2017 (3) TMI 1882 - AT - Income Tax

ITAT Kolkata Upholds CIT's Section 263 Orders: Legal Principles Applied

M/s. Labdhan Merchants Pvt. Ltd., M/s. Agarwal Jewellers and Gems Pvt. Ltd. Versus Commissioner of Income Tax, Kolkata

The Appellate Tribunal ITAT Kolkata consolidated appeals challenging orders passed by the Commissioners of Income-tax (CIT) under section 263 of the ... Revision u/s 263 by CIT - period of limitation - addition on account of receipt of share capital - Reopening of assessment u/s 147 initiated - HELD THAT:- It is relevant to mention that we have disposed of more than 500 cases involving same issue through certain orders with the main order having been passed in a group of cases led by Subhlakshmi Vanijya Pvt. Ltd. [2015 (8) TMI 174 - ITAT KOLKATA] as held the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases. Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit. CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 and not other CIT.Addition in the hands of a company can be made u/s 68 in its first year of incorporation. After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid. Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT. Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. - Decided against assessee. Issues Involved:Appeal against orders passed by CIT u/s 263 of the Income-tax Act, 1961 for assessment years; Similarity of facts in appeals; Validity of orders passed by CIT u/s 263; Power of CIT to revise assessment orders; Proper service of notices u/s 263; Limitation period for passing orders; Territorial jurisdiction of CIT; Addition in the hands of a company u/s 68; Validity of orders post-amalgamation; Validity of orders on non-working days; Validity of orders with unsigned notices; Acceptance of written submissions post-hearing; Impact of search proceedings on revision orders.Analysis:The judgment by the Appellate Tribunal ITAT Kolkata pertains to appeals challenging orders passed by the Commissioners of Income-tax (CIT) under section 263 of the Income-tax Act, 1961 for different assessment years. The Tribunal consolidated the appeals due to similar facts and grounds of appeal. The issues raised in these appeals were found to be covered against the assessees by previous orders passed by the Tribunal, notably in the case of Subhlakshmi Vanijya Pvt. Ltd. vs. CIT. The cases involved companies with low income, issuance of notices under section 148, and assessments made under sections 143(3) and 147, with inquiries about shares issued at a premium. The jurisdictional CITs passed orders under section 263, leading to the appeals before the Tribunal.The Tribunal highlighted that it had disposed of over 500 similar cases, with a key order passed in the Subhlakshmi Vanijya Pvt. Ltd. case for the assessment year 2009-10. The Tribunal emphasized the importance of logical conclusions in inquiries conducted by Assessing Officers (AOs) and the power of CIT to revise assessment orders in case of inadequate inquiries. The Tribunal reiterated conclusions drawn in previous cases, including the power of CIT to direct thorough inquiries by AOs and the relevance of notices served under section 263.The Tribunal also clarified various aspects, such as the limitation period for passing orders, territorial jurisdiction of CIT, validity of orders post-amalgamation, and the impact of search proceedings on revision orders. The Tribunal upheld the impugned orders based on the precedents set in previous cases, including the Subhlakshmi Vanijya Pvt. Ltd. case. The judgment emphasized the application of previous conclusions to the present appeals and ultimately dismissed both appeals based on the established legal principles and findings.In conclusion, the Tribunal's detailed analysis covered various legal aspects, including the powers of CIT under section 263, the importance of thorough inquiries in assessments, the validity of service of notices, and the impact of search proceedings on revision orders. The judgment provided a comprehensive overview of the legal framework and precedents guiding the resolution of the appeals before the Tribunal.