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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
PER ANADEE NATH MISSHRA, AM: (A) This appeal by Assessee is filed against the order of Learned
Principal Commissioner of Income Tax (Appeals)-, Delhi-7 [“Ld. PCIT”, for short], dated 31/03/2021 for Assessment Year 2016-17. Grounds taken in this appeal are as under:
“1. The PCIT has erred in law and on facts in passing an order u/s 263 of the Act ignoring that twin conditions laid down for initiation of the proceedings u/s 263 of the Act never existed. Thus, the proceedings are Oriental Buildtech Private Limited Vs. PCIT bad in law and the impugned order passed u/s 263 of the Act should be quashed as void ab initio.
2. The PCIT has erred in law and on facts in passing an order u/s 263 of the Act by directing the assessing officer to verify the issue of depreciation of Rs. 5,93,02,186/- claimed on Goodwill by the assessee ignoring that a) a query regarding depreciation on Goodwill was very much raised by the assessing officer during the course of assessment proceedings which was replied in detail by the assessee
b) depreciation on Goodwill was allowable as per the judgments of the Hon’ble Supreme Court and other Courts at the relevant time as per law c) the assessing officer allowed the said depreciation after applying his mind on the facts of the case and settled position of law at that time.
The allowance of depreciation on Goodwill was otherwise a d) debatable matter and the assessing officer adopted one of the possible two views.
Thus, the impugned order u/s 263 of the Act is bad in law and must be quashed.
3. The PCIT has erred in law and on facts in passing an order u/s 263 of the Act ignoring the detailed reply filed on 19/03/2021 by the assessee on the e-portal of the Income-tax Department and alleging that no reply has been filed by the assessee. Thus, the impugned order passed u/s 263 of the Act is completely perverse and passed with a predetermined frame of mind to harass the appellant by ignoring the principles of natural justice and must be quashed
4. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing.”
Oriental Buildtech Private Limited Vs. PCIT (B) In this case, assessment order dated 22/12/2018 was passed by the Assessing Officer u/s 143(3) of Income Tax Act; wherein returned loss amounting to Rs.4,81,84,590/- was accepted. A revisionary order u/s 263 of Income Tax Act was passed by Ld. Principal Commissioner of Income Tax (“PCIT”, for short) directing the Assessing Officer to pass an appropriate order, as per provisions of Income Tax Act, 1961, modifying the assessment order dated 22/12/2018. This present appeal has been filed by the assessee against the aforesaid impugned revisionary order dated 31/03/2021 passed by the Ld. PCIT.
(B) Vide order sheet noting dated 28/07/2021, Registry of Income Tax Appellate Tribunal (“ITAT”, for short) has commented that the appeal filed by the assessee was time barred by 57 days; and accordingly a defect notice dated 28/07/2021 was issued to the assessee. In response, vide letter dated 21/08/2021, the assessee has submitted as under:
The assessee received the impugned order dated 31/03/2021 passed u/s 263 of the Act in its case for the AY 2016-17 on 01/04/2021 on email. However, thereafter, the second wave of the COVID 19 spread its wings since the middle of April 2021 very rigorously and remained in full force till the middle of June 2021 disrupting not only the entire work but life of everyone. Thus, the assessee could file the above appeal challenging the said order before the Hon’ble ITAT on 27/07/2021 when the situation Oriental Buildtech Private Limited Vs. PCIT somehow normalised. It is well known that in this wave practically every family was somewhere got effected.
The above defect notice issued alleges a delay of 57 days in filing the said appeal. However, in this regard, it is submitted that the Hon’ble Supreme Court in the MA no/6.572021 in SMW(C) No. 3/2020, vide its order dated 27/04/2021, copy enclosed, has held as under: “We also take judicial note of the fact that the steep rise in COVID -19 Virus cases is not limited to Delhi alone but it has engulfed the entire nation. The extraordinary situation caused by the sudden and second outburst of COVID-19 Virus, thus, requires extraordinary measures to minimize the hardship of litigant public in all the states. We, therefore, restore the order dated 23n' March 2020 and in continuation of the order dated 8th March 2021 direct that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders. ”
Further, the CBDT also vide its circular no. 10 dated 25/05/2021 in pursuance to the said order of the Hon’ble Apex Court extended the limitation period in consonance to the directions of the Hon’ble Apex Court as above for filing appeals before the CIT(A). It is also well known that due to the difficulties faced by the general public because of the said pandemic, the Government of India has been continuously extending limitation period for compliance under various statutes.
In view of the above judgment of the Hon’ble Apex Court, the limitation for filing appeal before the Hon’ble ITAT also gets extended till further orders by the Hon’ble Apex Court and thus, the above appeal should be considered as filed within time and the defect pointed out should be removed.”
(B.1) In view of the aforesaid submissions made by the assessee vide letter dated 02/08/2021 and in respectful deference to aforesaid order dated 27/04/2021 of Hon’ble Supreme Court; we are of the view that this appeal is not fit to be treated as barred by limitation. We treat the appeal as having been filed within limitation period and accordingly, we proceed to decide the appeal on merits.
Oriental Buildtech Private Limited Vs. PCIT (C) At the time of hearing before us, the Ld. Authorized Representative for the appellant assessee drew our attention to paragraph-6 of the impugned revisionary order dated 31/03/2021 wherein the Ld. PCIT remarked that there was no compliance on the part of the assessee to show cause notice dated 08/03/2021. The Ld. AR for the assessee submitted that hearing was fixed by Ld. PCIT on 12/03/2021 vide aforesaid show cause notice dated 08/03/2021; and vide letter dated 12/03/2021, the assessee requested the Ld. PCIT to adjourn the hearing on the ground that some time was needed to prepare submissions on the issue under consideration. The Ld. AR for the assessee further submitted that the Ld. PCIT did not, however, provide another opportunity for hearing. The Ld. AR for the assessee furthermore submitted that the assessee filed written submissions in the office of Ld. PCIT during pending of revisionary proceedings in the office of Ld. PCIT; but the Ld. PCIT overlooked the same and did not take the assessee’s written submissions into consideration. Thus, the Ld. AR for the assessee submitted, the Ld. PCIT erroneously remarked that there was no compliance from the assessee’s side in response to aforesaid show cause notice dated 08/03/2021. The learned Page 5 of 8 Oriental Buildtech Private Limited Vs. PCIT Authorized Representative for the assessee vehemently pressed ground No.3 of the present appeal before us.
(C.1) The Ld. CIT-DR for Revenue relied on impugned revisionary order dated 31/03/2021 of the Ld. PCIT passed u/s 263 of the IT Act.
(C.2) We have heard both sides. We have perused the materials on record. It is not in dispute that the assessee filed letter requesting adjournment of the hearing fixed by the Ld. PCIT on 08/03/2021. It is also not in dispute that the assessee filed written submissions in the office of the Ld. PCIT in response to the aforesaid show cause notice dated 08/03/2021. We also notice that the hearing fixed on 12/03/2021 by Ld. PCIT was merely a few days after issue of notice dated 08/03/2021; and that despite the assessee’s request for adjournment, fresh hearing was not fixed by the Ld. PCIT. We also find that the written submissions filed by the assessee were not taken into consideration by the Ld. PCIT in pass/2ing the aforesaid revisionary order dated 31/03/2021 u/s 263 of I.T. Act. In view of the foregoing; we are of the view that the Ld. PCIT failed to provide reasonable opportunity to the assessee. We Oriental Buildtech Private Limited Vs. PCIT are also of the view that the Ld. PCIT failed to take the assessee’s written submissions into consideration before passing the aforesaid impugned revisionary order dated 31/03/2021.
(C.2.1) In view of the foregoing, and having regard to specific facts and circumstances of the present appeal before us, we set aside the impugned revisionary order dated 31/03/2021 passed by the Ld. PCIT u/s 263 of I.T. Act and direct the Ld. PCIT to pass fresh order in accordance with law after providing reasonable opportunity to the assessee’ and after giving due consideration to submissions made by the assessee. All grounds of appeal are treated as disposed off in accordance with the aforesaid directions.
(D) For statistical purposes, this appeal is treated as partly allowed.
This order was pronounced in Open Court on 23/02/2023 in the presence of representatives of both sides, after conclusion of the hearing and is signed today on 23/02/23.