Allahabad High Court: In an instant writ petition challenging the order passed by the Principal Commissioner of Income Tax (‘CIT’) cancelling the assessment order dated 22-12-2019 being erroneous in so far as it is prejudicial to the interest of the Revenue, Piyush Agrawal, J. while quashing the impugned has imposed Rs.10,000/- cost on Income Tax Authority within a period of one month from the date of this order.
Background:
The petitioner deals in the business of gold bars and gold ornaments. On 27-02-2019, a notice under Section 142(1) of the Income Tax Act was issued to the petitioner. Thereafter, on 23-08-2019, a show cause notice under Section 272-A(1)(d) of the Income Tax Act, 1961 (‘IT Act’) was issued. Thereafter, the petitioner, through its representative, appeared and submitted relevant documents before the authority and the Assessing Officer, after considering all the details, completed the assessment under Section 143(3) IT Act on a total return income of Rs. 53,91,630/.
On 27-03-2022, a notice under Section 263 IT Act was issued to the petitioner by the CIT on the ground that the income tax return for the assessment year 2017-18 was e-filed on 28-10-2017 declaring total income of Rs. 53,91,630/- and the case of the petitioner was selected for scrutiny under Computer Aided Scrutiny Selection (‘CASS’). Thereafter, by the impugned order, the CIT has cancelled the assessment order dated 22-12-2019 passed by the Assessing Officer, holding that the said order is erroneous in so far as it is prejudicial to the interest of the Revenue and directed the Assessing Officer to pass a fresh order. Hence, the petitioner filed this petition.
Analysis:
The Court noted that the notice under Section 263 IT Act dated 27-03-2022 was prepared and was approved for uploading on the portal. The Office of CIT sent the information to the petitioner on its portal on 28-03-2022. The petitioner came to know about the notice on 29-03-2022 in the morning and immediately thereafter, moved an adjournment application on 29-03-2022 itself. The fact that the adjournment moved has not been denied by CIT. The order sheet of the proceedings under Section 263 IT Act has been filed.
After perusing the order sheet, the Court noted that no order was passed on 29-03-2022, either allowing the adjournment application or rejecting the same or fixing any other date. It only shows that an adjournment application was moved on 30-03-2022, and on 31-03-2022, the order has been passed. The impugned order does not reveal the fact that what happened on 29-03-2022, whether the date was fixed for 30-03-2022 or 31-03-2022 or the judgment was reserved on 29-03-2022. The impugned order is silent about this fact. Further, no explanation has been submitted in the impugned order or in the counter affidavit as to why and under what circumstances as well as under which law, two different order sheets are being maintained.
After perusing the impugned order, the Court said that the assessee has not submitted any reply in response to the notice under Section 263 IT Act dated 27-03-2022. Further, it said that the assessee has submitted its reply after due examination of the same and material on record, the impugned order has been passed.
The Court said that this clearly reveals that the same are self-contradictory. The Assessing Officer is trying to blow hot and cold at the same time, as in one paragraph of the impugned order, it has been mentioned that no reply has been submitted by the petitioner, to the contrary, in other paragraph of the impugned order, it has been mentioned that the assessee has submitted its reply. Neither in the impugned order, nor in the counter affidavit, any reference to the reply submitted by the assessee, as alleged in the impugned order, has been made.
The Court said that the impugned order has been passed pursuant to the notice under Section 263 IT Act. Once the Assessing Officer himself records that no response has been filed in pursuance of the notice under Section 263, a contrary finding, as recorded in the impugned order, cannot be accepted in the eyes of the law. Further, the Court said that notice under Section 263 was prepared and uploaded on 28-03-2022 and the same was received on the fixed date and the impugned order dated 31-03-2022 has been passed in gross violation of the principles of natural justice.
After placing reliance on Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1, the Court said that since there is an apparent violation of the principles of natural justice, as no opportunity was given to the petitioner for defending or presenting its case, the impugned order cannot be sustained.
Further, after placing reliance on Malabar Industrial Co. Ltd. v. CIT, (2000) 2 SCC 718, the Court said that the impugned order does not refer any finding as enumerated in Explanation – II of Section 263 IT Act, to suggest that the assessment order was prejudicial to the interest of the Revenue. Thus, it cannot be sustained.
The matter is next to be taken up after three months.
[M.L. Chains v Pr. Commissioner of Income Tax, 2023 SCC OnLine All 633, Order dated 16-08-2023]
Advocates who appeared in this case :
Counsel for Petitioner: Advocate Amit Mahajan;
Counsel for Respondent: Advocate Gaurav Mahajan,Manu Ghildya.
