Itat/225/2023 Of Principal Commissioner Of Income Tax 5,Kolkata v. Weilburger Coatings India Pvt Ltd

OD-3 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT 225 OF 2023IA NO: GA/1/2023, GA/2/2023PRINCIPAL COMMISIONER OF INCOME TAX-5, KOLKATA-Versus-M/S. WEILBURGER COATINGS (INDIA) PVT. LTD. BEFORE: The Hon’ble T.S. SIVAGNANAM, CHIEF JUSTICE -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : 11[th] October, 2023 Appearance :Mr. Amit Sharma, Adv...for the appellant Mr. Abhratosh Majumder, Sr. Adv.Mr. Avra Majumder, Adv.…for the respondent The Court : We have heard Mr. Amit Sharma, learned standingCounsel appearing for the appellant and Mr. Abhratosh Majumder, learnedsenior Advocate for the respondent. There is a delay of 27 days in filing the appeal. We are satisfied withthe reasons assigned in the application for condonation of delay and the delayin filing the appeal is condoned. The application IA No : GA/1/2023 is allowed. This appeal by the revenue under Section 260A of the Income Tax Act,1961 (the Act) is directed against the order dated 28[th] March, 2023 passed bythe Income Tax Appellate Tribunal, “C” Bench, Kolkata in ITA No.753/Kol/2019 for the assessment year 2015-16. The revenue has raised the following substantial questions of law forconsideration :- a)Whether in the facts and circumstances of the case and in law theLearned Tribunal has committed substantial error in law in deletingthe disallowance of carry forward of losses of earlier years ?Learned Tribunal has committed substantial error in law in deletingthe disallowance of carry forward of losses of earlier years ? b)Whether the Learned Tribunal has substantially erred in law inholding that the Assessing Officer exceeded his jurisdiction inenquiring into those issues which were beyond the scope of limitedscrutiny, without taking into consideration the fact that the claim ofthe assessee pertaining to carried forward losses was inadmissiblesince the beginning itself and therefore the Assessing Officer wasjustified in disallowing the same without converting the case intocomplete scrutiny ?holding that the Assessing Officer exceeded his jurisdiction inenquiring into those issues which were beyond the scope of limitedscrutiny, without taking into consideration the fact that the claim ofthe assessee pertaining to carried forward losses was inadmissiblesince the beginning itself and therefore the Assessing Officer wasjustified in disallowing the same without converting the case intocomplete scrutiny ? We have heard Mr. Amit Sharma, learned standing Counsel appearingfor the appellant and Mr. Abhratosh Majumder, learned senior Advocate forthe respondent. The short issue which falls for consideration in the instant case iswhether the Assessing Officer exceeded his jurisdiction in completing theassessment on grounds which were not subject matter of the limited scrutiny. We have heard Mr. Amit Sharma, learned standing Counsel appearingfor the appellant and Mr. Abhratosh Majumder, learned senior Advocate forthe respondent. The short issue which falls for consideration in the instant case iswhether the Assessing Officer exceeded his jurisdiction in completing theassessment on grounds which were not subject matter of the limited scrutiny. The contention of the learned standing Counsel for the appellant isthat the assessee was put on notice on that particular issue by the AssessingOfficer, the assessee participated in the proceedings and thereafter theassessment was completed by order dated 27[th] December, 2017 under Section143(3) of the Act. The assessee carried the matter on appeal before theCommissioner of Income Tax (Appeals) 5 [CIT(A)] and the appeal was contestedon merits and the appeal stood partly allowed on certain issues by order dated14[th] January, 2019. The assessee being aggrieved by the disallowed portion ofthe order passed by the CIT(A) preferred appeal before the Tribunal and in theappeal additional ground was raised contending that the action of the CIT(A) inconfirming the action of the Assessing Officer in making additions in respect ofissues not mentioned in limited scrutiny were beyond jurisdiction of theAssessing Officer as the scrutiny assessment was selected for limited scrutinyunder Section 143(2) and not complete scrutiny. The Department objected tothe additional ground which were raised by the appellant before the Tribunal.However, the learned Tribunal overruled the said objection holding that theissue is jurisdictional issue and can be raised by the assessee at any point oftime. This finding of the learned Tribunal is well justified and in accordancewith the settled legal principle. Thereafter the learned Tribunal has re- examined the factual position and found that the issue which was decided bythe Assessing Officer was not part of the limited scrutiny for which theassessment was directed to be scrutinised. That apart, the learned Tribunalhas also taken note of the CBDT Instruction No.5 of 2016 to hold that theAssessing Officer has exceeded his jurisdiction. Learned senior Counsel for the respondent/assessee has placed beforeus another Instruction issued by the CBDT dated 30[th] November, 2017, beingF.No. DGIT(Vig.)/HQ/SI/2017-18, wherein the CBDT has noted instanceswhere some of the Assessing Officer were travelling beyond the issues whilemaking assessment in limited scrutiny cases by initiating inquiries on newissue without complying with mandatory requirements of the relevant CBDTInstruction dated 26.09.2014, 29.12.2015 and 14.07.2016. It has been statedthat these instances have been viewed seriously by the CBDT and in one casethe Central Inspection Team of the CBDT was tasked with examination ofassessment records on receipt of allegations of several irregularities andamong other irregularities it was found that no reasons had been recorded forexpanding the scope of limited scrutiny, no approval was taken from the PCITfor conversion of the limited scrutiny case to a complete scrutiny case and theorder sheet was maintained very perfunctorily. Further, the CBDT hasrecorded that this gave rise to a very strong suspicion of mala fide intentionsand the Officer concerned has been placed under suspension. Therefore, it wasreiterated that the Assessing Officer should abide by the Instructions of CBDT while completing limited scrutiny assessment and should be scrupulous aboutmaintenance of note sheets in assessment folders. while completing limited scrutiny assessment and should be scrupulous aboutmaintenance of note sheets in assessment folders. Thus, considering these aspects, we are of the view that the learnedTribunal rightly allowed the assessee’s appeal on the said issue. This Courthad an occasion to consider a somewhat similar issue in the case of PrincipalCommissioner of Income Tax 1, Kolkata Vs. Sukhdham Infrastructures LLP, inITAT No. 164 of 2023, dated 14[th] August, 2023. In the said case an identicalcontention as raised before us was raised stating that at best the action of theAssessing Officer could be construed to be an irregularity. While consideringsuch a contention in Sukhdham Infrastructures LLP the Court rejected thesame with the following observation :- “While considering the said issue, the Hon’ble Supreme Court noted thedistinction between the statutes affecting rights and those affecting mereprocedure. The revenue cannot rely upon the said decision as the scheme ofassessment as provided under Section 143 of the Act is a complete code by itselfand the circumstances under which the power under sub-section (2) of Section143 could be invoked has been clearly spelt out and on a reading of sub-section(3) of Section 143, it s evidently clear that on the day specified in the noticeissued under sub-section (2), or as soon afterwards as may be, after hearingsuch evidence as the assessee may produce and such other evidence as theAssessing Officer may require on specified points, and after taking into accountall relevant material which he has gathered, the Assessing Officer shall, by anorder in writing, make an assessment of the total income or loss of the assessee,and determine the sum payable by him or refund of any amount due to him onthe basis of such assessment. Therefore, the question of part of the provision being procedural is an incorrectinterpretation of the scheme provided under Section 143 of the Act. Further, asnoted above, the CIT(A) has examined the merits of the matter and after takingnote of the facts granted relief to the assessee to the extent indicated therein.Thus, for the above reasons, we find that the revenue has not made out anycase for interference of the order passed by the Tribunal. Accordingly, the appealfails and is dismissed. The substantial questions of law are answered against the revenue.The application for stay being GA 1 of 2023 is also dismissed.” In the light of the above, no grounds have been made out to interfere withthe order passed by the Tribunal. Accordingly, the appeal fails and is dismissed. The substantial questions of law are answered against the revenue.The stay application IA No : GA/2/2023 is also dismissed. (T.S. SIVAGNANAM) CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.) SN.AR(CR)