Calcutta High Court
Anr vs The Principal Commissioner Of on 4 May, 2022
OD-13
ITAT/328/2017
IA No.GA/2/2017 (Old No.GA/3184/2017)
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
M/S. OLYMPUS SUPPLIERS PVT. LTD. &
ANR.
-Versus-
THE PRINCIPAL COMMISSIONER OF
INCOME TAX, KOLKATA-2 & ANR.
Appearance:
Mr. Pranit Bag, Adv.
Mr. Soumyadeep Biswas, Adv.
...for the appellant.
Mr. Vipul Kundalia, Adv.
Mr. Prithu Dudheria, Adv.
Mr. Anurag Ray, Adv.
...for the respondent.
BEFORE:
The Hon'ble JUSTICE T.S. SIVAGNANAM
-And-
The Hon'ble JUSTICE HIRANMAY BHATTACHARYYA
Date : 4th May, 2022.
The Court : This appeal filed by the assessee under
Section 260A of the Income Tax Act, 1961 (the 'Act' in brevity) is
directed against the order dated August 5, 2016 passed by the
Income Tax Appellate Tribunal, "D" Bench, Kolkata (the 'Tribunal'
in short) in ITA No.1088/Kol/2016 for the assessment year 2009-10.
The appellant/assessee has raised the following
substantial questions of law for consideration:
(a) Whether the Tribunal failed to consider that any order
made beyond March 31, 2015, would be hit by sub-section
(2) of section 263 of the said Act in the present case, as
no order can be made under sub-section (1) of section 263
of the said Act, after expiry of 2 years from the end of
the financial year, 2012-13, in which the order sought to
be revised, was passed, as the order under section 263 was
deemed to be made over to the petitioners on February 29,
2016 in terms of the order of the Hon'ble Court dated
April 20, 2015 ?
(b) Whether the Tribunal failed to consider that an enquiry
was conducted by the Assessing Officer on the issue of
share capital and during such enquiry, all the materials
documents were placed before the Assessing Officer and as
such, the Commissioner of Income Tax cannot direct for an
enquiry on the same issue by holding that enquiry
conducted, was not sufficient and/or adequate ?
(c) Whether the Ld. Tribunal was justified in holding the
order of the Commissioner of Income Tax who held that the
re-assessment order passed by the Assessing Officer under
section 147 of the Income Tax Act, 1961, is erroneous and
prejudicial to the interest of the revenue on the ground
of lack of proper enquiry as to the issue of share capital
premium without considering that the case was re-opened
for the specific purpose of escapement of share dealing ?
(d) Whether the Ld. Tribunal was justified in law in upholding
the order passed by the Commissioner of Income Tax, under
section 263 of the said Act without any specific reasons
and on a general and vague conclusion drawn from the case
of Subhlakshmi Vanijya Private Ltd. vs. CIT [ITA
No.1104/Kol/2014, dated 30.07.2015 for the AY 2009-10] ?
(e) Whether the Tribunal was justified in law in ignoring that
no order under section 263 of the said Act can be made
under section 263(1) of the said Act, after expiry of 2
years from the end of the financial year in which the
order sought to be revised, was passed ?
We have heard Mr. Pranit Bag, learned counsel assisted by
Mr. Soumyadeep Biswas, learned advocate appearing for the
appellant/assessee and Mr. Vipul Kundalia, learned counsel
assisted by Mr. Prithu Dudheria and Mr. Anurag Ray, learned
advocates for the respondent/revenue.
The assessee was in appeal before the learned tribunal
challenging an order passed by the Principal Commissioner of
Income Tax, Kolkata-2 (PCIT, in short) dated 23rd March, 2015
passed under Section 263 of the Act. The appellant/assessee had
raised the following grounds before the learned tribunal:
"1. For that the order passed u/s 263 by the Ld. CIT is barred
by limitation, as such, the order passed u/s 263 is liable
to be quashed.
2. For that on the facts and in the circumstances of the case,
the order passed by the Ld. CIT u/s 263 of the Act is bad
in law and is liable to be quashed.
3. For that on the facts and in the circumstances of the case
the Ld. CIT was not justified in initiating proceedings
u/s 263.
4. For that the Ld. CIT erred in exercising the power of
revision for the purpose of directing the A.O. to hold
another investigation when the order of the A.O. was
neigher erroneous nor prejudicial to the interest of the
revenue.
5. For that the Ld. CIT was not justified in holding that
creditworthiness and identity of the shareholders from
whom share capital money was received and genuineness of
the transaction in the instant year remains to be verified
though the A.O. completed the assessment after making
proper verification.
6. For that the CIT was not justified in holding the order
passed by the A.O. to be erroneous on the issue of share
capital/premium when no addition u/s 68 can be made in the
instant case in view of the judgments of the Hon'ble
Supreme Court in the case of Lovely Exports 319 ITR (St.)
and also in the case of Bharat Engineering & Construction
Co. Ltd. 83 ITR 187.
7. For that in exercising revisionary powers u/s 263 the Ld.
CIT lost sight of the well settled legal position that in
the assessment u/s 147, the A.O. is not entitled to embark
upon a fishing expedition and to make roving enquiries as
such, assuming but not admitting that proper enquiries
were not done in respect of the share capital raised by
the assessee, there was no error in the order passed by
the A.O. u/s. 147.
8. For that the Ld. CIT exceeded his jurisdiction by directing
the Ld. A.O. as to how the fresh assessment should be
framed by him."
From the above grounds of appeal filed by the assessee
before the tribunal, we find that the first ground urged before
the tribunal is that the order passed by the PCIT under Section
263 of the Act is barred by limitation. There are other grounds
which have been raised by the assessee which are not required to
be gone into for taking a decision in the present appeal. The
learned tribunal had heard the appellant's appeal petition along
with three other cases and by a common order dated 5th August, 2016
dismissed all the appeals. We find from paragraph 2 of the
impugned order that the prayers sought for by the assessee for
condonation of delay of 19 days in filing the appeal was
considered by the tribunal. The appellant's case was that as
against the order passed under Section 263 of the Act, they had
filed a writ petition before this Court in WP No.3116(w) of 2016
contending that the order made under Section 263 of the Act on
March 23, 2015 was not served on the appellant/assessee. The
learned Writ Court considering the submissions made by the
appellant as well as the revenue, by order dated 20th April, 2016
held that since it appears that the non-service of the order dated
March 23, 2015 was on account of a mistake on the part of the
department, such order is now deemed to have been received by the
appellant/assessee on February 29, 2016. Further, the learned
Writ Court held that the assessee will be at liberty to pursue
their remedies against the order dated March 23, 2015 and
consequential orders in accordance with law by reckoning the date
of receipt of such order on February 29, 2016. In the light of
such direction, the merits of the order under Section 263 of the
Act was not gone into and it was left open to the parties to
canvass their grounds before the appropriate forum. Further,
there was a direction to the respondent/department to immediately
communicate the assessment order made consequent to the order
under Section 263 of the Act to the petitioning assessee. In
terms of the liberty granted, the assessee had preferred an appeal
before the tribunal which on the date of filing was barred by
limitation, it was delayed by a period of 19 days. The learned
tribunal took note of the direction issued by the learned Writ
Court in the said writ petition and condoned the delay in filing
the appeal. The next course that the tribunal should have adopted
is to consider the appellant's appeal petition on merits, more
particularly on the grounds which have been canvassed before the
tribunal as noted above. However, the tribunal was of the view
that the issues raised in all the four appeals which were heard
together are squarely covered by several orders passed by the
tribunal including the order in the case of Subhlakshmi Vanijya
Private Ltd. vs. CIT passed in ITA No.1104/Kol/2014, dated
30.07.2015 for the Assessment Year 2009-10.
In paragraph 4 of the impugned order, the learned
Tribunal briefly notes the facts of the case. But, however, we
find that the facts of the appellants' case have not been noted.
Thereafter, in paragraph 5 of the impugned order, the
learned Tribunal states that it has disposed of more than 500
cases involving the same issue by certain orders with the impugned
order having been passed in a group of cases led by Subhalakshmi
Vanijya Pvt. Ltd., dated July 30, 2015.
In paragraph 6 of the impugned order, the learned Tribunal
states that it has been admitted by the learned Departmental
representative that the facts and and circumstances of the issues
in consideration are mutatis mutandis similar to those decided
earlier in the case of Subhalakshmi Vanijya Pvt. Ltd. Thereafter,
it proceeds to quote the conclusion in the said decision.
In paragraph 7 of the impugned order, the learned Tribunal
states that all or some of the conclusions recorded by it in the
decision in the case of Subhalakshmi Vanijya Pvt. Ltd. are
applicable to the appellants before it and accordingly the appeals
were dismissed and the order passed by the PCIT was upheld.
The learned Tribunal has not ventured to consider the
facts of the assessees' case; more importantly, when they have
challenged the order passed by the PCIT under section 263 of the
Act firstly on the ground that it is barred by limitation. That
apart, the appellants had approached this Court and filed a writ
petition against the order passed under section 263 of the Act and
in the said writ petition the appellants were granted liberty to
pursue their remedies against the order dated March 29, 2015 by
reckoning the date of receipt of such order as on February 29,
2016. Therefore, the issue would be whether the proceedings are
barred by limitation.
Thus, the appellants ought to have been granted liberty to
canvass the issue before the learned Tribunal. More particularly
when they have specifically raised the same as one of the grounds
in the appeal memorandum filed before the learned Tribunal.
The learned Advocate appearing for the appellants would
submit that on merits also the appellants have got an excellent
case. However, since the learned Tribunal has not touched upon
the merits of the appellants' case, we are not inclined to go into
the said aspect.
The learned senior counsel appearing for the respondents
placed reliance on the decision of the Hon'ble Supreme Court in
the case of Commissioner of Income Tax, Chennai -vs- Md. Meeran
Shahul Hameed, reported in (2022) 1 SCC 12.
As observed by us, since we are not going into the merits
of the impugned order nor the correctness of the said order of the
learned Tribunal, we leave it to the Department to canvass all
points at the appropriate stage. Thus, we are of the considered
view that the matter has to be sent back to the learned Tribunal
to take a decision on merits and in accordance with law,
specifically with regard to the grounds canvassed by the
appellants before it.
For the above reasons, the appeal is allowed and the stay
application stands closed and the order passed by the learned
Tribunal is set aside and the appeal in ITA No.1088/KOL/2016 for
the assessment year 2009-10 stands restored to the file of the
learned Tribunal and the said appeal shall be heard and decided by
the learned Tribunal on merits and in accordance with law.
In view of the above liberty is granted to the appellants
as well as the respondents to canvass all points, both on facts as
well as on law, before the learned Tribunal, consequently the
substantial questions of law are all left open.
(T.S. SIVAGNANAM, J.)
(HIRANMAY BHATTACHARYYA, J.)
s.pal/A/s./tk
