended that it was not only when incriminatingcircumstances were found out, Sec.263 can be invoked by theCommissioner of Income Tax, but when there were omissionsto consider relevant materials and if the order passed by theAssessing Officer was erroneous and prejudicial to the interestof the Revenue, Sec.263 can be invoked. Learned SeniorCounsel for the Revenue has also invited our attention to thejudgment reported in 'Commissioner of Income-Tax v.Travancore Tea Estates Co. Ltd.' [(1988) 172 ITR 733] andspecifically drawn our attention to last but one paragraph ofthe judgment, which read thus: I.T.A Nos.207/12, 89 & 99 of 2014 21 “In our view, therefore, the power of theCommissioner under section 263 remains in full force,notwithstanding the order of the appellate authority, inrespect of matters not considered and decided inappeal. Accordingly, we answer the question in thenegative, that is, in favour of the Revenue and againstthe assessee.” 24. Bearing these principles in mind, we have gone through Annexure-B order of the Commissioner of Income Taxproduced along with the appeal memorandum and found thatthe Commissioner had found out several materials which werenot taken into consideration by the Assessing Officer and whichwere incriminating in nature and which caused huge loss to theRevenue. This is evident from Sl.No.8 of the order of theCommissioner of Income Tax which read thus: “In our view, therefore, the power of theCommissioner under section 263 remains in full force,notwithstanding the order of the appellate authority, inrespect of matters not considered and decided inappeal. Accordingly, we answer the question in thenegative, that is, in favour of the Revenue and againstthe assessee.” 24. Bearing these principles in mind, we have gone through Annexure-B order of the Commissioner of Income Taxproduced along with the appeal memorandum and found thatthe Commissioner had found out several materials which werenot taken into consideration by the Assessing Officer and whichwere incriminating in nature and which caused huge loss to theRevenue. This is evident from Sl.No.8 of the order of theCommissioner of Income Tax which read thus: “In view of the detailed discussions made abovepointing out several omissions to consider relevantmaterial, the block assessment made u/s.158 BC r.w.s.143(3) dated 29.10.2004 was erroneous andprejudicial to the interests of revenue, because all therelevant materials mentioned above were available atthe time of assessment, but were not considered whilecompleting the assessment.” 25.So also, from the order of the Tribunal, we havefound that the Tribunal before approving the findings of the I.T.A Nos.207/12, 89 & 99 of 2014 22 Commissioner of Income Tax, has re-appreciated thecircumstances by taking into account each and everycircumstances discussed by the Commissioner and thereforethe same can never be termed to be without any application ofmind as contended by the learned Senior Counsel for theassessee. 26.Having evaluated the arguments advanced by thelearned Senior Counsel for the parties, we are of theconsidered opinion that under Sec.263 of the Act, theCommissioner had every power to direct the Assessing Officerto take into account materials, accounts and othercircumstances which were not considered when the originalassessment order was prepared. 27.On a query from the Bench as to whether the re-assessment done which was the subject matter of I.T.A. No.99of 2014 was on the basis of the materials which were notconsidered by the Assessing Officer in the original assessment,learned Senior Counsel has informed that so far as theassessment which gave effect to the order under Sec.263, thematerials considered were entirely different. Therefore, we areof the considered opinion that the finding of the Tribunal that I.T.A Nos.207/12, 89 & 99 of 2014 23 the order of the Commissioner of Income Tax invoking powerunder Sec.263 was in order does not require any interferencein this appeal. 28.So far as I.T.A No.99 of 2014 is concerned, thesame was concerning the order giving effect to Sec.263 orderpassed by the Commissioner of Income Tax, the Tribunal foundthat the materials that were relied on by the Assessing Officerand approved by the 1[st] Appellate Authority for re-doing theassessment was not successfully challenged by the assesseebefore the Assessing Officer as well as the 1[st] AppellateAuthority. The findings that was approved by the Tribunalwere relating to factual aspects considered by the AssessingOfficer and re-appreciated by the 1[st] Appellate Authority andfound them to be correct and in order. Therefore, we do notthink that there are any legal circumstances warranting ourinterference in the said appeal also. In the facts and circumstances stated above, we do notfind any reason to interfere with the order passed by theTribunal and therefore the appeals fail and accordingly theyare dismissed. Resultantly, the questions of law raised inthese appeals are answered in the negative and in favour of I.T.A Nos.207/12, 89 & 99 of 2014 24 the Revenue. //true copy// P.S. to Judge St/- Sd/-ANTONY DOMINIC JUDGE Sd/- SHAJI P. CHALY JUDGE