SHRI LAXMI NARAYAN AGARWAL,JAIPUR vs. PCIT-2, JAIPUR

At the outset, it is noted that there has been a delay in filing the present appeal by 30 days. It was submitted that the impugned order was passed by the ld. PCIT on 31.03.2021 and the same was received by the assessee on 31.03.2021 and ordinarily, the appeal should have been filed before the Tribunal on or before 30.05.2021. However, the same was filed on 30.06.2021. It was submitted that the delay so happened in filing the present appeal was on account of the 2nd outburst of COVID-19 Pandemic and consequent lockdown announced by the State Government. It was accordingly submitted that due to lockdown, the assessee was prevented from filing the present appeal and the delay so happened was not deliberate. In support, the reliance was also placed on the decision of Hon’ble Supreme Court dated 27.04.2021 wherein the period of limitation in filing of appeal, irrespective of the limitation prescribed under the general law or special laws whether condonable or not shall stand extended with effect from 14th March, 2021 till further orders. It was accordingly submitted that the delay so happened in filing the present appeal was beyond the control of the assessee and the same may be condoned and appeal of the assessee be heard on merits.

Per contra, ld. Pr.CIT/DR did not raise any specific objection and fairly accepted that the explanation so furnished by the ld. AR regarding delay in filing the present appeal on account of COVID-19 pandemic may be considered by the Bench as it deems fit and appropriate.

Briefly stated, facts of the case are that the assessee filed his return of income on 14.10.2016 declaring total income of Rs. 9,11,36,210/- which was selected for scrutiny under compulsory manual selection. Thereafter, notice u/s 143(2) was issued calling for the information and explanation from the assessee and after considering the same, assessment was completed at an assessed income of Rs. 9,65,86,210/- by disallowing labour expenses, vehicles repair & maintenance expenses, staff welfare expenses, conveyance expenses, computer expenses, office expenses and site expenses and the assessment order was passed u/s 143(3) dated 31.12.2018.

Thereafter, the assessment records were called for and examined by the ld. Pr. CIT and he observed that the assessee has taken unsecured loans from 34 lenders and during the assessment proceedings, the assessee has not fulfilled the requirements namely, identity of the person, genuineness of the transaction and credit- worthiness of the payer and only PANs of 10 persons were filed during the course of assessment proceedings. The ld. Pr. CIT accordingly observed that the AO has not verified the issue of unsecured loans taken by the assessee during the year and has thus not deliberated on the issue of unsecured loans while completing the assessment and therefore, the assessment order passed u/s 143(3) dated 31.12.2018 is 5 Sh. Laxmi Narayan Agarwal, Jaipur vs. Pr. CIT, Jaipur-2 erroneous in so far as it is prejudicial to the interest of Revenue and a show cause notice u/s 263 was issued to the assessee. Thereafter, in absence of any submission filed by the assessee in response to the show-cause, the assessment order was set aside and to be redone de- novo in the light of the observation made in the impugned order passed u/s 263 after affording reasonable to the opportunity to the assessee. Against the said order, the assessee is in appeal before us.

In Ground No. 1, the assessee has challenged the exercise of jurisdiction by the ld. Pr. CIT u/s 263 of the Act. In this regard, it has been submitted by the ld A/R that the assessee has already filed an application under Vivad Se Vishwas Scheme on 30.01.2021 which was accepted by the Department and Form 3 was issued on 23.02.2021 by the ld. Pr. CIT, Jaipur-2. Thereafter, Form 4 dated 13.03.2021 was filed by the assessee and finally Form 5 dated 15.04.2021 was issued by the ld. Pr. CIT, Jaipur-2. It was accordingly submitted that prior to the issue of the show cause notice u/s 263 dated 26.03.2021, Form 3 has already been issued by the ld. Pr. PCIT dated 23.02.2021 and accordingly where the assessment order has already been made subject matter of the Vivad Se Vishwas Scheme where the declaration filed by the assessee has been accepted by the ld PCIT, the revision of the said assessment order by virtue of exercise of jurisdiction u/s 263 is not in accordance with the legislative intention of the scheme and therefore, consequent order passed u/s 263 deserves to be quashed.

Per contra, the ld. PCIT/DR taken us through the direct taxes Vivad Se Vishwas Scheme Act of 2020 and submitted that this Act seek to provide for resolution of disputed tax and for matters connected therewith or incidental thereto and our reference was drawn to the 6 Sh. Laxmi Narayan Agarwal, Jaipur vs. Pr. CIT, Jaipur-2 definition of the “appellant”, “disputed income”, “disputed tax”, “tax arrears” as provided in section 2 of the said Act. Further, our reference was drawn to sub-section (3) of Section 5 which talks about the determination of an amount payable under the Act which shall be conclusive as to the matters stated therein and no matter covered by such orders shall be reopened in any other provisions under the Act. Further, our reference was drawn to section 8 which provides that “save as otherwise expressly provided in sub-section 3 of Section 5 or Section 6, nothing contained in this Act shall be construed as conferring any benefit, concession or immunity on the declarant in any proceedings other than those in relation to which the declaration has been made. It was accordingly submitted by the ld PCIT that the whole scheme of the Act i.e. direct taxes Vivad Se Vishwas Scheme Act, 2020 is in relation to specific matters which are under dispute and only in respect of those matters, necessary provisions for settlement of tax dispute has been provided. It was accordingly submitted that merely because the assessee has moved an application under the said Act and that said application has been accepted by the Revenue, it doesn’t preclude the Revenue from exercise of jurisdiction either u/s 263 or 147 of the Act and where such an interpretation is accepted, firstly, the same is clearly not flowing from any specific provisions of the said Act rather it has been provided that such a benefit or concession is not intended or can be construed by virtue of said Act and secondly, it will make the powers of the PCIT u/s 263 or that of the Assessing officer u/s 147 and related provisions in the Income Tax Act as defunct and non-functional as soon as any assessee moves an application under the direct taxes Vivad Se Vishwas Scheme Act, 2020. It was accordingly submitted that the grounds so taken by the assessee deserves to be dismissed.

In Ground No. 2, the assessee has challenged the passing of the impugned order u/s 263 by the Pr. PCIT without providing adequate opportunity of being heard. It was submitted by the ld A/R that the first notice u/s 263 was issued only on 26.03.2021 fixing the date of hearing for 29th of March, 2021 and thereafter, proceedings were concluded on 31.03.2021 and the order was passed on the same date. It was submitted that 27th March and 28th March, being Saturday and Sunday, the assessee effectively got just one day to response which is not sufficient by any standards to respond to the show cause notice and therefore there is denial of adequate opportunity of being heard to the assessee and the principle of natural justice has been clearly violated in the instant case and on this ground as well, the impugned order passed by the ld PCIT be set-aside.

Per contra, the ld. PCIT/DR has relied on the order of the ld. Pr. CIT and our reference was drawn to para 6 of his order wherein it has been stated that “in compliance to the show cause notice dated 26.03.2021, no submission has been filed by the assessee and therefore, the order has been passed on the basis of material available on record.” It was submitted that it is clearly a case non-compliance on the part of the assessee rather than lack of opportunity on the part of

We have heard the rival contentions and purused the material available on record. We find that this is clearly a case of lack of adequate opportunity being provided by the ld PCIT. We find that the show-cause notice has been issued on 26.03.2021 at the fag end of the limitation period, which was expiring on 31.03.2021, wherein the assessee has been provided effectively one working day to respond by 29.03.2021, and the order was thereafter pronounced on 31.03.2021. We understand that being a limitation period, the ld PCIT could not have granted more time but the question is what stopped the ld PCIT to atleast initiate the proceedings earlier and why the proceedings were initiated at the fag end of the limitation period. One possible reason could be the ongoing covid pandemic by virtue of which all activities were at standstill and offices were closed including that of the Revenue authorities. At the same time, the Revenue authorities cannot be oblivious of the orders pronounced by the Hon’ble Supreme Court extending the limitation period and also the fact that the CBDT has also came out with directions extending the limitation period. Considering the entirety of facts and circumstances of the case, we believe that the assessee deserve a reasonable and sufficient opportunity to put forth his submissions and supporting documentation in response to the show- cause notice raised by the ld PCIT. We therefore deem it fit and appropriate that the matter be set-aside to the file of the ld PCIT to decide the matter a fresh as per law after providing reasonable opportunity to the assessee.