Principal Commissioner Ofincome Tax, Asansol v. Manindra Mohan Mazumdar

IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE PRINCIPAL COMMISSIONER OFINCOME TAX, ASANSOL -Versus- MANINDRA MOHAN MAZUMDAR BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 15[th] March, 2023 Appearance :Mr. Soumen Bhattacharjee, Adv....for the appellant. The Court : This appeal filed by the revenue underSection 260A of the Income Tax Act, 1961 (the ‘Act’ forbrevity) is directed against the order dated 28[th] July, 2022passed by the Income Tax Appellate Tribunal, “B” Bench, Kolkata(the Tribunal) in ITA No.200/Kol/2022 for the assessment year2017-18. The revenue has raised the following substantial questions of law for consideration: (i)Whether the Learned Tribunal has committedsubstantial error in law in not taking intoconsideration Explanation-2 to Section 263(1)which tantamount to violation of question oflaw ? We have heard Mr. Soumen Bhattacharjee, learnedstanding counsel for the appellant/revenue. Though therespondent has been served and affidavit of service has beenfiled, none appears for the respondent. The order which was impugned before the Tribunal waspassed by the Principal Commissioner of Income Tax, Asansolunder Section 263 of the Act. The learned Tribunal has allowedthe appeal filed by the assessee solely on the ground that certain records were placed before Tribunal which were examinedby the Tribunal and in the opinion of the learned Tribunal thatthose documents clearly show that the issue was discussed bythe Assessing Officer and he was satisfied with the reply givenby the assessee. Therefore, the Tribunal came to theconclusion that the PCIT could not have assumed jurisdictionunder Section 263 of the Act. That apart, the learned Tribunalrecorded the submission of the learned Advocate for theassessee that even otherwise there is no bar under the IncomeTax Act for setting off of derivative loss against businessincome. Though such submission was recorded, the learnedTribunal has not given any finding as to the correctness ofsuch submission but proceeds to record that the Departmentcould not have reverted the contention of the learned Advocatefor the assessee. Ultimately, the Tribunal has come to theconclusion that there is no justification on the part of thePCIT to exercise his revisional jurisdiction under Section 263of the Act. On perusal of the order passed by the PCIT dated26[th] March, 2022, it is seen that the assessee did not appearbefore the PCIT though they were granted opportunity ofpersonal hearing on two occasions. Thus, the record which wasexamined by the learned Tribunal was not placed before the PCITfor consideration so as to take a decision on merits.Furthermore, we find that the learned Tribunal has not given aspecific finding as to how there is no bar under the Income Tax Act for setting off of derivative loss against business incomein the facts and circumstances of the case. Therefore, we areof the view that the matter has to be freshly decided by thePCIT and, therefore, we are inclined to remand the matter backto the PCIT for fresh consideration. In the result, the appeal filed by the revenue(ITAT/27/2023) is allowed and the order passed by the learnedTribunal as well as the PCIT dated 26[th] March, 2022 are setaside and the matter is remanded to the PCIT for freshconsideration, who shall take note of the documents. Theassessee is directed to appear before the PCIT on the dates tobe fixed for personal hearing and place the paper book whichwas placed before the learned Tribunal and after consideringall the documents and hearing the assessee, a fresh decisionshall be taken in accordance with law.In the result, the substantial questions of law areleft open. Consequently, the connected application for stay (IANo.GA/1/2023) also stands closed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)