Punjab-Haryana High Court
The Pr. Commissioner Of Income Tax, ... vs M/S. Kanin (India) on 21 April, 2022
Bench: Tejinder Singh Dhindsa, Pankaj Jain
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Date of Decision : 21st April, 2022
ITA No.205 of 2019 (O&M)
The Pr. Commissioner of Income Tax (Central) Ludhiana
....Appellant
Versus
M/s Kanin (India)
.....Respondent
ITA No.213 of 2019 (O&M)
The Pr. Commissioner of Income Tax (Central) Ludhiana
....Appellant
Versus
M/s Kangaro Industries Limited
.....Respondent
CORAM : HON'BLE MR. JUSTICE TEJINDER SINGH DHINDSA
HON'BLE MR. JUSTICE PANKAJ JAIN
Present : Mr. Rajesh Katoch, Senior Standing Counsel assisted by
Ms. Pridhi Jaswinder Sandhu, Advocate
for the appellant(s).
PANKAJ JAIN, J.
By this judgment, we are deciding the aforesaid two appeals filed under Section 260(A) of the Income Tax Act, 1961 (for short, 'the Act') preferred by the Revenue.
2. As per Ld. Counsel for the appellant both the appeals have been decided by the Tribunal by a common order and, thus, the issue will be 1 of 6 ::: Downloaded on - 24-07-2022 07:30:32 ::: ITA No.205 of 2019 (O&M) and 2 ITA No.213 of 2019 (O&M) common in both the appeals.
3. The Tribunal decided the issue on the arguments advanced in ITA No.520/CHD/2018 titled as 'M/s Kanin India vs. The Principal CIT (Central), Ludhiana'. Thus, for convenience, the facts are being culled out from ITA No.205 of 2019.
4. Assessee is a firm engaged in manufacturing of engineering goods i.e., staplers and other stationery items. For the Assessment Year 2013-14 certain expenses were disallowed by the Assessing Officer during the assessment proceedings. Assessment Order dated 25th of May, 2015 was passed under Section 143(3) of the Act. The said Assessment Order was assailed in appeal by the Assessee. Appeal was allowed vide order dated 23rd of June, 2017 by the Commissioner of Income Tax (Appeals) deleting the additions made by the Assessing Officer in the order passed under Section 143(3) of the Act.
5. Principal Commissioner of Income Tax (Central), Ludhiana i.e., the appellant exercising powers under Section 263 of the Act, passed the order dated 31st of March, 2018 holding that the assessment made by Assessing Officer was erroneous and prejudicial to the interest of Revenue as the Assessment Order had been passed without making inquiries or verification.
6. Aggrieved by the order passed under Section 263 of the Income Tax Act, the Assessee assailed the same before the Tribunal. Now 2 of 6 ::: Downloaded on - 24-07-2022 07:30:33 ::: ITA No.205 of 2019 (O&M) and 3 ITA No.213 of 2019 (O&M) appeal filed by the assessee has been allowed by the Tribunal vide order dated 27th November, 2018 (Annexure A-IV to this appeal). Against the said order (Annexure A-IV) Revenue is in appeal.
7. Mr. Rajesh Katoch, Ld. Senior Standing Counsel for the appellant submits that since the assessment was made without making inquiries and verification thus, the case will fall within the ambit of Explanation 2(a) attached to Section 263 of the 1961 Act. The appellant was well within its jurisdiction to set aside the assessment order. However, Ld. Tribunal without appreciating the aforesaid fact has erred in setting aside the order dated 31st of March, 2018 passed by the appellant.
8. We have heard Ld. Counsel for the appellant and have carefully gone through the records of the case(s).
9. Ld. Senior Standing Counsel is not in a position to deny the fact that prior to passing of order under Section 143(3) of the Act, a questionnaire was issued by the Assessing Officer in the course of assessment proceedings to the assessee. The specific issues addressed by the appellant in the present proceedings were part of the questionnaire. It is in the backdrop of these circumstances that the Tribunal recorded the finding to the following effect :-
"In the facts of the present case, the Pr. CIT has exercised the power by merely flagging certain issues extracting the Show Cause Notice, extracting part of the reply of the assessee and without caring to address the same has 3 of 6 ::: Downloaded on - 24-07-2022 07:30:33 ::: ITA No.205 of 2019 (O&M) and 4 ITA No.213 of 2019 (O&M) summarily arrived at the conclusion ignoring the facts, evidences and plethora of jurisprudence available on the issue which casts responsibility on the Pr. CIT to point being out the error and not any and every error but such an error which is prejudicial to the interests of the Revenue. The twin requirements and the sine-qua-non for exercising the Revisionary Power cannot be left at the mercy of whims and fancies of Revisionary Authority the same should be brought out on record mere suspicions are not enough. In order to support the conclusion drawn reference may also be made to the decision of the Co-ordinate Benches in Narain Tatu Rane V ITO (supra) which clearly brings out that the explanation cannot be said to have overridden the law as incorporated by various High Courts which have consistently held that before reaching to the conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue, the Revisionary authority itself has to undertake some enquiries to establish that the assessment order is erroneous and prejudicial to the interests of the Revenue."
10. Trite it is that in order to attract Section 263 of the Act, twin conditions are to be satisfied namely :-
(i) The order of the Assessing Officer sought to be revised is erroneous, and
(ii) It is prejudicial to the interest of the Revenue.
11. The contention of Ld. Senior Standing Counsel that the order passed by the Assessing Officer will fall within the ambit of Explanation 2
(a) appended to Section 263 of the Act, cannot be accepted till it is pointed 4 of 6 ::: Downloaded on - 24-07-2022 07:30:33 ::: ITA No.205 of 2019 (O&M) and 5 ITA No.213 of 2019 (O&M) out as to which inquiry or verification was not made by the Assessing Officer before passing the order.
12. Ld. Counsel for the appellant is not in a position to point out as to what are those inquiries or verification which should have been made but have not been made by the Assessing Officer in the present case so as to make the present case fall within Explanation 2 attached to Section 263 of the Act.
13. In the case of 'M/s Malabar Industrial Co. Ltd. vs. Commissioner of Income-tax, Kerala', 2000(2) SCC 718, Apex Court has held that -
'The phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income- tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law.'
14. The substantial questions of law sought to be raised in Para No.3 of the grounds of appeal are pure questions of fact which have been adequately answered by the Tribunal.
5 of 6 ::: Downloaded on - 24-07-2022 07:30:33 ::: ITA No.205 of 2019 (O&M) and 6 ITA No.213 of 2019 (O&M)
15. Consequently, finding no merit in the instant appeals, the same are hereby dismissed.
16. Since the main appeals have been decided, the pending misc. application(s), if any, shall also stand disposed of.
(TEJINDER SINGH DHINDSA) (PANKAJ JAIN)
JUDGE JUDGE
April 21, 2022
Dpr
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
6 of 6
::: Downloaded on - 24-07-2022 07:30:33 :::