|The Tax Publishers2021 TaxPub(DT) 0765 (Bom-HC) : (2021) 432 ITR 0316 : (2021) 279 TAXMAN 0333
INCOME TAX ACT, 1961
Taking into consideration the reasoning of the CIT Court feel that the ITAT was not justified in interfering with CIT's order, since, the twin conditions prescribed under section 263 were fulfilled besides, CIT, by the impugned order, had quite fairly granted the assessee an opportunity of being heard.
Revision under section 263 - Erroneous and prejudicial order - Lack of inquiry and non-application of mind by AO vis-a-vis providing of hearing opportunity to assessee -
AO, vide assessment order dated 30-9-2011, added an amount of Rs. 2,31,010 by assessing the same as 'income from other sources' to the total income of the assessee. However, the AO accepted that assessee had incurred total business income (losses) to the extent of Rs. 1,78,57,950, which was eventually allowed to be carried forward for the next assessment year. CIT invoked his revisional jurisdiction under section 263 and by his Order dated 6-3-2014 set aside assessment Order dated 30-9-2011 and directed AO to pass a fresh order after granting the assessee reasonable opportunity of being heard. CIT also directed the AO to verify the claim of the assessee in respect of the allowability of the expenditure and carry forward of the losses to the extent of Rs. 1,78,57,950 in terms of the law. Assessee appealed to the ITAT which, by Order dated 11-2-2015, set aside CIT's order, dated 6-3-2014. Hence, the present appeal was filed by the Revenue on the substantial questions of law. Held: This was not a case where CIT had not concluded that the order of the AO in the aforesaid circumstances was not erroneous or that it was not prejudicial to the interest of the revenue. The only reason as to why the CIT had used the expression 'prima facie' in paragraphs 7 and 10 of the impugned Order was that the CIT intended to offer the assessee a reasonable opportunity of being heard by the AO, in the course of a detailed inquiry accompanied by due application of mind by the AO, in pursuance of a remand order. This was also not a case where the CIT failed to undertake inquiry in the course of the exercise of revisional jurisdiction. It was only in pursuance to such inquiry that CIT recorded a categorical finding that assessee had not even claimed any fees from M/s. Paradeep Phosphates Ltd. in respect of any alleged technical or management services rendered by it. In the present case, taking into consideration the reasoning of CIT, the High Court felt that the ITAT was not justified in interfering with the CIT's order, since, the twin conditions prescribed under section 263 were fulfilled. Besides, the CIT, by the impugned order, had quite fairly granted the assessee an opportunity of being heard whilst directing the AO to verify the claim of the assessee in respect of the allowability of the expenditure and carry forward of the loss of Rs. 1,78,57,950 in accordance with law. For all the aforesaid reasons, the court set aside the ITAT's Order dated 11-2-2015 and answered the substantial questions of law as framed, in favour of the revenue and against the assessee.
Distinguished:Malabar Industrial Co. Ltd. v. CIT, Kerala State 2000-(243) ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC) , CIT v. Amitabh Bachchan (2016) 69 Taxmann.com 170 (SC) : 2016 TaxPub(DT) 2291 (SC), CIT v. Max India Ltd. (.....) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) and CIT v. Gabriel India Ltd. 1993 (203) ITR 108 (Bom) : 1993 TaxPub(DT) 1357 (Bom-HC)Relied:Daniel Merchants (P) Ltd. & Anr. v. ITO & Anr. SLP (C) No. 23976/2017 : 2017 TaxPub(DT) 5217 (SC), K.A. Ramaswamy Chettiar & Anr. v. CIT (1996) 220 ITR 657 (Mad) : 1996 TaxPub(DT) 485 (Mad-HC), Rampyari Devi Sarogi v. CIT (1968) 67 ITR 84 (SC) : 1968 TaxPub(DT) 135 (SC), Duggal and Co. v. CIT (1996) 220 ITR 456 (Del-HC) : 1996 TaxPub(DT) 122 (Del-HC), CIT v. Pushpa Devi (1987) 164 ITR 639 (Pat.) : 1987 TaxPub(DT) 609 (Pat-HC) and CIT v. Pushpa Devi (1988) 173 ITR 445 (Pat-HC) : 1988 TaxPub(DT) 1122 (Pat-HC).
SUBSCRIBE FOR FULL CONTENT