CIT JALANDHAR vs. DEEPAK MITTAL PROP. M/S SONALIKA AG. IND. HSRPR

ITA/523/2009HC Punjab & HaryanaPHHC01084640200917 February 2010Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE JITENDRA CHAUHAN5 pages
AI SummaryDismissed

What were the facts?

The Revenue (Commissioner of Income Tax - CIT) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated May 27, 2009, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had set aside an order dated August 28, 2003, passed by the CIT under Section 263 of the Act. The CIT had invoked revisional jurisdiction based on a survey report under Section 133A, seeking to set aside an assessment order passed under Section 143(3) by the Assessing Officer (AO) on November 14, 2005, for assessment year 2003-04. The ITAT found that the CIT's order was not justified as the AO had already conducted a detailed inquiry and passed the assessment order based on the evidence. The ITAT also examined the merits of the case concerning the assessee's eligibility for deductions under Section 80IB(4).

What did the High Court hold?

The High Court held that the CIT's exercise of revisional jurisdiction under Section 263 of the Income Tax Act was unjustified. The Tribunal had rightly concluded that a change of opinion by re-appraising the evidence is not within the parameters of the CIT's revisional powers. The AO had conducted a detailed inquiry, and the CIT's order, which did not point out any loss to the revenue and merely asked for re-examination of documents, was not sustainable. Regarding the second issue, the Tribunal had relied on Supreme Court and High Court judgments (Textile Machinery Corporation Ltd v. CIT and CIT v. Perfect Liners) to hold that the assessee was engaged in manufacturing or production. The assessee's detailed explanation of the processes, including critical machinery operations on sophisticated CNC machines for chassis parts like Rear Cover, Differential Housing, and Reduction Unit, supported its claim. The AO had also made a categorical finding that the assessee was engaged in manufacturing. Therefore, the Tribunal's order did not suffer from any legal infirmity, and no substantial question of law arose for admission of the appeal.

What were the issues?

1. Whether the CIT was justified in exercising revisional jurisdiction under Section 263 of the Income Tax Act, 1961, to set aside the assessment order passed by the AO, based on a survey report and a change of opinion? Assessee's Contention (as inferred from the ITAT's reasoning): The assessee argued that the CIT's exercise of revisional jurisdiction was not warranted. The AO had already conducted a detailed inquiry and passed the assessment order based on the available evidence. The CIT's action amounted to a mere change of opinion by re-appraising the evidence, which is not permissible under Section 263. Revenue's Contention (as inferred from the ITAT's reasoning): The Revenue contended that the CIT was justified in revising the assessment order, presumably because the survey report indicated that the assessment order was erroneous and prejudicial to the interests of the revenue. The specific arguments of the Revenue are not explicitly detailed in the judgment, but the ITAT's rejection of the CIT's action implies the Revenue's stance was that the revision was necessary. 2. Whether the assessee was engaged in manufacturing or production of articles or things, thereby qualifying for deductions under Section 80IB(4) of the Income Tax Act, 1961? Assessee's Contention: The assessee claimed eligibility for deductions under Section 80IB(4), stating that it was engaged in the production or manufacture of components like Differential Housing, Get Box Housing, and Rear Cover Housing. The assessee explained the detailed manufacturing processes undertaken after receiving components from another entity.

Which sections of the Income-tax Act were involved?

Section 260A,Section 263,Section 133A,Section 143(3),Section 80IB(4),Section 80IB(14)(g)

AI-generated summary — verify with the full judgment below

ITA 523 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 523 of 2009 Date of decision 18 .2.2010 Commissioner of Income Tax ... Appellant Versus Deepak Mittal ... Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr.Vivek Sethi ,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The Revenue has approached this Court under Section 260A of the Income Tax Act, 1961 (for brevity 'the Act') challenging order dated 27.5.2009 passed by the Income Tax Appellate Tribunal, Amritsar Bench (for brevity 'the Tribunal') in ITA No. 340(ASR)/2008 in respect of the assessment year 2003-04. The Tribunal has set aside the order dated 28.8.2003 passed by the CIT Jalandhar (1) by exercising juri iction under Section 263 of the Act holding that on the basis of survey report conducted under Section 133 A of the Act the assessment completed under Section 143 (3) of the Act on 14.11.2005 by the Assessing Officer cannot be set aside by the CIT by exercising revisional juri iction. In that regard, the Tribunal has placed reliance on

The order continues below.

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