Itat/42/2024 Ia No: Ga/1/2024, Ga/2/2024 Principal Commissioner Of Income Tax Central 1 Kolkata v. M/S Rani Sati Agro Tech Pvt Ltd

OD–8 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/42/2024IA NO: GA/1/2024, GA/2/2024PRINCIPAL COMMISSIONER OFINCOME TAX CENTRAL 1 KOLKATAVSM/S RANI SATI AGRO TECH PVT LTD BEFORE :THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 23[rd] February, 2024. Appearance :Ms. Smita Das De, Adv.…for appellantMr. Abhratosh Majumdar, Sr. Adv.Mr. Avra Mazumder, Adv.Ms. Alisha Das, Adv.Mr. Suman Bhowmik, Adv.Mr. Kausheyo Roy, Adv.…for respondent The Court :- We have heard Mr. Smita Das De, Mr. Prithu Dudhoria,learned Counsel for the appellant and Mr. Abhratosh Majumder, learnedstanding Counsel for the respondent. It appears that there is a delay of 16 days in filing the appeal. We aresatisfied with the explanation offered and the delay in filing the appeal iscondoned. GA/1/2024 is allowed. This appeal by the revenue filed under Section 260A of the Income TaxAct, 1961 (the Act) is directed against the order dated June 19, 2023 passed bythe Income Tax Appellate Tribunal , “A” Bench, Kolkata in ITA/85/2022 for theassessment year 23012-13. ‘The revenue has raised the following substantialquestions of law for consideration : a)WHETHER on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal was justified in law to quashthe order passed u/s 263 of the Income Tax Act, 1961 by holding thatin the present case, the PCIT grossly erred in assuming jurisdictionunder section 263 of the Income Tax Act 1961 ?Learned Income Tax Appellate Tribunal was justified in law to quashthe order passed u/s 263 of the Income Tax Act, 1961 by holding thatin the present case, the PCIT grossly erred in assuming jurisdictionunder section 263 of the Income Tax Act 1961 ? b)WHETHER on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal was justified in law to quashorder u/s 263 of the Act without considering the fact that beforepassing order u/s 263 of the Act, the assessee was issued show causenotice and provided with sufficient opportunities to explain, as to whyremedial action under section 263 should not be taken in in its casebut the assessee failed to make any compliance ?Learned Income Tax Appellate Tribunal was justified in law to quashorder u/s 263 of the Act without considering the fact that beforepassing order u/s 263 of the Act, the assessee was issued show causenotice and provided with sufficient opportunities to explain, as to whyremedial action under section 263 should not be taken in in its casebut the assessee failed to make any compliance ?We have heard learned Advocates for the parties. The short question which falls for consideration in the instant case iswhether in the second round of litigation whether the Commissioner of IncomeTax was justified in invoking his power under Section 263 of the Act. Thelearned Tribunal has set down elaborate reasons in support of his conclusionwhile deciding the case in favour of the assessee. It has also taken note of therelevant case law on the subject including the decision of the Hon’ble SupremeCourt in the case of PCIT vs.NRA IRON & STEEL PVT. LTD.117 taxmann.com752. We find that the Tribunal has examined the factual position thoroughly andit has noted that in compliance with the direction issued by the Commissionerunder Section 263 by order dated 2.12.2015 the assessing officer commencedhis scrutiny proceedings. The manner in which such scrutiny was done wastaken note of the Tribunal. Further The Tribunal noted the assessing officer alsocalled for the details of the share application money received during the year by the letter dated 6.5.2016 and also to the reply given by the assessee wherein fulldetails were provided about the type of business carried on by the assessee, theaudited financial statement, auditor’s report note, NBFC auditors report fromReserve Bank, list of directors, details of trade payables, details of sundrydebtors, list of purchases during the year. The Tribunal also noted that theassessee had filed the details of allotment of equity shares to the three sharesubscribers and also the date-wise details which were filed regarding theinformation received from banking channels. Thus we find that the learnedTribunal was fully justified in concluding in favour of the assessee after notingthat the assessing officer had conducted extensive enquiry on issues anddirections mentioned in the order dated 2.12.2015 passed under Section 263 ofthe Act. Thus we find no grounds have been made out to interfere with the orderpassed by the learned Tribunal. Before parting we would like to observe that theunderstanding of the legal position by the Principal Commissioner of Income Tax, Kolkata –IV in his order dated 12.3.2019 in particular in paragraph 4.4 isincorrect. It has been observed that any order passed subsequent to the orderunder Section 263 must be in favour of the revenue. Further, it has beenobserved that earlier there is income which could be enhanced or could be thesame as earlier order but with the enhanced enquiry so that the addition shouldbe strengthened to pass the test of appellate proceedings, this proceedings iserroneous when the Commissioner exercised power under Section 263 of the Actthe twin conditions which have been laid down and reiterated in severaldecisions including the decision of the Hon’ble Supreme Court in the case ofMalabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC), CIT vs. Max IndiaLimited, 295 ITR 0282 has to be complied with. In absence, of such compliance the question of making an additionsimilarly the proceedings has been drawn under Section 263 is an incorrectinterpretation of the legal position. For the above reasons, the appeal filed by the revenue is dismissed andthe substantial questions of law are answered against the revenue. (T.S. SIVAGNANAM)CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.) pkd/GH.