TaxTMI 
TaxTMI 
2020 (8) TMI 272
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....is not proper adequate and proper opportunity and it is against the principle of natural justice when the notice was communicated to the lawyer at Cuttack to take adjournment for preparation of the case to represent properly, the learned CIT told that he has already passed 263 order because of limitation and he did not receive the adjournment petition. Hence, the order under section 263 is unjustified and illegal. 4) That under similar situation Hon'ble Andhra Pradesh High Court has strongly remarked their displeasure as follows in the case of Bernal Tiwari Vs. CIT, 173 ITR 280 (AP). "We must express our disapproval of the way in which Income Tax officers drag on assessment proceeding till almost the last minute and rush through the entire process of assessment when the limitation is about to set in without giving adequate opportunity to the assessee. The CIT exercising administrative jurisdiction over these officers should keep a close watch on the proceeding and should discourage any attempt on the part of the tax officers to drag on assessment proceeding till the last moment causing difficulties both to the assessee and to the department." Therefor....
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....Corporation Ltd. Vs. CIT 157 CTR 249, 229 ITR 383 (SC)). PRAYER Under the facts and circumstances of the case, the above additional grounds of appeal, may kindly be admitted, And for this Act of your kindness the appellant as in duty bound shall ever pray. 3. Brief facts of the case are that the assessee is deriving income from business of crushing and trading of iron ore. The return of income for the assessment year 2010-2011 was filed electronically on 14.10.2010 disclosing income of Rs. 6,15,910/-. Later on the case was taken up for scrutiny u/s.143(3) of the Act and completed on 22.03.2013 determining the total income at Rs. 10,37,182/-. The PCIT by virtue of powers vested under Section 263, called for the records for examination and after verification of records, he noted that the order passed by the ld. AO was erroneous and prejudicial to the interest of revenue. On perusal of the trading profit and loss account, the Pr. CIT noticed that the assessee had valued the closing stock of Rs. 69,78,657/- from the tax audit report, the quantitative details noticed by the Pr. CIT read as under :- Iron ore Quantity (in qtl) Amount in Rs. Rate (in Rs.) ....
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....neous nor prejudicial to the interest of revenue, so as to attract provision of section 263 of the I.T. Act. In page 1, the Assessing Officer observed as follows :- "In the course of assessment proceeding, the assessee was asked to submit copy of audited accounts along with audit report and statement of bank accounts and other details. The A/R of the assessee filed the details as called for." "the documents have been verified on test check basis". Further, Please Refer Paqe-2, Para-2 of the Asst. Order : "In course of hearing, the assessee was asked to produce copy of audited accounts for the Assessment Year-2010-11. On going through the same, it is seen that the assessee has credited a sum of Rs. 4,03,581/- in its P&L account under the head interest on loan from partners. The A.R. was asked to explain the reasons for not showing any interest income on loan advanced to the partners when in the immediate preceding assessment year the assessee has charged interest on loan to its partners. However, the A.R. could not furnish any satisfactory reply in this regard". Further, allegation of learned CIT is in order u/s 263 regarding valuation of closing ....
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....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. 2. The assessment order dated 22.03.13 as noted by the CIT to be u/s 143(3)/147 of the IT Act 1961 is also not correct. It indicates that he was confused, because no such order u/s 143(3)/147 is in existence. It was u/s. 143(3) only. 3. The Supreme Court in the case of Malbar Industries Company Ltd, 243 ITR 83(SC) has categorically held that the commissioner has to be satisfied to twin conditions, namely,(i) the order of the A.O sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent -if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumpti....
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....ich is not the facts here. In the instant case, it is regarding valuation of closing stock etc and hence distinguishable. b) The case law cited by CIT Vs. Smt. Tara Devi Agarwal, 88 ITR 323(SC) relates to matter prior to repeal of IT. Act, 1922. There the matter was whether the income has not been earned and is not assessable whether belongs to her or his in order to assessed someone else who would have been assessed to a larger amount. Therefore, the said case has no relevance to the facts of the instant case. c) In the case of Uma Shankar Rice Mills, 187 ITR 638 (Ori) related to restriction to the power of the CIT u/s. 263. There also the High Court has not mentioned as to whether in a case where the A.O. had already examined the Audited ' Accounts and the entire material on record to be examined, by invoking section 263. Hence, the case is distinguishable. d) In case of Gee Vee Enterprises Vs. Addl CIT 99 ITR 375 (Del). It is matter regarding failure to make enquiries before granting registration. Appeal to Tribunal not preferred. Honourable Delhi High Court did not entertain remedy in writ under Article 226 or 227 of the Constitution of India. ....
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....vil procedure code shows that notices under the Income Tax Act are required to be served on the assessee in accordance with the provisions of the civil procedure code shows that notices under the Income Tax Act are required to be served on the assessee in accordance with the provisions of section 282 and may be served personally upon the person named therein or upon his agent duly authorised. The onus is on the Revenue to establish that the service was made either on the assessee himself or on somebody duly authorised by him to receive such notice. The assessee is a partnership firm the notice u/s 263 was neither served on the partners nor on any employees authorized by the partners to receive Income Tax Notices. Hence, the order is illegal for non service of valid notice. Kindly refer to a copy of the affidavit dated 19.12.2015 sworn in by managing partner Sri Dipu Jaiswal - available in page 5 & 6 of the paper book denying proper services of notice. In this context the judgment in the case of this Cuttack Bench of tribunal cited above may kindly be allowed : In the case of Nripendra Mishra Vs. ITO, 121 TTJ 701, the notice was served by the Inspector on one R. Fr....
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....portunity of being heard should be real, reasonable and effective. The same should not be for namesake. The same should not be a paper opportunity. It was so held in CIT Vs. Panna Devi Saraogi [1970] 78 ITR 728 (Cal.) In Smt Ritu Devi Vs. CIT [2004] 271 ITR 466 (Mad), time of just one day was given to the assessee to furnish reply. This was held as denial of opportunity under the principles of natural justice. As held in I.E. Vittal V. Appropriate Authority [1996] 221 ITR 760 AP, where a decision is based upon a document in a proceeding, a copy of the same should be provided to the affected party. Otherwise, it would violate the principles of natural justice as the opportunity of being heard should be an effective opportunity and not an empty formality. Denial of opportunity may make an order void. Limitation of time cannot stand in the way of not giving adequate opportunity. The principle is inviolable (Page 423 Evidence Income Tax Para 47.7). It may kindly be noted that it has been decided by Honorable Jurisdictional High Court in the case of A. Venkata Rao, 203 ITR Page-64 that the Tribunal is duty bound to examine the point raised by the parties and record def....
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....fore, the assessee cannot say that the show cause notice has not been received by the assessee as well as the order has not been passed within the stipulated time. Ld. DR also submitted that in the original grounds of appeal, the assessee has clearly mentioned that notice was served upon the assessee on 23.03.2015 at ground No.3, whereas he has filed an additional ground in which he has stated that the show cause notice has not been served upon the assessee. There is a contradictory ground taken by the assessee. He further submitted that the AO should have been calculated the value of closing stock which are less than the purchase price as mentioned in the audited report and some price is also very high which is Rs. 2533.91/-, therefore, the Pr. CIT has rightly invoked his power u/s.263 of the Act. In addition to the above submissions, ld. DR has also submitted a written synopsis, which reads as under :- i.) This is assessee's appeal against the revision order dated 30.03.2015 u/s. 263 of the Income Tax Act passed by Pr. CIT, Cuttack. The issue relates to the incorrect valuation of closing stock as on 31.03.2010. ii.) In this case, the AR of the assessee has c....
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....turn of income and same was not received back, then it would be deemed to have been served upon the assessee. The Hon'ble Mumbai ITAT in the case of P. A. Chacko Muthalaly vs. ACIT (50 taxmann.com 54) held that once the notice u/s.143(2) has been sent by speed post and it has been sent on the correct address then it can't be said that its service was done on some other person. vii.) Coming to the merit of the case, it is clear that the Assessing Officer while completing the original assessment had not applied his mind to the aspect of valuation of closing stock. In the original assessment dated 22.03.2013, the A.O. had only made disallowance of interest. There is not a whisper in the assessment order about the valuation of the closing stock. No effort was made by the A.O. to obtain the market value of such goods lying in the closing stock though their valuation was much below the purchase cost. The average sale price was also much higher than the rate at which it was valued on 31.03.2010. No enquiry of any sort was made by the Assessing Officer. Thus the order of the A.O. was not only erroneous but also prejudicial to the interests of the Revenue. Reliance is place....
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.... at page No.21 wherein in the right side top, it has been mentioned that the order dated 30.03.2015 passed u/s.263 of the Act received through speed post by the office staff on 04.04.2015. According to the arguments of the assessee the order should be served upto the end of the financial year i.e. 31.03.2015 but the order has been received by the assessee on 04.04.2015, which is illegal. In this regard, we refer to the provisions of Section 263(2) of the Act, which reads as under :- "263(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed." From the record, it is clear that the assessment order u/s.143(3) of the Act was passed on 22.03.2013 and the Pr. CIT has passed his order on 30.03.2015, therefore, the order is within two years from the relevant date. From the reading of the provisions of Section 263(2) of the Act, it is clear that there is no mention about the "service" of the order, however, it is only mentioned that the order shall be "made". With regard to "service" it has clearly been defined in the section 143(2) of the Income Tax Act but in section ....
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....he Act on 20.03.2015 requiring the assessee to furnish the clarification by 27.03.2015 and thereafter the Pr. CIT passed the order on 30.03.2015 stating that he was constrained to dispose off the revision proceedings on or before the end of the relevant financial year. It is clear that the Pr. CIT has provided opportunity to the assessee on 27.03.2015 for appearing before him, which, in our opinion, causes denial of opportunity under the principles of natural justice. Before us, ld. AR submitted that the assessee stays in Joda which is near about 275 kms from Cuttack and the notice received on 23.03.2015, therefore, the assessee had no sufficient time to contact his local lawyer, who is staying at Barbil and the Counsel to appear before the Pr. CIT, Cuttack is staying at Cuttack. When the authorized representative of the assessee appeared before the Pr.CIT, the order u/s.263 of the Act was already passed. It is trite that right to fair hearing is a guaranteed right of an assessee and granting of effective opportunity is a sin qua non in Section 263 of the Act for unsetting a statutory order. It was the duty of the Pr. CIT to provide the assessee an effective opportunity to enable i....