TaxTMI 
TaxTMI 
2021 (5) TMI 892
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....by violating the principles of natural justice. 2. The Appellant prays that the impugned order passed in violation of principles of natural justice be quashed as bad in law. WITHOUT PREJUDICE TO GROUND NO. I, GROUND NO. II: IMPUGNED ORDER PASSED TO REVISE THE ASSESSMENT ORDER, WHICH WAS SUPERCEDED BY THE SUBSEQUENT RECTIFICATION ORDER, IS BAD IN LAW: 1. On the facts and circumstances of the case and in law, the Id. Pr. CIT erred in invoking the provisions of section 263 of the Act to revise the order passed u/s 143(3) r.w.s. 144C(13) of the Act dated November 29, 2016("the assessment order") without appreciating that the assessment order had merged into the order passed u/s 154 of the Act dated May 31, 2018("the rectification order"). 2. The Appellant prays that the impugned order passed to revise the assessment order, which was superseded by the subsequent rectification order, be held as bad in law. WITHOUT PREJUDICE TO GROUND NO. I AND II ABOVE, GROUND NO. Ill: IMPUGNED ORDER PASSED BY INVOKING PROVISIONS OF SECTION 263 OF THE ACT IS BAD IN LAW: 1. On the facts and circumstances of the case and in law, the ld. Pr. CIT erred in invoking....
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....e consideration be restricted to forward rate while computing the sale consideration 3. The Appellant prays that the action of the Ld. PCIT in directing the AO to verify the discounting of the assignment as be set-aside or quashed. 3. The hearing in this case was first concluded just before the lockdown on account of Covid pandemic started. Before the order in this case could be finalized, one of us was hospitalized on account of Covid infection, and the other was on medical leaves, due to a fractured leg, for two months. It was in this backdrop that the matter had to be refixed for hearing, arguments were heard afresh, and the hearing was finally concluded on 11th December 2020. There is thus indeed an inordinate delay in disposal of this appeal, but this delay is on account of factors beyond our control. 4. To adjudicate on this appeal, only a very few material facts need to be taken note of. The assessee before us is a domestic company engaged in the business of pharmaceuticals. The scrutiny assessment in this case was completed on 13th November 2016, determining a taxable income at Rs (-) 268,01,35,553 and book profit under section 115 JB of Rs. 107,24,76,5....
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....3. In this regard, it is seen that your company had accounted the consideration-on the basis of the foreign exchange rate prevalent at the time of transaction and offered the said amount to tax in the respective assessment year. Thereafter, when the actual foreign exchange proceeds were received by your company, the consideration underwent an incremental change due to increase in value of Dollar in terms of Rupee. Therefore, the amount accounted in the current AY of Rs. 3,09,51,25,000/- is nothing but additional consideration received for the slump sale of the domestic formulation business. Thus, as per the provisions of the Act, the said gain should have been offered to tax. However, you have not offered the additional consideration of Rs. 309,51,25,000/- to tax and the AO also has not brought it to tax while completing the assessment u/s. 143(3) rws 144C(13) of the IT Act. 4. Thus prima-facie there is a the failure on the part of the AO to make relevant and meaningful inquiry as warranted by the facts of the present case and allowing without causing necessary enquiries the claims of the assessee. The AO's failure to take cognizance of the legal implication o....
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....9, 2018, I appeared before PCIT along with Ms. Manshi Padhiar, Chartered Accountant and Mr. Pinesh Bhandari, representing the client. 5. I say that I tendered the written submissions of 13 pages dated August 9, 2018 on the issue of validity of jurisdiction under section 263 of the Act with respect to the issue of taxability of the amount of Rs. 309,51,25,000/- referred to in the show cause notice dated July 17, 2018; 6. I say that in the personal hearing, the discussion was restricted to the sale of the Domestic Formulation Business to M/s Abbot Healthcare Pvt. Ltd. and why the sum of Rs. 309 crores relating to foreign exchange gain in the assessment year 2012-13, i.e. a year subsequent to the year of the transfer of domestic formulation business, be added to the assessee's income; 7. I say that no further issues or points were put to us by the PCIT or discussed during the hearing on August 9, 2018; 8. I say that no further personal hearing took place in the matter and the order dated March 29, 2019 under section 263 was directly received on April 2, 2019. I hereby affirm that whatever is stated above is true to best of my knowledge ....
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....pportunity of being heard as contemplated by Section 263 of the Act had been breached. Hence the order passed u/s. 263 of the IT Act is as per the law. 6. I say that vide order passed u/s 263 of the Act, the assessment order has been set aside to the file of the AO with directions to verify the transactions of discounting of Abbott Receivables during AY 2012-13, so that if the consequent gain for the said AY is found to be fully or partly not offered for taxation, the same could be considered for bringing to taxation. I say that, the order u/s 263 has in no way, crystallized the assessee's liability and has left the door open for him to make his submissions on the said matter before the AO and the AO is duty bound to pass a speaking order after taking the submissions of the assessee under due consideration. 7. I say that, if the Hon ITAT still believes that the opportunity of being heard was not given to the assessee, then the same is a procedural lapse AND is hence a curable defect. It per se does not make the order u/s. 263 invalid. This ratio is laid down by the Apex Court in the case of Commissioner v/s Jai Prakash Singh [1996] 85 taxman 407(SC). According....
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....transferred to a buyer Axis bank in March 2013. The receivables were discounted by entering into transfer agreement with Axis Bank dated March 25th 2013 at the rate of USD 55. The assessee Suo motto offered a capital gain of Rs. 8,45,42,842/-on account of this transaction. 3.4 Further from the perusal of the records of AY 2013-14 it is seen that , the DRP has gone into various aspects of a similar transaction and after analysing the facts of the case, it was held by the DRP in its order dated 29.9.2017 for AY 2013-14 that the actual gain of the assessee from the said transaction amounts to Rs. 98,28,43,1207- and accordingly the AO was directed to make an addition of Rs. 89,83,00,2787- on this amount for AY 2013-14 and the issue has been discussed in detail in para-32 to 35 of the said order. 3.5 It was further observed by DRP that similar transactions were observed to have happened during AY 2012-13 too. As per the details furnished during the period pertaining to AY 2012-13, the asssessee was to receive 400 million USD on Abbott Receivables. The same was discounted at 55.295 rupees per dollar. As per the findings of DRP for AY 2013-14, the cost of acquisition on ....
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....200 (SC)], learned Commissioner is indeed free to exercise his jurisdiction on consideration of all the facts, as long an opportunity of hearing is provided to the assessee to contest facts on the basis of which learned Commissioner seeks to exercise his revisional power. It is submitted that this requirement is not satisfied on the facts of the present case. Learned counsel for the assessee also places his reliance on the judgment of Hon'ble Punjab & Haryana High Court, in the case of CIT Vs Roadmaster Industries of India Ltd [(2013) 233 Taxman 13 (P&H)]. It was then contended that if the Commissioner was to get another opportunity for conducting hearing on the issues on which revision is done, without providing an opportunity of hearing to the assessee at the stage of first revision proceedings, it would result in a situation that the revision can be done on any ground without providing an opportunity of hearing, and such a lapse, which is jurisdictional, is made up at a later point of time. Learned Departmental Representative vehemently opposes these submissions. The stand of the learned Commissioner is that even if the assessee is not given an opportunity of hearing by the lear....
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....nt gain for the said AY is found to be fully or partly not offered for taxation. The order u/s 263 has in no way crystallized the assessee's liability and has left the door open for the assessee to make its submissions on the said matter before the AO and the AO is duty bound to pass a speaking order after taking the submissions of the assessee under due consideration. No undue prejudice has been caused to the assessee . 4. Without prejudice to the above submissions, if it is held that opportunity of being heard was not given to the assessee, then, the same is to be treated as a procedural lapse and hence a curable defect. The Hon'ble Madras High Court in the case of V. Raju v Commissioner of Income-tax (1984) 16 Taxman 249 (Mad) has held that in view of principles of natural justice having been embedded in section 263 itself, order passed by commissioner under section 263 without giving opportunity to assessee of being heard, suffered only from procedural irregularity and could not be void ab initio and non est in law. It also held that the tribunal, while setting aside order of commissioner passed under section 263 on the ground of procedural irregularity, is dut....
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....ass a fresh order of assessment in accordance with law - Held, no (iii) Prem Syndicate v CIT[1983] 141ITR 290 (Madhya Pradesh) Head Notes Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment years 1967-68 and 1968-69 - Commissioner issued notice under section 263(1) which was served on authorised representative of assessee firm and on family member of its partner - Notice was served at Indore one day before date of hearing at Bhopal - None appeared before Commissioner on behalf of assessee - Commissioner after setting aside assessment order directed ITO to make fresh assessment -Tribunal held Commissioner's order to be void ab-initio and also refused to direct Commissioner to pass fresh order after giving assessee further opportunity of being heard - Whether no notice was required to be issued ay Commissioner before exercising jurisdiction to proceed under section 263(1) and, hence, question of its validity did not arise nor did, it affect Commissioner's jurisdiction to exercise power under section 263(1) - Held, yes - Whether however, on facts, there was no proper opportunity to assessee ....
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.... revised return. It is also pointed out that all these details were duly submitted before us, that we have called a remand report from the Assessing Officer on the same wherein the Assessing Officer has accepted correctness of the said conversion rate but submitted that he "is not in a position to make any comment as under what analogy the learned PCIT has adopted the said exchange rate in the order under section 263 dated 29th March 2019". He submits that, for this reason, on merits also, the impugned revision order needs to be quashed. Of course, he has dealt with, and addressed us at length, on several other legal and factual aspects, but, for the reasons we will set out in a short while, it is not really necessary to go into those aspects in any detail. 10. We have considered the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 11. We find that as is evident from a perusal of the affidavits filed by the learned counsel for the assessee as also by the learned Principal Commissioner, it is clear that the learned Principal Commissioner has not given any opportunity of hearing to the assesse....
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....ng an opportunity of hearing to the assessee. When there is a foundational curable defect in the impugned order, and we are alive to this situation, we cannot simply ignore the same, and proceed to take a call on merits at this stage itself. When admittedly no hearing has taken place on the issue in the impugned revision order, and as such proper call, after hearing the assessee, is required to be taken at that stage now, we cannot simply bypass that forum and take a call on merits, at our level, on that issue. We have no reasons to doubt that in case, on merits, no revision is required to exercised on the issue, the Commissioner will not, once he has the benefit of hearing the assessee on merits, drop the revision proceedings. We have heard the parties on this foundational aspect, and the only fetters on the grounds on which we decide an appeal on is that we can do so only after hearing parties on the said ground. Just because an assessee prefers the matter being decided on merits by us does not bind us for a decision on merits. In any case, we are of the considered view that such a decision on merits at this stage will be premature and inappropriate. However, once the assessee ha....