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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5009 OF 2016 [Arising out of S.L.P.(C) No.11621 of 2009]

COMMISSIONER OF INCOME TAX, MUMBAI                  ...APPELLANT(S)

        VERSUS

AMITABH BACHCHAN                    ...RESPONDENT(S)

WITH

CIVIL APPEAL NO.5010 OF 2016 [Arising out of S.L.P.(C) No.861 of 2013]

J U D G M E N T

RANJAN GOGOI, J.

SLP(C) NO. 11621 OF 2009

1.  Leave granted.

2. The appellant - Revenue seeks to challenge the order  

of the High Court dated 7th August, 2008 dismissing the appeal  

filed by it  under Section 260A of  the Income Tax Act,  1961  

(hereinafter referred to as ‘”the Act”) and affirming the order of  

the Income Tax Appellate Tribunal, Mumbai Bench (“Tribunal”

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for short) dated 28th August, 2007 whereby the order dated 20th  

March,  2006 passed by  the  Commissioner  of  Income Tax-1,  

Mumbai (“C.I.T.” for short) under Section 263 of the Act was  

reversed.  The assessment year in question is 2001-2002 and  

the assessment order is dated 30th March, 2004.

3. After the assessment as above was finalized, a show  

cause notice dated 7th November, 2005 under Section 263 of  

the Act was issued by the learned C.I.T. detailing as many as  

eleven (11) issues/grounds on which the assessment order was  

proposed  to  be  revised  under  Section  263  of  the  Act.   The  

respondent - assessee filed his reply to the said show cause  

notice on consideration of which by order dated 20th March,  

2006 the learned C.I.T. set aside the order of assessment dated  

30th March, 2004 and directed a fresh assessment to be made.  

Aggrieved, the respondent – assessee challenged the said order  

before the learned Tribunal  which was allowed by the order  

dated 28th August, 2007.   

4. Aggrieved by the order dated 28th August,  2007 of  

the  learned  Tribunal,  the  Revenue  filed  an  appeal  under  

Section 260A of the Act before the High Court of Bombay.  The

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aforesaid  appeal  i.e.  ITA  No.293  of  2008  was  summarily  

dismissed by the High Court by the impugned order dated 7th  

August, 2008 holding that as the C.I.T. had gone beyond the  

scope of the show cause notice dated 7th November, 2005 and  

had dealt with the issues not covered/mentioned in the said  

notice  the  revisional  order  dated  20th March,  2006  was  in  

violation  of  the  principles  of  natural  justice.   So  far  as  the  

question  as  to  whether  the  Assessing  Officer  had  made  

sufficient  enquiries  about  the  assessee’s  claim  of  expenses  

made in the re-revised return of income is concerned, which  

question was formulated as question No.2 for the High Court’s  

consideration,  the  High  Court  took  the  view  that  the  said  

question raised pure questions of fact and, therefore, ought not  

to be examined under Section 260A of the Act.  The appeal of  

the  Revenue  was  consequently  dismissed.   Aggrieved,  this  

appeal has been filed upon grant of leave under Article 136 of  

the Constitution of India.   

5. We have heard Shri Ranjit Kumar, learned Solicitor  

General appearing for the appellant Revenue and Shri Shyam  

Divan, learned Senior Counsel appearing for the respondent –  

assessee.

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6. The  assessment  in  question  was  set  aside  by  the  

learned  C.I.T.  by  the  order  dated  20th March,  2006  on  the  

principal  ground  that  requisite  and  due  enquiries  were  not  

made  by  the  Assessing  Officer  prior  to  finalization  of  the  

assessment  by  order  dated  30th March,  2004.   In  this  

connection, the learned C.I.T. on consideration of the facts of  

the  case  and  the  record  of  the  proceedings  came  to  the  

conclusion that in the course of the assessment proceedings  

despite several opportunities the assessee did not submit the  

requisite  books  of  account  and  documents  and  deliberately  

dragged the matter leading to one adjournment after the other.  

Eventually, the Assessing Officer, to avoid the bar of limitation,  

had  no  option  but  to  “hurriedly”  finalize  the  assessment  

proceedings which on due and proper scrutiny disclosed that  

the necessary enquiries were not made.  On the said basis the  

learned  C.I.T.  came  to  the  conclusion  that  the  assessment  

order  in  question  was  erroneous  and  prejudicial  to  the  

interests of  the Revenue warranting exercise of  power under  

Section 263 of the Act.  Consequently, the assessment for the  

year  2001-2002  was  set  aside  and  a  fresh assessment  was  

ordered.  At this stage, it  must be noticed that in the order

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dated 20th March, 2006 the learned C.I.T. arrived at findings  

and conclusions in respect of issues which were not specifically  

mentioned in the show cause notice dated 7th November, 2005.  

In fact, on as many as seven/eight (07/08) issues mentioned in  

the said show cause notice the learned C.I.T. did not record  

any finding whereas conclusions adverse to the assessee were  

recorded on issues not specifically mentioned in the said notice  

before proceeding to hold that the assessment needs to be set  

aside.   However, three (03) of the issues, details of which are  

noticed herein below, are common to the show cause notice as  

well as the revisional order of the learned C.I.T.

7. On appeal, the learned Tribunal took the view that  

the learned C.I.T. exercising powers under Section 263 of the  

Act could not have gone beyond the issues mentioned in the  

show  cause  notice  dated  7th November,  2005.  The  learned  

Tribunal, therefore, thought it proper to take the view that in  

respect of the issues not mentioned in the show cause notice  

the  findings  as  recorded  in  the  revisional  order  dated  20th  

March,  2006 have  to  be  understood  to  be  in  breach  of  the  

principles  of  natural  justice.  The  learned  Tribunal  also  

specifically  considered  the  three  (03)  common  issues

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mentioned  above  and  on  such  consideration  arrived  at  the  

conclusion that the reasons disclosed by the learned C.I.T. in  

the order dated 20th March, 2006 for holding the assessment to  

be  liable  for  cancellation  on  that  basis  are  not  tenable.  

Accordingly,  the  learned  Tribunal  allowed  the  appeal  of  the  

assessee and reversed the order of the suo motu revision dated  

20th March, 2006.

8. At  this  stage,  it  may  be  appropriate  to  reproduce  

hereunder  the  provisions  of  Section  263  of  the  Act  to  

appreciate  the  arguments  advanced  and  to  understand  the  

contours of the suo motu revisional power vested in the learned  

C.I.T. by the aforesaid provision of the Act.  

“263 - Revision of orders prejudicial to rev- enue.-(1)  The Principal  Commissioner  or  Commissioner may call for and examine the  record  of  any  proceeding  under  this  Act,  and if  he considers that any order passed  therein  by  the  Assessing  Officer  is  erro- neous in so far as it is prejudicial to the in- terests of the revenue, he may, after giving  the assessee an opportunity of being heard  and  after  making  or  causing  to  be  made  such inquiry as he deems necessary,  pass  such order thereon as the circumstances of  the case justify, including an order enhanc- ing  or  modifying  the  assessment,  or  can- celling the assessment and directing a fresh  assessment.

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Explanation………………………………………...”

9. Under the Act different shades of power have been  

conferred  on  different  authorities  to  deal  with  orders  of  

assessment passed by the primary authority.   While Section  

147 confers power on the Assessing Authority itself to proceed  

against income escaping assessment,  Section 154 of the Act  

empowers such authority to correct a mistake apparent on the  

face  of  the  record.  The  power  of  appeal  and  revision  is  

contained in Chapter XX of the Act which includes Section 263  

that confer suo motu power of revision in the learned C.I.T.  The  

different  shades  of  power  conferred  on  different  authorities  

under the Act has to be exercised within the areas specifically  

delineated  by  the  Act  and  the  exercise  of  power  under  one  

provision  cannot  trench  upon  the  powers  available  under  

another  provision  of  the  Act.   In  this  regard,  it  must  be  

specifically noticed that against an order of assessment, so far  

as the Revenue is concerned, the power conferred under the  

Act is to reopen the concluded assessment under Section 147  

and/or to revise the assessment order under Section 263 of the  

Act.  The scope of the power/jurisdiction under the different  

provisions of the Act would naturally be different. The power

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and  jurisdiction  of  the  Revenue  to  deal  with  a  concluded  

assessment, therefore,  must be understood in the context of  

the  provisions  of  the  relevant  Sections  noticed  above.  While  

doing so it must also be borne in mind that the legislature had  

not vested in the Revenue any specific power to question an  

order of assessment by means of an appeal.  

10.  Reverting to the specific provisions of Section 263 of the  

Act what has to be seen is that a satisfaction that an order  

passed  by  the  Authority  under  the  Act  is  erroneous  and  

prejudicial  to  the  interest  of  the  Revenue  is  the  basic  pre-

condition for exercise of jurisdiction under Section 263 of the  

Act.   Both  are  twin  conditions  that  have  to  be  conjointly  

present.   Once  such  satisfaction  is  reached,  jurisdiction  to  

exercise the power would be available subject to observance of  

the  principles  of  natural  justice  which  is  implicit  in  the  

requirement  cast  by  the  Section  to  give  the  assessee  an  

opportunity of being heard.  It is in the context of the above  

position that  this  Court  has repeatedly  held that  unlike the  

power of  reopening an assessment under Section 147 of the  

Act, the power of revision under Section 263 is not contingent  

on the giving of a notice to show cause.  In fact, Section 263

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has been understood not to require any specific show cause  

notice to be served on the assessee. Rather, what is required  

under the said provision is an opportunity of hearing to the  

assessee.  The two requirements are different; the first would  

comprehend a prior  notice  detailing  the  specific  grounds on  

which  revision  of  the  assessment  order  is  tentatively  being  

proposed. Such a notice is not required. What is contemplated  

by Section 263, is an opportunity of hearing to be afforded to  

the assessee. Failure to give such an opportunity would render  

the revisional order legally fragile not on the ground of lack of  

jurisdiction  but  on  the  ground  of  violation  of  principles  of  

natural justice.  Reference in this regard may be illustratively  

made to the decisions of this Court in Gita Devi Aggarwal vs.  

Commissioner of Income Tax, West Bengal and others  1   and  

in  The  C.I.T.,  West  Bengal,  II,  Calcutta     vs.  M/s  Electro  

House2. Paragraph  4  of  the  decision  in  The  C.I.T.,  West  

Bengal,  II,  Calcutta     vs.  M/s  Electro  House (supra)  being  

illumination  of  the  issue  indicated  above  may  be  usefully  

reproduced hereunder:

“This section unlike Section 34 does not pre- scribe any notice to be given. It only requires  the Commissioner to give an opportunity to the

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assessee of being heard. The section does not  speak of any notice. It is unfortunate that the  High  Court  failed  to  notice  the  difference  in  language between Sections 33-B and 34.  For  the assumption of jurisdiction to proceed un- der Section 34, the notice as prescribed in that  section is a condition precedent. But no such  notice  is  contemplated  by  Section 33-B.  The  jurisdiction  of  the  Commissioner  to  proceed  under  Section 33-B is  not  dependent on the  fulfilment of any condition precedent. All that  he is required to do before reaching his deci- sion and not before commencing the enquiry,  he must give  the assessee an opportunity of  being heard and make or cause to make such  enquiry as he deems necessary. Those require- ments have nothing to do with the jurisdiction  of the Commissioner. They pertain to the re- gion of natural justice. Breach of the principles  of natural justice may affect the legality of the  order made but that does not affect the juris- diction of the Commissioner. At present we are  not called upon to consider whether the order  made by the Commissioner is vitiated because  of the contravention of any of the principles of  natural justice. The scope of these appeals is  very narrow. All that we have to see is whether  before assuming jurisdiction the Commissioner  was required to issue a notice and if he was so  required  what  that  notice  should  have  con- tained? Our answer to that  question has al- ready been made clear. In our judgment no no- tice was required to be issued by the Commis- sioner before assuming jurisdiction to proceed  under  Section  33-B.  Therefore  the  question  what that notice should contain does not arise  for  consideration.  It  is  not  necessary  nor  proper for us in this case to consider as to the  nature of the enquiry to be held under Section  33-B. Therefore,  we refrain from spelling out  what  principles  of  natural  justice  should  be  observed  in  an  enquiry  under  Section  33-B.  This Court in Gita Devi Aggarwal v. CIT, West

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Bengal ruled that Section 33-B does not in ex- press terms require a notice to be served on  the assessee as in the case of Section 34. Sec- tion 33-B merely requires that an opportunity  of being heard should be given to the assessee  and the stringent requirement of service of no- tice under Section 34 cannot, therefore, be ap- plied  to  a  proceeding  under  Section  33-B.”  (Page 827-828).

[Note: Section 33-B and Section 34 of the Income Tax Act, 1922  

corresponds to Section 263 and Section 147 of the Income Tax  

Act, 1961]

11. It may be that in a given case and in most cases it is  

so done a notice proposing the revisional exercise is given to  

the assessee indicating therein broadly or even specifically the  

grounds on which the exercise is felt necessary. But there is  

nothing in the section (Section 263) to raise the said notice to  

the  status  of  a  mandatory  show  cause  notice  affecting  the  

initiation of the exercise in the absence thereof or to require the  

C.I.T.  to  confine  himself  to  the  terms  of  the  notice  and  

foreclosing consideration of any other issue or question of fact.  

This is not the purport of Section 263. Of course, there can be  

no  dispute  that  while  the  C.I.T.  is  free  to  exercise  his  

jurisdiction  on  consideration  of  all  relevant  facts,  a  full  

opportunity  to  controvert  the  same  and  to  explain  the  

circumstances surrounding such facts, as may be considered

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relevant by the assessee, must be afforded to him by the C.I.T.  

prior to the finalization of the decision.    

12. In the present case, there is no dispute that in the  

order  dated  20th March,  2006  passed  by  the  learned  C.I.T.  

under Section 263 of the Act findings have been recorded on  

issues that are not specifically mentioned in the show cause  

notice dated 7th November, 2005 though there are three (03)  

issues mentioned in the show cause notice dated 7th November,  

2005 which had specifically been dealt with in the order dated  

20th March, 2006.  The learned Tribunal in its order dated 28th  

August, 2007 put the aforesaid two features of the case into  

two different compartments.  Insofar as the first question i.e.  

findings contained in the order of the learned C.I.T. dated 20th  

March, 2006 beyond the issues mentioned in the show cause  

notice  is  concerned  the  learned  Tribunal  taking  note  of  the  

aforesaid admitted position held as follows:

“In the  case on hand,  the  CIT has assumed  jurisdiction by issuing show cause notice u/s  263 but while passing the final order he relied  on  various  other  grounds  for  coming  to  the  final conclusion.  This itself makes the revision  order bad in law and also violative of principles  of natural justice and thus not maintainable.  If,  during  the  course  of  revision  proceedings  the CIT was of the opinion that the order of the

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AO was erroneous on some other grounds also  or on any additional grounds not mentioned in  the show cause notice, he ought to have given  another show cause notice to the assessee on  those  grounds  and  given  him  a  reasonable  opportunity  of  hearing  before  coming  to  the  conclusion  and  passing  the  final  revision  order.  In the case on hand, the CIT has not  done so.  Thus, the order u/s 263 is violative  of  principles  of  natural  justice  as  far  as  the  reasons,  which  formed  the  basis  for  the  revision but were not part of the show cause  notice  issued  u/s  263  are  concerned.   The  order of the CIT passed u/s 263 is therefore  liable to be quashed in so far as those grounds  are concerned.”

13. The above ground which had led the learned Tribunal to  

interfere  with  the  order  of  the  learned  C.I.T.  seems  to  be  

contrary to the settled position in law, as indicated above and  

the two decisions of this Court in Gita Devi Aggarwal (supra)  

and  M/s Electro House    (supra)  .  The learned Tribunal in its  

order dated 28th August,  2007 had not recorded any finding  

that in course of the suo motu revisional proceedings, hearing  

of which was spread over many days and attended to by the  

authorized  representative  of  the  assessee,  opportunity  of  

hearing was not afforded to the assessee and that the assessee  

was denied an opportunity to contest the facts on the basis of  

which  the  learned  C.I.T.  had  come  to  his  conclusions  as  

recorded  in  the  order  dated  20th March,  2006.  Despite  the

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absence  of  any  such  finding  in  the  order  of  the  learned  

Tribunal, before holding the same to be legally unsustainable  

the Court will  have to be satisfied that in the course of  the  

revisional proceeding the assessee, actually and really, did not  

have the opportunity to contest the facts on the basis of which  

the  learned  C.I.T.  had  concluded  that  the  order  of  the  

Assessing Officer is erroneous and prejudicial to the interests  

of the Revenue.  The above is the question to which the Court,  

therefore, will have to turn to.   

14. To determine the above question we have read and  

considered the order of the Assessing Officer dated 30th March,  

2004;  as  well  as  the  order  of  the  learned  C.I.T.  dated  20 th  

March, 2006.   From the above consideration, it appears that  

the learned C.I.T. in the course of the revisional proceedings  

had  scrutinized  the  record  of  the  proceedings  before  the  

Assessing  Officer  and  noted  the  various  dates  on  which  

opportunities  to  produce  the  books  of  account  and  other  

relevant  documents  were  afforded  to  the  assessee  which  

requirement was not complied with by the assessee.  In these  

circumstances, the revisional authority took the view that the  

Assessing Officer, after being compelled to adjourn the matter

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from time to time, had to hurriedly complete the assessment  

proceedings to avoid the same from becoming time barred.  In  

the course of the revisional exercise relevant facts, documents,  

and books of account which were overlooked in the assessment  

proceedings  were  considered.  On  such  re-scrutiny  it  was  

revealed that the original assessment order on several heads  

was erroneous and had the potential of causing loss of revenue  

to the State.  It is on the aforesaid basis that the necessary  

satisfaction that the assessment order dated 30th March, 2004  

was erroneous and prejudicial to the interests of the revenue  

was  recorded  by  the  learned  C.I.T.  At  each  stage  of  the  

revisional  proceeding  the  authorized  representative  of  the  

assessee had appeared and had full opportunity to contest the  

basis  on which the  revisional  authority  was proceeding/had  

proceeded in the matter.  If the revisional authority had come  

to its conclusions in the matter on the basis of the record of the  

assessment proceedings which was open for  scrutiny by the  

assessee and available to his authorized representative at all  

times it is difficult to see as to how the requirement of giving of  

a reasonable opportunity of  being heard as contemplated by  

Section 263 of the Act had been breached in the present case.  

The order of the learned Tribunal insofar as the first issue i.e.

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the  revisional  order  going  beyond  the  show  cause  notice  is  

concerned, therefore, cannot have our acceptance.  The High  

Court having failed to fully deal with the matter in its cryptic  

order dated 7th August, 2008 we are of the view that the said  

orders are not tenable and are liable to be interfered with.  

15. This will bring us to a consideration of the second  

limb of the case as dealt with by the learned Tribunal, namely,  

that tenability of the order of the learned C.I.T. on the three  

(03) issues mentioned in the show cause notice and also dealt  

with  in  the  revisional  order  dated  20th March,  2006.   The  

aforesaid three (03) issues are:

“i) Assessee  maintaining  5  bank  accounts  and  AO  not  examining  the  5th bank  account, books of account and any other  bank  account  where  receipts  related  to  KBC were banked.

ii) Regarding  claim of  deposits  of  Rs.52.06  lakhs  in   Special  Bench  A/c  No.11155  under  the  head  “Receipts  on  behalf  of  Mrs. Jaya Bachchan and  

iii) Regarding  the  claim  of  additional  expenses in the re-revised return.”

16. On the above issues the learned Tribunal had given

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detailed  reasons  for  not  accepting  the  grounds  cited  in  the  

revisional order for setting aside the assessment under Section  

263 of  the  Act.   The reasons  cited  by  the  learned  Tribunal  

insofar as the first two issues are concerned may not justify a  

serious  relook  and  hence  need  not  be  gone  into.  The  third  

question would, however, require some detailed attention.  The  

said question is with regard to the claim of additional expenses  

made  by  the  assessee  in  its  re-revised  return  which  was  

subsequently withdrawn.   

17. The  assessee  in  the  re-revised  return  dated  31st  

March, 2003 had made a claim of additional expenses of 30%  

of the gross professional receipts (Rs.3.17 crores).  It appears  

that the Assessing Officer required the assessee to file requisite  

details in this regard.  The assessee responded by letter dated  

13th February, 2004 stating as follows:

“With  regard  to  the  30% estimated  expenses  claimed, we have to submit that these are the  expenses which are spent for security purposes  by employing certain Agencies, guards etc. for  the personal safety of Shri Bachchan as he has  to protect himself  from various threats to his  life  received by him and to avoid extortion of  money  from  gangsters.  The  names  of  such  Agencies cannot be disclosed/divulged as there  is  a  possibility  of  leakage  of  information  of  Agencies’ names from the office staff, which will

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obviously be detrimental to the interests of Shri  Bachchan. The payments have been made out  of  cash  balances  available  and  lot  of  outstanding  expenses  are  to  be  paid  which  could not be paid for want of income.”

18. Thereafter by letter dated 13th March, 2004 the assessee  

informed the learned C.I.T. that the claim was made on a belief  

that the same is allowable but as it will not be feasible for the  

assessee  to  substantiate  the  same,  the  re-revised  return  of  

income  may  be  taken  to  the  withdrawn.   It  appears  that  

thereafter the Assessing Officer issued a notice to show cause  

as to why the provisions of Section 69-C should not be invoked  

and the expenses claimed should not be treated as unexplained  

expenditure. In reply, the assessee by letter dated 24th March,  

2004  submitted  that  the  claim  was  made  as  a  standard  

deduction and that the assessee had been wrongly advised to  

make the said claim and as the same has been withdrawn,  

Section  69-C  will  have  no  application.  The  record  of  the  

assessment  proceedings  disclose  that  the  said  stand  was  

accepted  by  the  Assessing  Officer  and  the  matter  was  not  

pursued any further.  

19. The  learned  C.I.T.  took  the  view  that

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notwithstanding the withdrawal of the claim by the assessee, in  

view of  the  earlier  stand taken that  the  said  expenses were  

incurred for security purposes of the assessee, the Assessing  

Officer  ought  to  have  proceeded  with  the  matter  as  the  

assessee was following the cash system of accounting and the  

filing of the re-revised return,  prima facie, indicated that the  

additional expenses claimed had been incurred. In this regard,  

the following findings/reasons recorded by the learned C.I.T. in  

the  order  dated  20th March,  2006  would  be  of  particular  

relevance:

“Withdrawal  of  claim by assessee can be  for  variety of reasons and this does not mean that  Assessing  Officer  should  abandon  enquiries  regarding  sources  for  incurring  expenses.  Assessee  follows  cash  system  of  accounting  and  the  claim  regarding  additional  expenses  was made through duly verified revised return.  The  claim  was  pressed  during  assessment  proceedings  carried  on  by  A.O.   after  filing  revised return and it  was specially  stated in  letter dated 13.02.2004 that expenses were for  security  purposes  and  that  payments  have  been made out of cash balances available etc.  Under  the  circumstances,  the  Assessing  Officer  was  expected  to  examine  the  matter  further to arrive at a definite finding whether  assessee incurred expenses or not and in case,  actually incurred, then what were sources for  incurring  these  expenses.   Assessing  Officer  was satisfied on withdrawal of the claim and in  my  view,  his  failure  to  decide  the  matter

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regarding  actual  incurring  of  additional  expenses  and  sources  thereof  resulted  into  erroneous  order  which  is  prejudicial  to  the  interest of revenue.”

20. An  argument  has  been  made  on  behalf  of  the  

assessee  that  notice  under  Section 69-C was  issued  by  the  

Assessing Officer and thereafter on withdrawal of the claim by  

the  assessee  the  Assessing  Officer  thought  that  the  matter  

ought not to be investigated any further.  This, according to the  

learned counsel for the assessee, is a possible view and when  

two views are possible on an issue, exercise of revisional power  

under  Section  263  would  not  be  justified.  Reliance  in  this  

regard  has  been  placed  on  a  judgment  of  this  Court  in  

Malabar     Industrial  Co.  Ltd.    vs.    CIT  3 which  has  

been  approved  in Commissioner  of  Income-tax  vs. Max  

India Ltd.   4   

21. There can be no doubt that so long as the view taken  

by the Assessing Officer is a possible view the same ought not  

to be interfered with by the Commissioner under Section 263 of  

the Act merely on the ground that there is another possible  

view of the matter.  Permitting exercise of revisional power in a

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situation where two views are possible would really amount to  

conferring some kind of an appellate power in the revisional  

authority.  This  is  a  course  of  action  that  must  be  desisted  

from.  However, the above is not the situation in the present  

case in view of the reasons stated by the learned C.I.T. on the  

basis of which the said authority felt that the matter needed  

further  investigation,  a  view  with  which  we  wholly  agree.  

Making  a  claim  which  would  prima  facie  disclose  that  the  

expenses in respect of which deduction has been claimed has  

been  incurred  and  thereafter  abandoning/withdrawing  the  

same  gives  rise  to  the  necessity  of  further  enquiry  in  the  

interest of the Revenue. The notice issued under Section 69-C  

of the Act could not have been simply dropped on the ground  

that the claim has been withdrawn.  We, therefore, are of the  

opinion that the learned C.I.T. was perfectly justified in coming  

to his conclusions insofar as the issue No.(iii) is concerned and  

in  passing  the  impugned order  on that  basis.   The  learned  

Tribunal as well as the High Court, therefore, ought not to have  

interfered with the said conclusion.  

22. In the light  of  the discussions that  have preceded  

and  for  the  reasons  alluded  we  are  of  the  opinion  that  the

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present  is  a  fit  case for  exercise  of  the  suo motu revisional  

powers of the learned C.I.T. under Section 263 of the Act.  The  

order of the learned C.I.T., therefore, is restored and those of  

the  learned Tribunal  dated 28th August,  2007 and the  High  

Court dated 7th August, 2008 are set aside.  The appeal of the  

Revenue is allowed.  

SLP(C) No.861 of 2013

23. Leave granted.

24. Pursuant to the revisional order dated 20th March,  

2006 under Section 263 of the Income Tax Act setting aside the  

assessment  order  for  the  assessment  year  2001-2002  and  

directing fresh assessment, a fresh assessment had been made  

by the Assessing Officer by order dated 29th December, 2006.  

Against the said order the respondent assessee filed an appeal  

before the learned Commissioner of Income Tax (Appeals).  By  

order dated 18th October,  2007 the learned Commissioner of  

Income Tax (Appeals) had set aside the assessment order dated  

29th December, 2006 as in the meantime, by order dated 28th  

August, 2007 of the learned Income Tax Appellate Tribunal the  

revisional order dated 20th March, 2006 under Section 263 of

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the Act was set aside.  The Revenue’s appeal before the learned  

Tribunal  against  the  order  dated  18th October,  2007  was  

dismissed on 11th January, 2000 and by the High Court on 29th  

February, 2012.   Against the aforesaid order of the High Court  

this appeal has been filed by the Revenue.   As by the order  

passed today in the Civil Appeal arising out of Special Leave  

Petition (Civil) No.11621 of 2009 we have restored the suo motu  

revisional order dated 20th March, 2006 passed by the learned  

C.I.T., we allow this appeal filed by the Revenue and set aside  

the  order  dated  11th January,  2010  passed  by  the  learned  

Tribunal and the order dated 29th February, 2012 passed by  

the High Court referred to above.  However,  we have to add  

that  as  the  re-assessment  order  dated 29th December,  2006  

had not been tested on merits the assessee would be free to do  

so, if he is so inclined and so advised.   

25. The appeals are disposed of in the above terms.  

….……......................,J. [RANJAN GOGOI]

….……......................,J. [PRAFULLA C. PANT]

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NEW DELHI MAY 11, 2016