Iapl/233/2015 Of Principal Commissioner Of Income Tax v. M/S Girnar Textiles

Case :- INCOME TAX APPEAL No. - 233 of 2015Appellant :- Principal Commissioner Of Income TaxRespondent :- M/S Girnar TextilesCounsel for Appellant :- Manu Ghildyal S.C.Counsel for Respondent :- Prateek Chandra Hon'ble Bharati Sapru,J.Hon'ble Piyush Agrawal,J. (Delivered by Hon'ble Piyush Agrawal,J.) The present appeal has been filed underSection 260-A of the Income Tax Act, 1961(hereinafter referred to as "the Act") againstthe order dated 30th March, 2015 passed bythe Tribunal in ITA No. 3376/Del/2013 for theassessment year 2008-09. The appeal was admitted vide this Court's order dated 22nd September, 2015 on thefollowing substantial question of law, whichreads as follows:- "Whether the Tribunal was justified in holding that the Commissioner of Income Tax had passed an order whichwas not covered by the grounds mentioned in the noticeunder Section 263 of the Income Tax Act" The brief facts of the case are the respondent is a partnership firm engaged inthe manufacturing and export of homefurnishing. On 5.10.2010, an assessmentorder under Section 143(3) of the Act waspassed on a total income of Rs. 19,35,120/-. Thereafter, a proceeding under Section 263was initiated by CIT on the ground that therespondent has taken an unsecured loanfrom M/s Kabir Oldtax for a sum of Rs.57,80,000/-andneitherproperexamination/verification was done by theAssessing Authority nor the creditworthiness nor other details were sought by theAssessing Authority. Further, there were Sundry Creditors of Rs.10,81,49,561/- which were unexplained. Therespondent-assessee paid Rs. 13,05,900/-towards designing charges on which noproper inquiry was made, as to whether,TDS was made on these payment or not. The respondent has shown fire loss of Rs.62,58,623/- for which the Assessing Authorityhas neither taken any detail nor made anyinquiry. On the basis of the above said facts noticewas issued, the respondent submitted adetailed reply. In spite of the reply, havingbeen submitted by the respondent, an orderunder Section 263 was passed on18.3.2013 in which four directions weregiven by the Assessing Authority. On 17.2.2014, the Assessing Authoritypassed an order under Section 263/143(3) ofthe Act and partly modified the earlierassessment order. The respondent beingaggrieved by the order under Section 263preferred an appeal before the Tribunal, NewDelhi, but, by the impugned order, theTribunal had allowed the appeal filed by therespondent and set aside the order passedunder Section 263. Heard Mr. Manu Ghildyal, learned counselfor the Revenue and Ms. SaubhagyaAgrawal, learned counsel for the respondent. It was argued on behalf of the Revenue that the Tribunal was not justified in setting asidethe order of the CIT passed under section263 and Assessing Authority without properexamination/verification, has allowed certainclaims of the respondent. Rebutting the argument of the Revenue, thecounsel for the respondent has argued thatthe Tribunal being a last court of fact and lawhas rightly allowed the appeal and set asidethe order of CIT, passed under Section 263of the Act. On perusal of the record, it reveals that theproceeding has been initiated under Section263 as the assessment order has beenpassed without making proper requisite anddesired inquiries and therefore, order isalleged to be irrelevant and prejudicial to theinterest of Revenue. The record of the case also reveals that theproceeding under Section 263 was initiatedafter issuing notice by pointing out fourissues therein and while passing orderunder Section 263, CIT directed theAssessing Authority to make inquiry not onlyon the four points but also enlarge the scopeof inquiry to entire Sundry Creditors and alsoestimate net profit at the rate of Rs. 5% ofgross turn over of the Assessee which werenot mentioned in the notice under Section263 of the Act. In the impugned order, the Tribunal hasrecorded a finding of fact which is quoted asbelow:- The record of the case also reveals that theproceeding under Section 263 was initiatedafter issuing notice by pointing out fourissues therein and while passing orderunder Section 263, CIT directed theAssessing Authority to make inquiry not onlyon the four points but also enlarge the scopeof inquiry to entire Sundry Creditors and alsoestimate net profit at the rate of Rs. 5% ofgross turn over of the Assessee which werenot mentioned in the notice under Section263 of the Act. In the impugned order, the Tribunal hasrecorded a finding of fact which is quoted asbelow:- "16. Under these clear facts and circumstances of the present case we hold that the issue is covered on all fourcorners in favour of assessee by decision of thecoordinate bench of in the case of B.S. Sangwan (supra)and we are inclined to hold that the revision u/s 263 of theAct can only be passed on the ground on which assesseehas been given reasonable opportunity of being heard inthe notice u/s 263 of the Act and it is not allowable andopen to the CIT to set out one reason for revising theassessment order but actually revising the assessmentorder on some other ground in addition to grounds whichfound place in the notice u/s 263 of the Act, by passingfinal order u/s 263 of the Act. We may further point outthat the AO did not make any addition on any one out offour issues, which were raised and pointed out in thenotice u/s 263 of the Act, in the order framed u/s 263 readwith section 1 in pursuant to the impugned order. Hence, impugned order u/s 263 of the Act is not valid andsustainable and therefore, we quash the same and allsubsequent proceedings and order passed in pursuantthereto. Accordingly, ground no. 1 and 2 of the assesseeare allowed." In view of the finding of fact recorded by theTribunal, we do not find any substance in thepresent appeal which gives arise tosubstantial question of law and, hence, theappeal is dismissed. The question of law is answered in favour ofthe respondent-assessee and against thedepartment. Order Date :- 11.3.2019 SY