Madhya Pradesh High Court
The Pr. Commissioner Of Income Tax I vs Prakhar Developers Private Limited on 1 April, 2024
Author: Vivek Rusia
Bench: Vivek Rusia
Income Tax Appeal No.182 of 2023 1
IN THE HIGH COURT OF MADHYA PRADESH AT
INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE GAJENDRA SINGH
ON THE 1st OF APRIL, 2024
INCOME TAX APPEAL No. 182 of 2023
BETWEEN:-
THE PR. COMMISSIONER OF INCOME TAX I AAYKAR BHAWAN WHITE
CHURCH ROAD INDORE (MADHYA PRADESH)
.....PETITIONER
(BY MS. VEENA MANDLIK, ADVOCATE)
AND
PRAKHAR DEVELOPERS PRIVATE LIMITED 259, GUMASTA NAGAR
INDORE PAN AAECP788E (MADHYA PRADESH)
.....RESPONDENTS
(NONE FOR THE RESPONDENT)
This appeal coming on for admission this day, JUSTICE
VIVEK RUSIA passed the following:
ORDER
The Principal Commissioner of Income Tax (in short 'PCIT'),
Indore has filed this appeal under Section 260A of the Income Tax
Act, 1961 (in short 'the Act') against the order dated 05.01.2023
passed by the Income Tax Appellate Tribunal (in short 'ITAT'), Bench
Indore in IT(SS)A No.110/Ind/2021 in an appeal filed by the
respondent / assessee, whereby the order passed by PCIT (Central),
Bhopal dated 27.03.2021 has been set aside.
02. Heard on I.A. No.1729/2024, which is an application under
Section 5 of the Limitation Act for condonation of delay in filing the
present appeal. As per contents of the application, this appeal is
barred by 107 days.
03. Keeping in view the reasons assigned in the application
which is duly supported by an affidavit, I.A. No.1729/2024 stands
allowed. Delay in filing the appeal is hereby condoned.
04. Facts of the case in short are as under:-
4.1. The respondent / assessee, a company engaged in the business
of Real Estate, filed the return of income under Section 139(1) of the
Act for the Assessment Year - 2012 - 13 on 19.09.2011 declaration
total income of rupees 'NIL'.
4.2. A search and seizure operation under Section 132 of the Act
was carried out on 12.07.2016 at various premises of Jain & Dixit
Group Indore. In the said search, the assessee was also covered under
Section 132 of the Act. Accordingly, notices under Section 153A
were issued to the assessee for the Assessment Years - 2011 - 12 to
2016 - 17 on 09.10.2017 under Section 143(2) of the Act. A notice
under Section 143(2) of the Act was also issued on 02.08.2018 for the
Assessment Year - 2017 - 18. Since common issues / facts were
involved in case of the assessee for all the concerned Assessment
Year, a common order for Assessment Years - 2011 - 12 to 2016 - 17
under Section 143(3) r/w section 153A and for Assessment Year -
2017 - 18 under Section 143(3) of the Act was passed.
4.3. After hearing the assessee, the assessment under Section
143(3) r/w section 153A of the Act was completed on 19.12.2018 by
the Assessing Officer accepting the return of income of the assessee
for the Assessment Year - 2012 - 13 i.e. 'NIL'.
4.4. The PCIT (Central), Bhopal on perusal of the record observed
that the Assessing Officer did not disallow the cash payment made by
the assessee 40A(3) of the Act for the Assessment Year - 2011 - 12
& 2012 - 13, hence, found erroneous so far it is prejudicial to the
interest of the Revenue, accordingly, the proceedings under Section
263 of the Act were suo motu initiated against the assessee. The
assessee was given opportunity of hearing and vide order dated
19.12.2018, assessment order of the AY - 2011 - 12 to 2017 - 18 was
set aside and remanded the matter to the Assessing Officer for fresh
examination after giving due opportunity of hearing to the assessee.
4.5. Being aggrieved by the aforesaid order, the respondent /
assessee preferred an appeal before the ITAT, Bench Indore. In the
said appeal, the respondent / assessee challenged the authority of
PCIT (Central), Bhopal under Section 263 of the Act on the ground
that the assessment order was passed under Section 143(3) r/w
section 153A of the Act upon taking prior approval from the Assistant
Commissioner, Income Tax (Central) - 1, Indore under Section 153D
of the Act.
4.6. Learned ITAT by placing reliance on a judgment passed by
the Co-ordinate Bench of Pune in the case of Shri Ramamoorthy
Vasudevan v/s PCIT (ITA Nos.967 & 968/Pun/2016) has held that
the order passed by the PCIT is unsustainable due to lack of
jurisdiction in invoking Section 263 of the Act and accordingly, set
aside the order. Hence, this appeal is before this Court under Section
260A of the Act.
05. In this appeal, the tax effect is below than Rs.1,00,00,000/-.
The Income Tax Authority has placed reliance upon Clause 10(c) of
Circular No.3/2018 dated 11.07.2018 proposing following substantial
questions of law:-
(1) Whether on the facts and in the circumstances of the case,
the ITAT was justified in law in allowing the appeal of the
assessee without considering the merits of the case ?
(2) Whether on the facts and circumstances of the case, the
ITAT was justified in law in quashing the Order U/s 263
passed by Pr. CIT (Central), Bhopal considering the
assessment order passed by the AO U/s 143(3) r.w.s. 153A
dated 19.12.2018 as erroneous in so far as prejudices to the
interest of revenue as assessee had made cash payment for
purchase of land in violation of Rule 6DD(g) r.w.s. 40A(3) of
the Income Tax Act, 1961, as the land was held by the
assessee as stock in trade for the company ?
(3) Whether on the facts and circumstances of the case, the
ITAT was justified in law in passing the perverse order that
revisionary proceedings U/s 263 of the Act cannot be assumed
in the instant case unless any revision directions are issued by
the JCIT since the impugned assessment order sought to be
revised U/s 263 was passed after obtaining the approval of
the JCIT U/s 153D without appreciating the fact that no such
statutory obligation is entailed in letter and the sprite of
either Section 153D or Section 263 of the Act and
accordingly, the ITAT ignored the dictum of law laid down in
Orissa State Warehousing v/s CIT 237 ITR 589 (SC) wherein
it has been held that-
"The Court is to ascribe natural and ordinary
meaning of the words used by the legislature and the
Court ought not, under any circumstances, substitute its
own impression and ideas in place of legislative intent
as is available from a plain reading of the statutory
provisions ?
06. Ms. Veena Mandlik, learned counsel for the appellant submits
that the assessee made a cash payment for purchase of the land in
violation of Rule 6DD(g) r/w 40A(3) of the Act as the land was held
by him as stock in trade for the company, therefore, there was a
prejudice to the interest of the Revenue. Hence, this appeal is liable
to be admitted on the aforesaid proposed substantial questions of law.
07. Learned counsel for the appellant failed to answer the query
made by this Court whether order passed by the Pune Bench in the
case of Ramamoorthy Vasudevan (supra) was challenged before the
High Court or Supreme Court on the issue of jurisdiction under
Section 263 of the Act. Learned counsel submits that she could not
lay her hands any order / judgment passed by the High Court as well
as by the Supreme Court on this issue. In the case of Ramamoorthy
Vasudevan (supra), in a similar facts and circumstances, reliance has
been placed on judgments delivered by the Pune Bench of Tribunal in
the case of Dhariwal Industries Limited v/s CIT (ITA No.1108 to
1113/PUN/2014), Lucknow Bench in the case of Mehtab Alam v/s
ACIT (ITA Nos.288 to 294/Lkw/2014), Hyderabad Bench of the
Tribunal in the case of CH. Krishna Murthy v/s ACIT (ITA
No.766/Hyd/2012) and one of the judgment passed by the High
Court of Judicature at Allahabad in the case of CIT v/s Dr. Ashok
Kumar (ITA No.192 of 2000) and Hyderabad Bench of Tribunal in
the case of M/s Trinity Infra Ventures Limited v/s DCIT (ITA
No.584/H/2015) and consistently held that once the order under
Section 143(3) r/w section 153A of the Act has been passed after
taking prior approval of the ACIT under Section 153D of the Act,
then the jurisdiction under Section 263 of the Act cannot be invoked.
Therefore, the view taken by the Co-ordinate Bench of the Appellate
Tribunal had attained finality. Hence, the ITAT, Indore has not
committed any error of law by following the same view.
08. Even otherwise, as per Section 263 of the Act, the Principal
Chief Commissioner or Principal Commissioner or Commissioner
may call for and examine the record of any proceeding under this Act
and if he considers that any order passed therein by the Assessing
Officer, is erroneous in so far as it is prejudical to the interests of the
Revenue, he may make enquiry as he deems necessary, pass such
order thereon as the circumstances of the case justify. For passing any
order under Sections 143(3) & 153A of the Act, prior approval of
Joint Commissioner is required under Section 153A of the Act, or
Principal Commissioner or Commissioner as the case may be.
Therefore, once prior approval had already been taken by the
Assessing Officer and accepted the return submitted by the assessee,
then the same authority cannot exercise the power under Section 263
of the Act to reverse the order of Assessing Officer.
09. Even otherwise, the total tax effect of this appeal is less than
Rs.1,00,00,000/-, therefore, we do not find any ground to interfere
with the order passed by the Income Tax Appellate Tribunal, Indore.
10. In view of the above, Income Tax Appeal stands dismissed.
(VIVEK RUSIA) (GAJENDRA SINGH)
JUDGE JUDGE
Ravi
