TaxTMI 
TaxTMI 
2025 (9) TMI 1809
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....ng to Assessment Year (AY) 2020-21. 2. At the outset, learned counsel appearing for the assessee submitted that the appeal can be decided on the limited issue raised in Ground No.2, which reads as under: "2. The learned Commissioner of Income Tax erred in passing an order under section 263 without issuing any notice to the appellant." 3. Briefly the facts are, assessee is a resident corporate entity engaged in construction and maintenance of roads, rails, bridges, tunnels, ports, harbour, runways etc. For the assessment year under dispute, assessee filed its return of income on 03.02.2021, declaring NIL income. The return of income so filed was selected for scrutiny and the Assessing Officer (AO) completed the assessmen....
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..... 263 of the Act without following the statutory mandate. Thus, he submitted, the order being without jurisdiction, should be quashed. In support, he relied upon the decision of the Hon'ble Delhi High Court in the case 'Tulsi Tracom (P) Ltd. vs. CIT' [2017] 86 taxmann.com 35 (Delhi). 6. Learned Departmental Representative (DR) furnished a copy of report dated 17.09.2025 received from the Office of PCIT-1, Mumbai, and submitted that before the order u/s. 263 of the Act was passed, no show cause notice was issued to the assessee. However, he submitted, non-issuance of show cause notice is a mere irregularity, which can be cured by setting aside the matter to the PCIT for passing a fresh order after complying with the principles of natural ....
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....he assessee. In fact, in the report dated 17.09.2025 furnished to learned DR by the ITO (HQ) (Tech-1) office of PCIT-1, Mumbai, a copy of which was furnished before us by learned DR it is clearly stated that no show cause notice was issued to the assessee prior to passing of the order u/s. 263 of the Act. Thus, in such a scenario, what would be the effect of noncompliance with the mandate of subsection (1) of Section 263 of the Act and secondly whether restoration of the matter to PCIT with a direction to pass a fresh order resulting in extension of limitation provided under sub-Section (2) of Section 263 of the Act would be valid. While faced with an identical situation, in case of Tulsi Tracom (P) Ltd. vs CIT (Supra), the Hon'ble Delhi Hi....
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.... considered to be relevant by the 16. The short question that, therefore, arises is as to whether such an opportunity was afforded to the Appellant in the present case? 17. A perusal of the records reveals that the ITO was well aware of the various addresses of the Appellant including the latest address at New Delhi at the time when the notice under Section 263 of the Act dated 18th March, 2013 was to be issued. The Appellant had filed its return for AY 2012-13 on 25th September, 2012 i.e. a full five months prior to the issuance of the notice under Section 263 of the Act. Thus, the first error committed by the ITO was to issue the notice under Section 263 on 18th March 2013, to the address of the Appellant which was chang....
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....e noting in the impugned order reads: "The show cause notice, which was served by post calling for compliance on 22-03-2013. The notice was returned by the postal authority 25.03.2013. This order is therefore being passed ex-parte." 20. The CIT who issued the order under Section 263 of the Act ought to have been fully satisfied that adequate opportunity was given to the Assessee to controvert the facts stated in the notice under Section 263 of the Act and to explain the circumstances surrounding such facts. The satisfaction of the CIT on these counts could not have been arrived at as per the narration of facts and events as discussed hereinabove as the process commencing with the issuance of the notice under Section 263 cu....
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.... was passed. Thus, there is an outer limit in the statute under Section 263 which in the present case, is 31st March, 2013. Since, no useful purpose will be served in giving an opportunity to the Appellant of being heard at this stage, this Court answers question No.1 in the negative ie. in favour of the Assessee and against the Revenue. 24. In view of the above, question No.2 does not survive. The appeal is allowed and the notice dated 18th March 2013 as also order dated 30th March, 2013 are set aside. There will be no order as to costs." 9. From the aforesaid observations of Hon'ble Delhi High Court, the following two crucial propositions can be culled out: (i) the assessee must be given full opportunity to controvert the issu....