Chhattisgarh State Minor Forest Produce (Trading Anddevelopment) Co-Operative Federation Limited Raipur Chhattisgarh State Minor Forest Produce (Trading Anddeve v. Pr. Commissioner Of Income Tax-1, Raipur Pr. Commissioner Of Income Tax-1, Raipur

NAFR HIGH COURT OF CHHATTISGARH, BILASPUR TAXC No. 163 of 2024 Chhattisgarh State Minor Forest Produce (Trading andDevelopment) Co-operative Federation Limited Raipur Chhattisgarh State Minor Forest Produce (Trading andDevelopment) Co-operative Federation Limited Raipur ---- Appellant Versus Pr. Commissioner of Income Tax-1, Raipur Pr. Commissioner of Income Tax-1, Raipur ---- Respondent For the Appellant -Dr. Rakesh Gupta, Advocate along with Shri S. Rajeshwara Rao, Advocate and Shri Sunil Agrawal, Advocate For the Respondent - Ms. Naushina Afrin Ali, Advocate along Shri Ajay Kumrani, Advocate Hon'ble Shri Justice Goutam Bhaduri & Hon’ble Shri Justice Radhakishan Agrawal Judgment on Board Per Goutam Bhaduri, J.22/07/2024 Heard. 1.The submission is made that the appellant, which is an apexbody of the Co-operative, came into existence by an order ofthe State Government on 23/02/2001 to facilitate collection,storage, processing and disposal of specified forest producewithin the periphery of the State of Chhattisgarh and the societywas entitled for a commission of Re.1/- per annum for theaforesaid services rendered by it as an agent of the StateGovernment of Chhattisgarh. The appellant came intobody of the Co-operative, came into existence by an order ofthe State Government on 23/02/2001 to facilitate collection,storage, processing and disposal of specified forest producewithin the periphery of the State of Chhattisgarh and the societywas entitled for a commission of Re.1/- per annum for theaforesaid services rendered by it as an agent of the StateGovernment of Chhattisgarh. The appellant came into 2. existence for the reason that the State Government whilecollecting the forest produce through private contractors foundthat the forest dwellers were not being fully paid and the benefitis not being passed. In view of such background, the role of theassessee was to act as an agency to facilitate collection, storage,processing and disposal of specified forest produce and to act asa coordinator. The documents filed along with this appeal would show that arevision proceeding was drawn under Section 263 of theIncome Tax Act, 1961 (hereinafter referred to as ‘the Act,1961’) by the Principal Commissioner of Income Tax, Raipur-1(hereinafter referred to as the Pr. CIT). The order of the Pr. CITdated 30/03/2021 would show that pursuant to the notice issueda detailed reply was filed by the appellant and thereafter thelearned Pr. CIT was pleased to dispose of the revision by orderdated 30/03/2021 and the relevant part is reproducedhereinbelow:- 5. I have gone through the case recordand submission of the assesseefurnishedduringassessmentproceedings and revision proceedings.From the facts narrated above, it isclear that the Assessing Officer hasnot conducted proper enquiryregarding genuineness of thecontention made by the assessee.Therefore, I am satisfied that theassessment order is erroneous in so faras it is prejudicial to the interest ofrevenue in view of Explanation 2 ofSection 263 of the Income tax Act.The A.O. is directed to verify theclaim of deduction u/s 80P(2)(d) of the IT Act 1961 on interest receivedfrom banks on FDR, FFD, SB interestetc. and verify the claim ofexpenditure. I, therefore, set aside theassessment order and remand it backto the Assessing Officer for freshadjudication of the issues discussedherein above by conducting necessaryenquiries in this case and framingfresh assessment order after affordingadequate opportunities to the assessee. the IT Act 1961 on interest receivedfrom banks on FDR, FFD, SB interestetc. and verify the claim ofexpenditure. I, therefore, set aside theassessment order and remand it backto the Assessing Officer for freshadjudication of the issues discussedherein above by conducting necessaryenquiries in this case and framingfresh assessment order after affordingadequate opportunities to the assessee. 3.When the appeal was filed against such order, the Income TaxAppellate Tribunal, Raipur Bench, Raipur (hereinafter ‘theITAT’) by its order dated 09/05/2024 maintained the order onthe ground that certain documents were sought from theassessee and having not been produced, there was no otheroption except to pass the order. Appellate Tribunal, Raipur Bench, Raipur (hereinafter ‘theITAT’) by its order dated 09/05/2024 maintained the order onthe ground that certain documents were sought from theassessee and having not been produced, there was no otheroption except to pass the order. 4.The submission is made that the entire show-cause notice wasreplied in detail and minimum it is expected that whileexercising such quasi judicial power, the authority herein i.e.the Pr. CIT was required to look into it and the reply filed alongwith the documents wherein everything was explained, but in acryptic manner the order has been passed and the learned ITATtoo failed to take into cognizance. replied in detail and minimum it is expected that whileexercising such quasi judicial power, the authority herein i.e.the Pr. CIT was required to look into it and the reply filed alongwith the documents wherein everything was explained, but in acryptic manner the order has been passed and the learned ITATtoo failed to take into cognizance. 5.We went through the record and the orders of the Pr. CIT andthe ITAT. Prima facie, it do not satisfy us, therefore, we admitthe appeal on the following question of law:-the ITAT. Prima facie, it do not satisfy us, therefore, we admitthe appeal on the following question of law:- A. Whether the ITAT in confirming the order oflearned Principal Commissioner of Income Taxpassed under Section 263 of the Act, 1961, wherebythe assessment order was set aside without lookinginto the defence raised and application of mind.learned Principal Commissioner of Income Taxpassed under Section 263 of the Act, 1961, wherebythe assessment order was set aside without lookinginto the defence raised and application of mind. 6.We went through the reply which was filed by the assesseebefore the Pr. CIT while power of revision was exercised.Section 263 of the Act, 1961 gives power to the Principal ChiefCommissioner or the Officer as it is been prescribed that hemay call for and examine the record of any proceeding underthis Act, and if he considers that any order passed therein by theAssessing Officer is erroneous, in so far as it is prejudicial tothe interests of the revenue, he may, after giving the assessee anopportunity of being heard and after making or causing to bemade such inquiry as he deems necessary, pass such order. 7.The order of the Pr. CIT, therefore, necessarily would require toexplain i.e. record reasons to exercise the power under Section263 of the Act, 1961 to say that the order was prejudicial to theinterest of Revenue. However, in case in hand after thatproceedings were initiated, the enquiry was conducted andduring such enquiry the reply and the documents were placedby assessee. Section 263 makes it incumbent to the Pr. CIT toconduct enquiry. The enquiry means not to shelve the reply andthe documents but to deliberate upon it and the same cannot beset aside on the ground that the Officer is not satisfied withreply. The reasons for satisfaction or non-satisfaction arerequired to be recorded. In the instant case, after going throughpara 5 of the order, which is the substratum of the entire issue, itis manifest that the said procedure has not been followed. 8.Under the circumstances, we allow the appeal and answer thequestion of law in favour of the assessee and remand back thecase to the Pr. CIT to reconsider the reply and the documents ofassessee. It is directed that after giving opportunity of hearingto the assessee, the learned authority shall pass the order, inaccordance with law and on its own merits.question of law in favour of the assessee and remand back thecase to the Pr. CIT to reconsider the reply and the documents ofassessee. It is directed that after giving opportunity of hearingto the assessee, the learned authority shall pass the order, inaccordance with law and on its own merits. SD/- SD/- Sd/- Sd/- (Goutam Bhaduri) Judge (Radhakishan Agrawal) Judge A S H U