TaxTMI 
TaxTMI 
2023 (11) TMI 29
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.... the learned Pr.CIT, Valsad has erred in invoking powers under section 263 and passing order holding the assessment order to be "erroneous" and "prejudicial" without even justifying, which of the twining condition described in section 263 is applicable and as to how the order of assessment is "erroneous" causing "loss to the revenue". 3. On the facts and in the circumstances of the case as well as law on the subject, in any event, in response to the notice under Section 263 on the issue of claim of "Bad Debts" of Rs. 2,31,18,532/-, of furnishing of details pertaining to "Employee Contribution towards Provident Fund" as well as Reporting of Stock in "Annual Report" and in "Return of Income" the appellant had made detailed submissions on the issue that had been taken up in the notice u/s 263 and for the reason that the learned Pr.CIT, Valsad has failed to carry out his statutory obligation to deal with and decide such issue, the order under Section 263 stands wholly vitiated and the same deserves to be quashed. 4. On the facts and in the circumstances of the case as well as law on the subject, the details called out by the learned Pr. CIT, Valsad in relation to proc....
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....ssing officer has not gone through into the write off of Desire Pen and Stationery where even the PAN number is not given by the assessee- company and the amount involved is Rs. 2,15,823/-. Even AO did not send any communication to the AO's of these entities regarding the write-off and consequently cassation of liability. Thus, on all counts, the AO has failed to do the required verification and thus assessment order suffers from patent errors and which is detrimental to the interest of Revenue also. In view of the factual position, a show cause notice vide DIN No. ITBA/COM/S/01/2022-23/1050688684(1) dated 13.03.2023 was issued to the assessee to explain the transaction. 5. In response to the above notice of ld. PCIT, the assessee submitted its reply before the ld. PCIT, which was reproduced by ld. PCIT in his order. 6. Thereafter, ld PCIT has raised other issue relating to addition of fixed assets, for which the ld. PCIT has issued notice to the assessee, however, the assessee, in response to that notice, filed adjournment application before ld PCIT asking time to submit the reply. However, the ld. PCIT without waiting the reply of the assessee, framed the order on 31.03....
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....essee, further argued that ld PCIT has raised another issue about additions to the fixed assets during the financial year amounting Rs. 1,51,82,414/- which have been shown along with work in progress valuing Rs. 17,58,838/-, however ld PCIT observed that in the ITR additions to the fixed assets have been shown at Rs. 23,67,914/- only, therefore, ld PCIT considered the order of the assessing officer, as erroneous and prejudicial to the interest of revenue. To examine this new issue, the ld PCIT has issued notice to the assessee under section 263 of the Act dated 29.03.2023. In compliance to the said notice, the assessee has replied on 30.03.2023. However, ld PCIT did not consider the reply of the assessee and passed the order under section 263 of the Act on 31.03.2023, which is against the principle of natural justice and therefore order of ld PCIT may be quashed. 11. On the other hand, Ld. Departmental Representative (ld. DR) for the Revenue relied on the findings of ld PCIT. 12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts o....
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....ansaction, hence it is against the principal of natural justice. We note that the Hon'ble Supreme Court in M. S. Gill vs The Chief Election Commission 1978 AIR SC 851 held "The dichotomy between administrative and quasi-judicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the watershed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. 16. We note that Hon`ble Supreme Court in the case of Amitabh Bachchan 384 ITR 0200 (SC), held that opportunity of hearing should be provided by Principal Commissioner of Income Tax (PCIT) to the assessee during revision proceedings. The findings of the Hon`ble Supreme Court is reproduced below (to the extent useful for our analysis): "9. Under the Act different shades of power have been conf....
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....63 has been understood not to require any specific show cause notice to be served on the assessee. Rather, what is required under the said provision is an opportunity of hearing to the assessee. The two requirements are different; the first would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Reference in this regard may be illustratively made to the decisions of this Court in Gita Devi Aggarwal vs. Commissioner of Income Tax, West Bengal and others (1970) 76 ITR 496 and in The C.I.T., West Bengal, II, Calcutta vs. M/s Electro House (1971) 82 ITR 824. Paragraph 4 of the decision in The C.I.T., West Bengal, II, Calcutta vs. M/s Electro House (supra) being illumination of the issue indicated above may be usefully reproduced hereunder..........:" 17. From the above judgment of Hon`ble....