Principal Commissioner Of Incometax, Central-2, Kolkata v. M/S. Singhal Enterprises Pvt. Ltd

ITAT/103/2022IA No.GA/2/2022 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOMETAX, CENTRAL-2, KOLKATA -Versus- M/S. SINGHAL ENTERPRISES PVT. LTD. Appearance:Mr. Prithu Dudheria, Adv....for the appellant.Mr. Abhratosh Majumdar, Sr. Adv.Mr. Siddhartha Das, Adv.Ms. Swapna Das, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE SUPRATIM BHATTACHARYA Date : 6[th] September, 2022. The Court : This appeal filed by the revenue underSection 260A of the Income Tax Act, is directed against the orderdated 26[th] February, 2020 passed by the Income Tax AppellateTribunal, “A” Bench, Kolkata (the Tribunal) in ITA No.1071/Kol/2018 and ITA No.1072/Kol/2018 for the assessment years2013-14 and 2014-15. The revenue has raised the following substantial questions of law for consideration: We have heard Mr. Prithu Dudheria, learned standingcounsel for the appellant and Mr. Abhratosh Majumdar, learnedsenior counsel assisted by Mr. Siddhartha Das and Ms. Swapna Das,learned Advocates for the respondent/assessee. The short question involved in the instant case iswhether Principal Commissioner of Income Tax, Central, Kolkata-2,(PCIT) was justified in invoking his jurisdiction under Section263 of the Act. We have gone through the order passed by the learnedtribunal and the tribunal has taken note of the factual situation.After having appraised itself about the legal position, moreparticularly the decision of the Hon’ble Supreme Court in the caseof Malabar Industries Ltd. vs. Commissioner of Income Tax reportedin [2000] 243 ITR 83 (SC), the tribunal took note of thecontention of the assessee that the overdraft facility has beengranted on the security of the fixed deposit and, therefore, theinterest on the overdraft and the interest on the fixed depositsare inter-linked. Further, the assessee has used its fixeddeposits for taking overdraft facilities without encashing thefixed deposits and the interest on the overdraft has a directnexus with interest accruing in the fixed deposit and, therefore,the interest on the overdraft has been adjusted with the fixeddeposit interest and the net interest income has been shown asother income. The learned tribunal has noted that the assessingofficer had enquired into this aspect and had taken one of theplausible view of netting off of interest expense with interestincome, in the light of the decision of the Hon’ble Supreme Courtin the case of ACG Associated Capsules (P) ltd. vs. CIT reportedin (2012) 18 taxmann.com 137 (SC). Further, the tribunal aftergoing through the entire records placed before it has recorded afinding that the assessing officer, after making proper enquiryand proper application of mind has framed the assessment under Section 143(3) of the Act and, therefore, the assessment ordercannot be termed to be ‘erroneous’ and ‘prejudicial to theinterest of revenue.’ The tribunal also noted the settleddistinction between “lack of enquiry” and “inadequate enquiry” andif it is a case of an inadequate enquiry, the law is settled thatan order under Section 263 cannot be passed. Thus, we find that the learned tribunal on analysing thefactual position has granted relief to the assessee. Thus, wefind there is no question of law much less substantial question oflaw arising for consideration in this appeal.Accordingly, the appeal of the revenue (ITAT/103/2022)fails and is dismissed. Consequently, the connected application for stay (IANo.GA/2/2022) stands closed. (T.S. SIVAGNANAM, J.) (SUPRATIM BHATTACHARYA, J.) S.Das/As.