2019 (4) TMI 1437 - HC - Income Tax

Dismissal of Appeal Against Income Tax Section 263 Notice Emphasizes Independent Evaluation and Reasoned Decision

The appeal challenging a show cause notice under Section 263 of the Income Tax Act for the assessment year 2015-16 was dismissed by the Court. The Court ... Revision u/s 263 - Show cause notice issued by the CIT (International Taxation) exercising jurisdiction under Section 263 - HELD THAT:- While we find no basis for the appellant-writ petitioner’s apprehension that the Commissioner would ignore the contentions put forth by them in their reply to the show cause notice, merely on account of the observations made by the learned Single Judge in the order suffice it to direct the Commissioner, Income Tax to consider the appellant-writ petitioner’s reply to the show cause notice, and pass a reasoned order thereupon taking into account the contentions put forth in the reply, uninfluenced by any observations made either in the order under appeal or in the order now passed by us. Issues:Challenge to show cause notice under Section 263 of the Income Tax Act for assessment year 2015-16.Analysis:The appellant challenged the show cause notice issued by the Commissioner of Income Tax (International Taxation) dated 21.12.2017 under Section 263 of the Income Tax Act for revising the assessment order passed for the assessment year 2015-16 on 20.01.2017. The appellant claimed that the show cause notice contained errors, both factual and legal, necessitating interference. The appellant filed its explanation to the show cause notice on 22.02.2018, but the learned Single Judge noted that the writ petition was filed one year after the issuance of the show cause notice. The learned Single Judge referred to the Supreme Court judgment in 'Commissioner of I.T. Mumbai v. Amitabh Bachhan' (2016) 11 SCC 748, emphasizing the need for the Commissioner to establish that the order was both erroneous and prejudicial to the interest of revenue. The Court dismissed the writ petition, stating that no interference was warranted.The appellant contended that the Commissioner should not disregard their reply to the show cause notice based on the observations made by the learned Single Judge. The Court clarified that the Commissioner must consider the appellant's reply to the show cause notice and issue a reasoned order, taking into account the contentions raised in the reply. The Court emphasized that the Commissioner's prima facie view expressed in the show cause notice could be rebutted by the appellant in their response, and it was essential for the Commissioner to assess whether the assessment order was indeed erroneous and prejudicial to the revenue. The Court directed the Commissioner to evaluate the appellant's reply independently of any previous observations made by the Court.In conclusion, the appeal was dismissed, subject to the directive for the Commissioner to consider the appellant's response to the show cause notice and issue a reasoned decision, detached from any previous remarks made by the Court.