NEELACHAL GRAMYA BANK,BHUBANESWAR vs. PRINCIPAL CIT-1, BHUBANESWAR

Shri B.K.Mahapatra, ld AR appeared for the assessee and Shri Shri B.K.Mahapatra, ld AR appeared for the assessee and Shri Shri B.K.Mahapatra, ld AR appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. M.K.Gautam, ld CIT DR appeared for the revenue.

It was submitted by ld AR that the original assessment i It was submitted by ld AR that the original assessment i It was submitted by ld AR that the original assessment in the case of the assessee came to be completed u/s.143(3) /147 of the Act on the assessee came to be completed u/s.143(3) /147 of the Act on the assessee came to be completed u/s.143(3) /147 of the Act on P a g e 1 | 5 15.12.2017. The said assessment order was the subject matter of revision u/s.263 of the Act by the Pr. CIT. It was the submission that the issues in the revision was of commission paid to daily deposit agent and commission paid to agency arrangement to sponsor bank. It was the submission that the Pr. CIT was of the view that no TDS had been made on the said expenses u/s.194H of the Act. It was the submission that the audit report of the assessee specifically mentioned that all the payments have been made after deduction of respective TDS. It was the submission that though the Pr. CIT has invoked his powers u/s.263 of the Act and set aside the matter to the file of the AO, he has given direction to modify the assessment thereby giving direction to the AO to make addition. It was the submission that though the Pr. CIT has mentioned that the assessee was to be given sufficient opportunity, a direction had been given to modify the assessment after due examination. The said direction was, in effect, the direction to make the addition and not the verification. It was the further submission that adequate opportunity had not been granted to the assessee in the proceedings u/s.263 of the Act insofar as only two days time had been granted to the assessee to respond to the notice, which had effectively not been served on the assessee. It was the submission that the order passed u/s.263 is liable to be quashed.

In reply, ld CIT DR submitted that all that section 263 requires that the assessee should be heard. The assessee had been given two

P a g e 2 | 5 opportunities to represent its case before the Pr. CIT. The opportunity had been given by issuing notice through email through ITBA portal. It was the submission that the assessee having not responded to the notices, the Pr. CIT was not liable to be held to be at fault. It was the submission that in the order passed u/s.263, specific direction was given to the AO to modify the assessment after due examination. It was the submission that there was no direction to make a direct addition. The Assessing Officer has been directed to examine the issue and then make addition, if called for. It was the submission that the order u/s.263 is liable to be upheld.

We have considered the rival submissions. Coming to the first issue of opportunity of being heard, admittedly, notice u/s.263 has been issued on 12.2.2020 giving time to the assessee for 14.2.2020 i.e. two days. As there was no compliance, it is noticed that another notice has been issued on 18.2.2020 fixing the hearing on 20.2.2020 again giving two days time. Admittedly, the provisions of section 263 require that the assessee should be heard in respect of the issue on which the revision is being proposed. Admittedly, granting two days time from the date of the notice to the date of fixing the hearing is clearly a violation of the provisions of natural justice. The statue provides for an opportunity of being heard. It provides for an effective opportunity of being heard. When emails are sent through electronic media, many a times such emails go to the “spam” folders and are lost track of. Providing of two days time to respond in respect of the P a g e 3 | 5 issue relating to assessment year 2013-14 in 2020 itself is a notional opportunity, not an effective opportunity. But as the opportunity has been granted and as the Tribunal is creature of the statute, the Tribunal cannot restore the issue back to the file of the pr. CIT insofar as it would mean extending period of limitation for the purpose of passing order u/s.263 of the Act. It is presumed that in future, the revenue would take adequate care to grant the assessee atleast two weeks time when opportunity of being heard is granted to the assessee. It would also be advisable to send notice of hearing through atleast two of the various modes of service of notice as provided under the provisions of section 282 of the Act. It is an admitted fact that email normally sent sometimes goes to the spam folders unless specifically opened does not show up even in the notification in the electronic media.

Coming to the issue of whether Pr. CIT has given a direction to make addition or whether he has directed the AO to examine the issue and then make the adjudication. Clearly, a perusal of the order of the Pr. CIT shows that he has directed the AO to modify the assessment after due examination of the said issue in question as per facts and law. Thus, the same cannot be read to be a direction to make the addition but is clearly a direction to examine the issue on the basis of facts and law and then to adjudicate the issue by the AO.

Ld AR has not been able to show that the issues raised by the Pr. CIT has been examined by the AO in the original assessment order passed u/s.143(3)/147 of the Act. This being so, we are of the view that the order passed u/s.263 by the ld. Pr. CIT is liable to be upheld and we do so.

In the result, appeal of the assessee stands dismissed.