PR. COMMISSIONER OF INCOME TAX, PATIALA vs. STATE BANK OF PATIALA, THE MALL, PATIALA, (PAN: AACCS0143D)

PDF · subscribers
ITA/275/2017HC Punjab & HaryanaPHHC01117475201726 September 2017Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE ARUN MONGA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, after hearing the learned counsel for the appellant-revenue, noted that the issue involved in the present appeal was covered against the revenue by previous judgments of the same Court in ITA No. 270 of 2016 and ITA No. 193 of 2017, both involving the same appellant and respondent, decided on 27.02.2017 and 22.05.2017 respectively. Consequently, the Court held that no substantial question of law arose from the ITAT's order. The appeal was accordingly dismissed. The Court did not delve into the merits of the Section 14A disallowance or the validity of the Section 263 order, as the appeal was disposed of on the ground that no substantial question of law was involved, based on prior precedents.

What were the facts?

The assessee, State Bank of Patiala, had its assessment for AY 2009-10 completed under Section 143(3) of the Income Tax Act, 1961, with a disallowance of ₹2,32,60,607 under Section 14A read with Rule 8D. The Principal Commissioner of Income Tax (PCIT) initiated proceedings under Section 263, deeming the assessment order erroneous and prejudicial to revenue, and directed an enhancement of income by ₹43.544 crore. The ITAT quashed the PCIT's Section 263 order. Subsequently, the Assessing Officer, in compliance with the PCIT's order, made a further addition of ₹43,43,39,393 under Section 14A. The CIT(A) held this subsequent order infructuous as the Section 263 order was quashed, and allowed the assessee's appeal. The ITAT dismissed the revenue's appeal against the CIT(A)'s order, leading to the present appeal by the revenue to the High Court.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Hon'ble ITAT, Chandigarh is legally correct in deleting the addition of ₹45,76,00,000 (₹2,32,60,607 made under Section 143(3) + ₹43,43,39,393 made under Section 143(3) r.w.s 263) on account of apportionment of expenses against exempted income under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962, by holding that the order under Section 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax, Patiala has already been quashed by the Tribunal? Assessee's contention: The ITAT correctly held that once the order under Section 263 was quashed, the subsequent assessment order passed in compliance with it would not survive and the proceedings were infructuous. The CIT(A) had already allowed the appeal on this basis. Revenue's contention: The revenue argued that the ITAT was legally incorrect in deleting the addition, as the assessment order under Section 143(3) read with Section 263 should survive. The revenue relied on the substantial question of law framed in its appeal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 263,Section 14A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 275 of 2017 (O&M)

Date of decision: 26.09.2017

The Pr. Commissioner of Income Tax, Patiala.

……Appellant

Vs. State Bank of Patiala

…..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL

HON’BLE MR. JUSTICE AMIT RAWAL Present: Mr. Zora Singh Klar, Senior Standing Counsel

for the appellant-revenue. Ajay Kumar Mittal,J.

1.

The appellant-revenue has filed the instant appeal under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 29.11.2016, Annexure A.6, passed by the Income Tax Appellate Tribunal, Division Bench, Chandigarh (in short, “the Tribunal”) in ITA No. 871/CHD/2016, for the assessment year 2009-10, claiming following substantial question of law:- “Whether in the facts and circumstances of the case, the Hon’ble ITAT, Chandigarh is legally correct in deleting the addition of ` 45,76,00,000/- (` 2,32,60,607/- made under Section 143(3) + ` 43,43,39,393/-, made under Section 143(3) r.w.s 263) on account of apportionment of expenses against exempted income under Section 14A of the Income Tax Act, 1961 read with rule 8D of the Income Tax Rules, 1962 by holding that the order under Section 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax, Patiala has already been quashed by the Tribunal?”

Gurbax Singh 2017.10.13 16:21

2.

A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. Assessment under Section 143(3) of the Act was made by the Assessing Officer at an income of ` 1065,37,96,820/- which included disallowance of ` 2,32,60,607/- on account of apportionment of expenses against exempted income under Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (in short, “the Rules”) vide order dated 23.12.2011, Annexure A.

1.

Later on, Principal Commissioner of Income Tax, Patiala passed order under Section 263 of the Act on 18.03.2014, Annexure A.2, holding the aforesaid assessment order to be erroneous and prejudicial to the interest of the revenue and set aside the assessment order with direction to enhance income of the assessee by ` 43.544 crore being the difference of disallowance. The assessee challenged the order under Section 263 of the Act before the Tribunal. Vide order dated 28.03.2016, Annexure A.3, the Tribunal quashed the order under Section 263 of the Act. In compliance to the order dated 18.03.2014 under Section 263 of the Act, the Assessing Officer passed order on 15.10.2014 under Section 143(3) read with Section 263 of the Act by making further addition of ` 43,43,39,393/- under Section 14A of the Act. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) relying upon the order passed by the Tribunal dated 28.03.2016 held that order dated 15.10.2014, passed by the Assessing Officer under Section 143(3) read with Section 263 of the Act stood infructuous and accordingly allowed the appeal of the assessee vide order dated 27.05.2016, Annexure A.5 given in Appeal No. 224/IT/CIT(A)/PTA/14-

15.

Not satisfied with the order, the department filed an appeal before the Tribunal. Vide order dated 29.11.2016, Annexure A.6, the Tribunal dismissed the appeal of the department on the ground that since the order under Section 263 of the Act had been set aside and quashed by it, the assessment order under Section 143(3) read with Section 263 of the Act would not survive and the present proceedings stood infructous. Hence, the instant appeal by the appellant-revenue.

3.

We have heard learned counsel for the appellant-revenue.

4.

Learned counsel for the appellant-revenue very fairly ‘gs’

Judge Whether speaking/reasoned

Yes/No

Whether reportable

Yes/No

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →