The Principal Commissioner Of Income Tax-4, Kolkata v. M/S. Bridge & Roof Co. (India) Limited

Form No.(J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE Present : THE HON’BLE JUSTICE T.S. SIVAGNANAM A N D THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA IA NO.GA/2/2017(Old GA/434/2017) ITAT/46/2017 THE PRINCIPAL COMMISSIONER OF INCOME TAX-4, KOLKATA -Versus- M/S. BRIDGE & ROOF CO. (INDIA) LIMITED For the Appellant: Mr. Radhamohan Roy, Adv. For the Respondent: Mr. J. P. Khaitan, Sr. Adv. Mr. Siddhartha Das, Adv. Ms. Swapna Das, Adv. Heard on : 06.12.2021 Judgment on : 06.12.2021 T. S. SIVAGANANAM, J. : The appeal filed by the revenue underSection 260A of the Income Tax Act, 1961 (the ‘Act’ in brevity) isdirected against the order dated 18[th] March, 2016 passed by theIncome Tax Appellate Tribunal, Kolkata “B” Bench (the ‘Tribunal’in short) in ITA No.1772/Kol/2014 for the assessment year 2010-11. The revenue has raised for the following substantialquestions of law for consideration: “(a) Whether in the facts and circumstances of thecase, the assessee claimed depreciation on tools & tackles@20% while including them under the head “Inventories” thoughno depreciation U/s.32(1) is allowable on inventories whichinclude only goods for purchase and sales? (b) Whether in the facts and circumstances of the casethe Judgment and Order passed by the Learned Tribunal areliable to be set aside and the amount of Rs.2,37,83,000/- beadded in the total income of the assessee because the assesseedid not follow the provision of Section 145A of the Income TaxAct, 1961 relating to the Method of Accounting in certaincases where the valuation of purchase and sale of goods andadjustments of tax duty and cess is dealt which does notprovide for depreciation as claimed by the assessee?” We have heard Mr. Smarajit Roychowdhury, learned counselfor the appellant/revenue and Mr. J. P. Khaitan, learned seniorcounsel for the respondent/assessee. The short issue which falls for consideration is whether the Commissioner of Income Tax Kolkata-IV, was justified ininvoking his power under Section 263 of the Act to set aside theorder of assessment dated 21[st] March, 2013 passed by the AssessingOfficer under Section 143(3) of the Act. The settled legalposition is that to invoke the power under Section 263 of the Act,it is not sufficient that the order should be shown to be erroneous alone but it should be shown to be erroneous andprejudicial to the interest of the revenue. In other words, thepower under Section 263 of the Act is not a power to review theorder passed by the assessing officer, and merely because thecommissioner is of different view, such power cannot be invoked.Bearing this legal principle in mind, we have examined the factsof the case and we find that the reason for interfering with theorder passed by the assessing officer was on the ground that theassessing officer did not properly scrutinize the valuation of theclosing stock of tools and tackles.On perusal of the order passed under Section 263 of theAct dated 21[st] August, 2014, we find that the order is bereft ofany particulars. We cannot decipher as to how the Commissionerwas of the opinion that he is justified in invoking his powerunder Section 263 of the Act. Be that as it may, the tribunal ongoing through the facts of the case found that a specific querywas raised by the assessing officer to the assessee with regard tothe valuation of closing stock of tools and tackles and theassessee had offered an explanation which found favour with theassessing officer and assessment was completed. This factualposition was put to the revenue during the course of argumentbefore the tribunal and the revenue was not able to controvert or revert this factual position which was manifestly clear from therecords. Thus, the tribunal was fully justified in allowing theassessee’s appeal and set aside the order passed by theCommissioner under Section 263 of the Act. For the above reasons, the appeal (ITAT/46/2017) fails andis dismissed. The substantial questions of law are answeredagainst the revenue. revert this factual position which was manifestly clear from therecords. Thus, the tribunal was fully justified in allowing theassessee’s appeal and set aside the order passed by theCommissioner under Section 263 of the Act. For the above reasons, the appeal (ITAT/46/2017) fails andis dismissed. The substantial questions of law are answeredagainst the revenue. The connected application for stay (IA No.GA/2/2017, oldNo.GA/434/2017)) also stands closed. (T.S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) A/s./bp