Principal Commissioner Ofincome Tax, Central-I, Kolkata v. M/S. Techno Tracom Pvt. Ltd

OD - 3 ITAT/67/2023 IA No.GA/1/2023 GA/2/2023 IN THE HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OFINCOME TAX, CENTRAL-I, KOLKATA -Versus- M/S. TECHNO TRACOM PVT. LTD. BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 27[th] March, 2023 Appearance :Mr. Tilak Mitra, Adv....for the appellant Mr. J. P. Khaitan, Sr. Adv.Mr. Pratyush Jhunjhunwala, Adv.Mr. Anil Dugar, Adv....for the respondent. The Court : There is a delay of 168 days in filing theappeal. We have heard Mr. Tilak Mitra, learned counsel for theappellant and Mr. J. P. Khaitan, learned Senior Counsel for therespondent and perused the averments set out in the affidavitfiled in support of the application for condonation. We findsufficient cause has been shown for not preferring the appealwithin the period of limitation. Accordingly, the application for condonation of delay(IA No.GA/1/2023) is allowed and the delay in filing the appealis condoned. This appeal filed by the revenue under Section 260A ofthe Income Tax Act, 1961 (the ‘Act’ for brevity) is directedagainst the order dated 18[th] April, 2022 passed by the IncomeTax Appellate Tribunal, “B” Bench, Kolkata (the Tribunal) inITA No.205/Kol/2021 for the assessment year 2009-10. The revenue has raised the following substantialquestions of law for consideration: (i)Whether the Tribunal has erred in quashing therevisionary order under Section 263 passed bythe Learned Pr. Commissioner of Income Tax asbad in law thereby deleting the addition madeon the basis of unexplained cash credit underSection 68 of the Act ?revisionary order under Section 263 passed bythe Learned Pr. Commissioner of Income Tax asbad in law thereby deleting the addition madeon the basis of unexplained cash credit underSection 68 of the Act ?(ii)Whether the Learned Tribunal has erred inignoring the discussion and findings renderedby the Principal Commissioner of Income Tax inhis order under Section 263 of the Act ?ignoring the discussion and findings renderedby the Principal Commissioner of Income Tax inhis order under Section 263 of the Act ? We have heard Mr. Tilak Mitra, learned standingcounsel for the appellant/revenue and Mr. J.P. Khaitan, learnedSenior Counsel assisted by Mr. Pratyush Jhunjhunwala and Mr.Anil Dugar, learned Advocates for the respondent/assessee.The short issue which falls for consideration in thisappeal is whether the assumption of jurisdiction by the Principal Commissioner of Income Tax (PCIT) under Section 263of the Act was justified and whether the order passed under thesaid provision was valid and sustainable in law. To findanswer to the said query, we need to take note of certainfacts. The original assessment under Section 143(3) of theAct was completed for the assessment year under considerationon 28[th] March, 2011. The PCIT exercised its jurisdiction underSection 263 of the Act and passed by the order dated 28[th]March, 2013. Prior to the order being passed under Section 263of the Act, a search and seizure operation was conducted on theassessee on 18[th] February, 2013. The assessee challenged theorder passed under Section 263 of the Act before the Tribunal.The Tribunal by order dated 1[st] October, 2019 set aside theorder dated 28[th] March, 2013 passed under Section 263 of theAct and remanded the matter back to the PCIT for a freshdecision. While the matter was pending, the Assessing Officercompleted the assessment pursuant to the search and seizureoperation under Section 153A read with Section 143(3) by orderdated 23[rd] March, 2015. The assessee moved the Tribunal andfiled a miscellaneous application stating that in the light ofthe order passed under Section 154A dated 23[rd] March, 2015, theassumption of jurisdiction by the PCIT under Section 263 of theAct was unsustainable. Though the Tribunal rejected the saidmiscellaneous application by order dated 22[nd] January, 2020, there was a direction issued to the Commissioner of Income Taxto consider the argument which was placed by the assesseebefore the Tribunal in the miscellaneous application beforepassing the order under Section 263. Thus, the Commissionerwas required to consider the effect of the order passed underSection 153A. However, this was ignored by the Commissioner bystating that it is irrelevant and the Commissioner proceeded topass the order under Section 263 of the Act dated 30[th] March,2021. This was impugned before the Tribunal. The Tribunalafter taking note of various decisions of the Hon’ble SupremeCourt and High Courts and, more particularly, the decision ofthis Court in the case of CIT vs. S.M. Oil Extraction Pvt. Ltd.reported in (1991) 190 ITR 404 (Cal) wherein it was held thatthe Commissioner is entitled for the purpose of exercising hisrevisional jurisdiction to look into the whole evidence. TheCourt explained the expression “record” as used in Section 263of the Act to be comprehensive enough to include the wholerecord of evidence on which the original assessment order wasbased. Further it was held that where any proceeding isinitiated in the course of assessment proceedings, having arelevant and material bearing on the assessment to be made andthe result of such proceedings was not available with theIncome Tax Officer before the completion of the assessment butthe result came subsequently, the revising authority (PCIT) isentitled to look into the search material as it forms part of the assessment records of the particular assessment year.Bearing the above legal principle in mind, the Tribunalproceeded to examine the facts of the case and has recorded thefollowing findings:“So in the light of the aforesaid ratio ofthe decision made by the Hon’ble Supreme Court afterconsidering the meaning of ‘records’ which has beenanswered in the light of the Explanation (1) insertedby the Finance Act, 1988, which state that recordshall include and shall be deemed always to have beenincluded all records relating to any proceedings underthis Act available at the time of examination by theLd. Pr. CIT or Commissioner. In the light of theaforesaid given in the statute, the Ld. Pr. CIT whilecalling for and examining the record of any proceedingunder this Act was duty bound to look into the recordsavailable at the time of examination of the Ld. Pr.CIT while exercising his revisional jurisdiction afterthe direction of the Tribunal dated 01.10.2019 readwith order dated 22.01.2020 had passed the impugnedorder dated 30.3.2021 wherein he has taken intoconsideration the order passed by the Tribunal dated01.10.2019 and 22.01.2020. Before the Ld. Pr. CIT theassessee had brought to his notice about the searchwhich happened in the assessee’s premises on18.02.2015. The Ld. Pr. CIT while passing the impugnedorder has taken a narrow view by indicrously statingthat the Tribunal had set aside the order of the AOdated 28.03.2022 and not that of the AO dated23.03.2015 and, therefore, he was of the opinion thatthe order passed by the AO u/s. 153A of the Act dated 23.03.2015 for AY 2009-10 was immaterial andirrelevant which view of Ld. Pr. CIT according to usis ex-facie wrong in the light of the deemingfiction/explanation given for records u/s. 263 of theAct. It has been brought tot our notice that theAssessing Officer before framing the assessment orderu/s. 153A of the Act dated 23.03.2015 had made enquiryinto the share capital and premium collected by theassessee during the relevant assessment year (AY 2009-10). Before us the assessee had filed paper bookconsists of 125 pages and a perusal of which we notethat the AO during the re-assessment proceedings u/s.153A of the Act has asked the assessee to file aboutthe ‘nature and source’ of the share capital andpremium collected by the assessee during the relevantassessment year. Pursuant to the notice u/s. 142(1) ofthe Act dated 11.11.2014, placed at pages 67 to 68 ofthe paper book. The assessee had filed the details ofshares allotted and documents filed before the ROC aswell as the bank statement including the bank bookfiled. It is noted that after the assessee havingfiled the details of the twenty five (25) SHAREsubscribers, the AO had issued notice u/s. 133(6) ofthe Act to all the shareholders in order to examinetheir respective identity, creditworthiness andgenuineness which is available from page nos.72 to 94of the paper book. It is also noted that all the sharesubscribers have directly replied to the AssessingOfficer (Central Circle) pursuant to the notice u/s.133(6) of the Act which are available from pages 95 to119 of the paper book. Thus it is seen that theAssessing Officer had in fact enquired about thenature and source of the share subscribers which all had contributed tot he share capital of the assessee.It is also noted that the Assessing Officer whilepassing the order dated 23.03.2015 u/s. 153A/143(3)which is available at pages 16 to 20 of paper book hasnot drawn any adverse inference against the sharecapital/premium collected by the assessee during theyear under consideration. It should be borne in mindthat as per the law for AY 2009-10, if here is anycredit appearing in the books of the assessee, andsection 68 of the Act is attracted, then the initialburden is on the assessee to prove the ‘nature andsource’ of it and in this case the assessee on enquiryby Assessing Officer albeit [in the second round] hadfiled the documents pertaining to twenty five (25)share subscribers and the Assessing Officer hadverified the veracity of the same by issuing noticeu/s. 133(6) of the Act to all the share subscribersand after verification has accepted the share capitaland premium of the assessee. In the light of theaforesaid action taken by the Assessing Officer albeitduring the search assessment proceedings dated23.03.2015, it cannot be said that the AssessingOfficer has not enquired about the nature and sourceof the share capital and premium collected by theassessee. Here it has to be taken note that undersection 263 of the Act, the Ld. Pr. CIT has to examineall the records pertaining to the assessment year atthe time of examination by him, which includes in thiscase the post-search assessment proceedings dated23.03.2015 and thereafter only if he finds that theorder passed by the AO on any issue is erroneous in sofar as it is prejudicial to the interest of the revenue, then only he may interfere byenhancing/modifying/cancelling the assessment order”. In our considered view, the finding rendered by thelearned Tribunal was perfectly justified as in our opinion thePCIT could not have ignored the order passed under Section 153Aof the Act dated 23[rd] March, 2015 as being immaterial andirrelevant. The Tribunal not stopping with that has alsoexamined as to the exercise undertaken by the Assessing Officerwhile completing the assessment under Section 153A of the Actand found that the entire records were examined and no adverseinference was drawn against the assessee. Thus, in our view the Tribunal rightly granted reliefto the assessee and the order does not call for anyinterference. revenue, then only he may interfere byenhancing/modifying/cancelling the assessment order”. In our considered view, the finding rendered by thelearned Tribunal was perfectly justified as in our opinion thePCIT could not have ignored the order passed under Section 153Aof the Act dated 23[rd] March, 2015 as being immaterial andirrelevant. The Tribunal not stopping with that has alsoexamined as to the exercise undertaken by the Assessing Officerwhile completing the assessment under Section 153A of the Actand found that the entire records were examined and no adverseinference was drawn against the assessee. Thus, in our view the Tribunal rightly granted reliefto the assessee and the order does not call for anyinterference. For the above reasons, the appeal (ITAT/67/2023) failsand is dismissed and the substantial questions of law areanswered against the revenue.Consequently, the connected application for stay (IANo.GA/2/2023) also stands closed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)