Pr. Commissioner Of Income Tax, Raipur, District Raipur,Chhattisgarh v. Dee Vee Projects Ltd., 1[St] Floor, Vikas Complex, P.h. Road, Korba,District Korba, Chhattisgarh

(Tax Case No.12/2024) Digitallysigned bySISTASISTASOMAYAJULUSOMAYAJULUDate:2025.03.2615:31:35+0530 2025:CGHC:13104-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 12 of 2024 (Arising out of order dated 11-10-2021 passed by the Income TaxAppellate Tribunal, Raipur Bench, Raipur in ITA No.27/RPR/2021) Pr. Commissioner of Income Tax, Raipur, District Raipur,Chhattisgarh ... Appellant versus Dee Vee Projects Ltd., 1[st] Floor, Vikas Complex, P.H. Road, Korba,District Korba, Chhattisgarh ... Respondent For Appellant : Mr. Amit Chaudhari and Mr. Vijay Chawla, Advocates. For Respondent : Mr. Neelabh Dubey, Advocate on behalf of Mr. S.Rajeswara Rao, Advocate.Rajeswara Rao, Advocate. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Sanjay Kumar Jaiswal, JJ. Order on Board(19/03/2025) Sanjay K. Agrawal, J. 1. This appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) was admitted for hearing on 6- (Tax Case No.12/2024) 3-2024 by formulating the following substantial question of law: - “Whether on the points of law and on the facts andcircumstances of the case, the Ld. ITAT was justified inquashing the revision order of the CIT passed u/s 263 ofthe Act, without going into the merits of the case andappreciating that proper show cause notice was issuedand was duly received by the assessee to furnish hisreply but the assessee failed to comply with the noticeu/s 263.” 2. The respondent herein i.e. the assessee Company has declaredits total income of 22,56,28,290/- and accordingly its case₹was selected for scrutiny through CASS and assessment wascompleted under Section 143(3) of the Act on 27-12-2018 bymaking dis-allowances of expenses for 20,00,000/- out of ₹₹10.52 crores i.e. less than 2% of total expenses claimed,thereby assessing total income at ₹ 22,76,28,290/-.Thereafter, the Principal Commissioner of Income Tax inexercise of his revisional jurisdiction under Section 263 of theAct passed order on 27-3-2021 holding that the order passedby the Assessing Officer, dated 27-12-2018 under Section143(3) of the Act for the year under consideration, iserroneous and prejudicial to the interest of revenue which waschallenged before the ITAT and which was entertained by theITAT holding that it is in violation of principles of natural (Tax Case No.12/2024) justice against which this tax appeal has been preferred, whichhas been admitted for consideration by formulating thesubstantial question of law as mentioned in the openingparagraph of this order. 3. Mr. Amit Chaudhari, learned counsel appearing for theappellant herein / Revenue, would submit that reasonableopportunity was granted to the assessee to place his casebefore the court and therefore the ITAT is absolutelyunjustified in allowing the appeal by setting aside the order ofthe Principal Commissioner of Income Tax (PCIT) passedunder Section 263 of the Act, as such, the appeal deserves tobe allowed.appellant herein / Revenue, would submit that reasonableopportunity was granted to the assessee to place his casebefore the court and therefore the ITAT is absolutelyunjustified in allowing the appeal by setting aside the order ofthe Principal Commissioner of Income Tax (PCIT) passedunder Section 263 of the Act, as such, the appeal deserves tobe allowed. 3. Mr. Amit Chaudhari, learned counsel appearing for theappellant herein / Revenue, would submit that reasonableopportunity was granted to the assessee to place his casebefore the court and therefore the ITAT is absolutelyunjustified in allowing the appeal by setting aside the order ofthe Principal Commissioner of Income Tax (PCIT) passedunder Section 263 of the Act, as such, the appeal deserves tobe allowed.appellant herein / Revenue, would submit that reasonableopportunity was granted to the assessee to place his casebefore the court and therefore the ITAT is absolutelyunjustified in allowing the appeal by setting aside the order ofthe Principal Commissioner of Income Tax (PCIT) passedunder Section 263 of the Act, as such, the appeal deserves tobe allowed. 4. Mr. Neelabh Dubey, Advocate, appearing on behalf of Mr. S.Rajeswara Rao, learned counsel for the respondent herein /assessee Company, would submit that the ITAT is absolutelyjustified in quashing the order passed by the PCIT holding thatthe order so passed was in violation of the provisionscontained in Section 263 of the Act and he relied upon thedecision of the Supreme Court in the matter of CommissionerRajeswara Rao, learned counsel for the respondent herein /assessee Company, would submit that the ITAT is absolutelyjustified in quashing the order passed by the PCIT holding thatthe order so passed was in violation of the provisionscontained in Section 263 of the Act and he relied upon thedecision of the Supreme Court in the matter of Commissioner of Income Tax, Mumbai v. Amitabh Bachchan1 to buttress hissubmission and as such, the appeal deserves to be dismissed.submission and as such, the appeal deserves to be dismissed.1(2016) 11 SCC 748 (Tax Case No.12/2024) 5. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also wentthrough the record with utmost circumspection.through the record with utmost circumspection. 6. In order to consider the plea raised at the Bar, it would beappropriate to notice Section 263(1) of the Act which states asunder: -appropriate to notice Section 263(1) of the Act which states asunder: - “263. Revision of orders prejudicial to revenue.—(1)The Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner orCommissioner may call for and examine the record ofany proceeding under this Act, and if he considers thatany order passed therein by the Assessing Officer iserroneous in so far as it is prejudicial to the interests ofthe revenue, he may, after giving the assessee anopportunity of being heard and after making or causingto be made such inquiry as he deems necessary, passsuch order thereon as the circumstances of the casejustify, including an order enhancing or modifying theassessment, or cancelling the assessment and directing afresh assessment.” 7. A careful perusal of Section 263(1) of the Act would showthat before passing the order under the aforementionedprovision, the PCIT is required to afford reasonableopportunity of hearing to the assessee and after makinginquiry, he has to pass order under Section 263 of the Act. 8. Section 263 of the Act came up for consideration before theAmitabh Bachchan’sAmitabh Bachchan’sSupreme Court in case (supra) in which it (Tax Case No.12/2024) has been held by their Lordships that Section 263 of the Actcontemplates an opportunity of hearing to be afforded to theassessee and failure to give such an opportunity would renderthe revisional order legally fragile not on the ground of lack ofjurisdiction but on the ground of violation of principles ofnatural justice. Further, their Lordships of the Supreme Courtfollowing its earlier decisions in the matters of Gita Devi23Aggarwal v. CIT and CIT v. Electro House observed asunder:- 8. Section 263 of the Act came up for consideration before theAmitabh Bachchan’sAmitabh Bachchan’sSupreme Court in case (supra) in which it (Tax Case No.12/2024) has been held by their Lordships that Section 263 of the Actcontemplates an opportunity of hearing to be afforded to theassessee and failure to give such an opportunity would renderthe revisional order legally fragile not on the ground of lack ofjurisdiction but on the ground of violation of principles ofnatural justice. Further, their Lordships of the Supreme Courtfollowing its earlier decisions in the matters of Gita Devi23Aggarwal v. CIT and CIT v. Electro House observed asunder:- “10. Reverting to the specific provisions of Section 263of the Act what has to be seen is that a satisfaction thatan order passed by the authority under the Act iserroneous and prejudicial to the interest of the Revenueis the basic precondition for exercise of jurisdictionunder Section 263 of the Act. Both are twin conditionsthat have to be conjointly present. Once suchsatisfaction is reached, jurisdiction to exercise the powerwould be available subject to observance of theprinciples of natural justice which is implicit in therequirement cast by the section to give the assessee anopportunity of being heard. It is in the context of theabove position that this Court has repeatedly held thatunlike the power of reopening an assessment underSection 147 of the Act, the power of revision underSection 263 is not contingent on the giving of a notice toshow cause. In fact, Section 263 has been understoodnot to require any specific show-cause notice to beserved on the assessee. Rather, what is required underthe said provision is an opportunity of hearing to theassessee. The two requirements are different: the first 2(1970) 76 ITR 496 (SC) 3(1971) 2 SCC 647 : (1971) 82 ITR 824 (Tax Case No.12/2024) would comprehend a prior notice detailing the specificgrounds on which revision of the assessment order istentatively being proposed. Such a notice is notrequired. What is contemplated by Section 263, is anopportunity of hearing to be afforded to the assessee.Failure to give such an opportunity would render therevisional order legally fragile not on the ground of lackof jurisdiction but on the ground of violation ofprinciples of natural justice. Reference in this regardmay be illustratively made to the decisions of this Courtin Gita Devi Aggarwal v. CIT, (1970) 76 ITR 496 (SC),and in CIT v. Electro House, (1971) 2 SCC 647 : (1971)82 ITR 824.” 9. Notice is the first limb of the principle that no one should becondemned unheard. It must be precise and unambiguous. Itshould apprise the party determinatively of the case he has tomeet. Time given for the purpose should be adequate so as toenable him to make his representation. In the absence of anotice of the kind and such reasonable opportunity, the orderpassed becomes wholly vitiated. Thus, it is but essential thata party should be put on notice of the case before any adverseorder is passed against him. This is one of most importantprinciples of natural justice. (See Canara Bank and others v.Debasis Das and others4.) 10.Coming to the facts of the case in light of the principles of lawAmitabh Bachchan’scaselaid down by the Supreme Court in (Tax Case No.12/2024) (supra), admittedly, in this case, notice under the provisioncontained in Section 263 of the Act was issued on 25-3-2021fixing the date of hearing on 26-3-2021 at 1.00 p.m. and theorder was passed by the PCIT on 27-3-2021 overturning theplea of the respondent herein / assessee Company foradjournment seeking time by application dated 26-3-2021 andas such, no proper opportunity much less adequate /reasonable opportunity was granted to the assessee Companybefore passing the order under Section 263(1) of the Act. 10.Coming to the facts of the case in light of the principles of lawAmitabh Bachchan’scaselaid down by the Supreme Court in (Tax Case No.12/2024) (supra), admittedly, in this case, notice under the provisioncontained in Section 263 of the Act was issued on 25-3-2021fixing the date of hearing on 26-3-2021 at 1.00 p.m. and theorder was passed by the PCIT on 27-3-2021 overturning theplea of the respondent herein / assessee Company foradjournment seeking time by application dated 26-3-2021 andas such, no proper opportunity much less adequate /reasonable opportunity was granted to the assessee Companybefore passing the order under Section 263(1) of the Act. 11.In that view of the matter, time given to the respondent herein/ assessee Company to respond to the notice under Section263 of the Act was wholly inadequate, as notice was issued on25-3-2021, the date of hearing was fixed on 26-3-2021 at 1.00p.m. and the order was passed by the PCIT on 27-3-2021.Thus, the respondent was not afforded sufficient andadequate opportunity to meet the case whether the case ismade out for invoking Section 263 of the Act, for revoking theorder passed by the assessing authority and as such, thedecision rendered by the revisional authority (PCIT) invokingSection 263 of the Act is in teeth of principles of naturaljustice in view of the decisions of the Supreme Court in Gita Soma (Tax Case No.12/2024) Devi Aggarwal(supra) and Electro House’s case (supra)followed in Amitabh Bachchan’s case (supra). 12.For the foregoing reasons, the learned ITAT is absolutelyjustified in setting aside the order passed by the PCIT on 27-3-2021. Consequently, the substantial question of law isanswered in favour of the assessee and against the Revenue.Resultantly, the tax case deserves to be and is accordinglydismissed, leaving the parties to bear their own cost(s). Sd/- Sd/-(Sanjay K. Agrawal) (Sanjay Kumar Jaiswal)JudgeJudge