M/S. Olympus Suppliers Pvt. Ltd. &Anr v. The Principal Commissioner Ofincome Tax, Kolkata-2 & Anr

OD-13 ITAT/328/2017IA No.GA/2/2017 (Old No.GA/3184/2017) IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE M/S. OLYMPUS SUPPLIERS PVT. LTD. &ANR. -Versus- THE PRINCIPAL COMMISSIONER OFINCOME TAX, KOLKATA-2 & ANR. Appearance:Mr. Pranit Bag, Adv.Mr. Soumyadeep Biswas, Adv....for the appellant.Mr. Vipul Kundalia, Adv.Mr. Prithu Dudheria, Adv.Mr. Anurag Ray, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : 4[th] May, 2022. The Court : This appeal filed by the assessee underSection 260A of the Income Tax Act, 1961 (the ‘Act’ in brevity) isdirected against the order dated August 5, 2016 passed by theIncome Tax Appellate Tribunal, “D” Bench, Kolkata (the ‘Tribunal’in short) in ITA No.1088/Kol/2016 for the assessment year 2009-10.The appellant/assessee has raised the followingsubstantial questions of law for consideration: (a) (b) (c) (d) (e) Whether the Tribunal failed to consider that any ordermade beyond March 31, 2015, would be hit by sub-section(2) of section 263 of the said Act in the present case, asno order can be made under sub-section (1) of section 263of the said Act, after expiry of 2 years from the end ofthe financial year, 2012-13, in which the order sought tobe revised, was passed, as the order under section 263 wasdeemed to be made over to the petitioners on February 29,2016 in terms of the order of the Hon’ble Court datedApril 20, 2015 ? Whether the Tribunal failed to consider that an enquirywas conducted by the Assessing Officer on the issue ofshare capital and during such enquiry, all the materialsdocuments were placed before the Assessing Officer and assuch, the Commissioner of Income Tax cannot direct for anenquiry on the same issue by holding that enquiryconducted, was not sufficient and/or adequate ?Whether the Ld. Tribunal was justified in holding theorder of the Commissioner of Income Tax who held that there-assessment order passed by the Assessing Officer undersection 147 of the Income Tax Act, 1961, is erroneous andprejudicial to the interest of the revenue on the groundof lack of proper enquiry as to the issue of share capitalpremium without considering that the case was re-openedfor the specific purpose of escapement of share dealing ?Whether the Ld. Tribunal was justified in law in upholdingthe order passed by the Commissioner of Income Tax, undersection 263 of the said Act without any specific reasonsand on a general and vague conclusion drawn from the caseof Subhlakshmi Vanijya Private Ltd. vs. CIT [ITANo.1104/Kol/2014, dated 30.07.2015 for the AY 2009-10] ?Whether the Tribunal was justified in law in ignoring thatno order under section 263 of the said Act can be madeunder section 263(1) of the said Act, after expiry of 2 years from the end of the financial year in which theorder sought to be revised, was passed ? We have heard Mr. Pranit Bag, learned counsel assisted byMr. Soumyadeep Biswas, learned advocate appearing for theappellant/assessee and Mr. Vipul Kundalia, learned counselassisted by Mr. Prithu Dudheria and Mr. Anurag Ray, learnedadvocates for the respondent/revenue. The assessee was in appeal before the learned tribunalchallenging an order passed by the Principal Commissioner ofIncome Tax, Kolkata-2 (PCIT, in short) dated 23[rd] March, 2015passed under Section 263 of the Act. The appellant/assessee hadraised the following grounds before the learned tribunal: “1. For that the order passed u/s 263 by the Ld. CIT is barredby limitation, as such, the order passed u/s 263 is liableto be quashed. 2. For that on the facts and in the circumstances of the case,the order passed by the Ld. CIT u/s 263 of the Act is badin law and is liable to be quashed. 3. For that on the facts and in the circumstances of the casethe Ld. CIT was not justified in initiating proceedingsu/s 263.the Ld. CIT was not justified in initiating proceedingsu/s 263. The assessee was in appeal before the learned tribunalchallenging an order passed by the Principal Commissioner ofIncome Tax, Kolkata-2 (PCIT, in short) dated 23[rd] March, 2015passed under Section 263 of the Act. The appellant/assessee hadraised the following grounds before the learned tribunal: “1. For that the order passed u/s 263 by the Ld. CIT is barredby limitation, as such, the order passed u/s 263 is liableto be quashed. 2. For that on the facts and in the circumstances of the case,the order passed by the Ld. CIT u/s 263 of the Act is badin law and is liable to be quashed. 3. For that on the facts and in the circumstances of the casethe Ld. CIT was not justified in initiating proceedingsu/s 263.the Ld. CIT was not justified in initiating proceedingsu/s 263. 4. For that the Ld. CIT erred in exercising the power ofrevision for the purpose of directing the A.O. to holdanother investigation when the order of the A.O. wasneigher erroneous nor prejudicial to the interest of therevenue. 5. For that the Ld. CIT was not justified in holding thatcreditworthiness and identity of the shareholders fromwhom share capital money was received and genuineness ofthe transaction in the instant year remains to be verified though the A.O. completed the assessment after makingproper verification.proper verification. 6. For that the CIT was not justified in holding the orderpassed by the A.O. to be erroneous on the issue of sharecapital/premium when no addition u/s 68 can be made in theinstant case in view of the judgments of the Hon’bleSupreme Court in the case of Lovely Exports 319 ITR (St.)and also in the case of Bharat Engineering & ConstructionCo. Ltd. 83 ITR 187.passed by the A.O. to be erroneous on the issue of sharecapital/premium when no addition u/s 68 can be made in theinstant case in view of the judgments of the Hon’bleSupreme Court in the case of Lovely Exports 319 ITR (St.)and also in the case of Bharat Engineering & ConstructionCo. Ltd. 83 ITR 187. 7. For that in exercising revisionary powers u/s 263 the Ld.CIT lost sight of the well settled legal position that inthe assessment u/s 147, the A.O. is not entitled to embarkupon a fishing expedition and to make roving enquiries assuch, assuming but not admitting that proper enquirieswere not done in respect of the share capital raised bythe assessee, there was no error in the order passed bythe A.O. u/s. 147.CIT lost sight of the well settled legal position that inthe assessment u/s 147, the A.O. is not entitled to embarkupon a fishing expedition and to make roving enquiries assuch, assuming but not admitting that proper enquirieswere not done in respect of the share capital raised bythe assessee, there was no error in the order passed bythe A.O. u/s. 147. 8. For that the Ld. CIT exceeded his jurisdiction by directingthe Ld. A.O. as to how the fresh assessment should beframed by him.”the Ld. A.O. as to how the fresh assessment should beframed by him.” From the above grounds of appeal filed by the assesseebefore the tribunal, we find that the first ground urged beforethe tribunal is that the order passed by the PCIT under Section263 of the Act is barred by limitation. There are other groundswhich have been raised by the assessee which are not required tobe gone into for taking a decision in the present appeal. Thelearned tribunal had heard the appellant’s appeal petition alongwith three other cases and by a common order dated 5[th] August, 2016dismissed all the appeals. We find from paragraph 2 of theimpugned order that the prayers sought for by the assessee for From the above grounds of appeal filed by the assesseebefore the tribunal, we find that the first ground urged beforethe tribunal is that the order passed by the PCIT under Section263 of the Act is barred by limitation. There are other groundswhich have been raised by the assessee which are not required tobe gone into for taking a decision in the present appeal. Thelearned tribunal had heard the appellant’s appeal petition alongwith three other cases and by a common order dated 5[th] August, 2016dismissed all the appeals. We find from paragraph 2 of theimpugned order that the prayers sought for by the assessee for condonation of delay of 19 days in filing the appeal wasconsidered by the tribunal. The appellant’s case was that asagainst the order passed under Section 263 of the Act, they hadfiled a writ petition before this Court in WP No.3116(w) of 2016contending that the order made under Section 263 of the Act onMarch 23, 2015 was not served on the appellant/assessee. Thelearned Writ Court considering the submissions made by theappellant as well as the revenue, by order dated 20[th] April, 2016held that since it appears that the non-service of the order datedMarch 23, 2015 was on account of a mistake on the part of thedepartment, such order is now deemed to have been received by theappellant/assessee on February 29, 2016. Further, the learnedWrit Court held that the assessee will be at liberty to pursuetheir remedies against the order dated March 23, 2015 andconsequential orders in accordance with law by reckoning the dateof receipt of such order on February 29, 2016. In the light ofsuch direction, the merits of the order under Section 263 of theAct was not gone into and it was left open to the parties tocanvass their grounds before the appropriate forum. Further,there was a direction to the respondent/department to immediatelycommunicate the assessment order made consequent to the orderunder Section 263 of the Act to the petitioning assessee. Interms of the liberty granted, the assessee had preferred an appealbefore the tribunal which on the date of filing was barred by limitation, it was delayed by a period of 19 days. The learnedtribunal took note of the direction issued by the learned WritCourt in the said writ petition and condoned the delay in filingthe appeal. The next course that the tribunal should have adoptedis to consider the appellant’s appeal petition on merits, moreparticularly on the grounds which have been canvassed before thetribunal as noted above. However, the tribunal was of the viewthat the issues raised in all the four appeals which were heardtogether are squarely covered by several orders passed by thetribunal including the order in the case of Subhlakshmi VanijyaPrivate Ltd. vs. CIT passed in ITA No.1104/Kol/2014, dated30.07.2015 for the Assessment Year 2009-10. In paragraph 4 of the impugned order, the learnedTribunal briefly notes the facts of the case. But, however, wefind that the facts of the appellants’ case have not been noted. Thereafter, in paragraph 5 of the impugned order, thelearned Tribunal states that it has disposed of more than 500cases involving the same issue by certain orders with the impugnedorder having been passed in a group of cases led by SubhalakshmiVanijya Pvt. Ltd., dated July 30, 2015.In paragraph 6 of the impugned order, the learned Tribunalstates that it has been admitted by the learned Departmentalrepresentative that the facts and and circumstances of the issuesin consideration are mutatis mutandis similar to those decided earlier in the case of Subhalakshmi Vanijya Pvt. Ltd. Thereafter,it proceeds to quote the conclusion in the said decision. In paragraph 7 of the impugned order, the learned Tribunalstates that all or some of the conclusions recorded by it in thedecision in the case of Subhalakshmi Vanijya Pvt. Ltd. areapplicable to the appellants before it and accordingly the appealswere dismissed and the order passed by the PCIT was upheld. earlier in the case of Subhalakshmi Vanijya Pvt. Ltd. Thereafter,it proceeds to quote the conclusion in the said decision. In paragraph 7 of the impugned order, the learned Tribunalstates that all or some of the conclusions recorded by it in thedecision in the case of Subhalakshmi Vanijya Pvt. Ltd. areapplicable to the appellants before it and accordingly the appealswere dismissed and the order passed by the PCIT was upheld. The learned Tribunal has not ventured to consider thefacts of the assessees’ case; more importantly, when they havechallenged the order passed by the PCIT under section 263 of theAct firstly on the ground that it is barred by limitation. Thatapart, the appellants had approached this Court and filed a writpetition against the order passed under section 263 of the Act andin the said writ petition the appellants were granted liberty topursue their remedies against the order dated March 29, 2015 byreckoning the date of receipt of such order as on February 29,2016. Therefore, the issue would be whether the proceedings arebarred by limitation.Thus, the appellants ought to have been granted liberty tocanvass the issue before the learned Tribunal. More particularlywhen they have specifically raised the same as one of the groundsin the appeal memorandum filed before the learned Tribunal.The learned Advocate appearing for the appellants wouldsubmit that on merits also the appellants have got an excellent case. However, since the learned Tribunal has not touched uponthe merits of the appellants’ case, we are not inclined to go intothe said aspect.The learned senior counsel appearing for the respondentsplaced reliance on the decision of the Hon’ble Supreme Court inthe case of Commissioner of Income Tax, Chennai –vs- Md. MeeranShahul Hameed, reported in (2022) 1 SCC 12. As observed by us, since we are not going into the meritsof the impugned order nor the correctness of the said order of thelearned Tribunal, we leave it to the Department to canvass allpoints at the appropriate stage. Thus, we are of the consideredview that the matter has to be sent back to the learned Tribunalto take a decision on merits and in accordance with law,specifically with regard to the grounds canvassed by theappellants before it. For the above reasons, the appeal is allowed and the stayapplication stands closed and the order passed by the learnedTribunal is set aside and the appeal in ITA No.1088/KOL/2016 forthe assessment year 2009-10 stands restored to the file of thelearned Tribunal and the said appeal shall be heard and decided bythe learned Tribunal on merits and in accordance with law.In view of the above liberty is granted to the appellantsas well as the respondents to canvass all points, both on facts as well as on law, before the learned Tribunal, consequently thesubstantial questions of law are all left open. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) s.pal/A/s./tk