COMPUCOM SOFTWARE LIMITED vs. PRINCIPAL COMMISSIONER OF INCOME TAX, JAIUR 2, JAIPUR

Facts

The assessee, Compucom Software Limited, filed its return of income for FY 2017-2018 on 28.11.2017, declaring a total income of approximately Rs. 10.91 crores. The assessment order under Section 143(3) of the IT Act, passed by the ACIT on 17.12.2019, assessed the total income at approximately Rs. 11.17 crores after additions of Rs. 25.89 lakhs. The PCIT initiated revisionary proceedings under Section 263 of the IT Act by issuing a notice on 12.03.2022, fixing the hearing for 21.03.2022. The assessee filed an adjournment application on 21.03.2022, but the PCIT passed an order on 27.03.2023 stating no reply was filed. The ITAT, in its order dated 31.08.2022, allowed the assessee's appeal to the extent of remanding the matter back to the PCIT due to violations of natural justice. The assessee filed an appeal before the High Court against the ITAT's order.

Held

The High Court held that the assessee's contention that the entire proceedings under Section 263 should be set aside was not tenable. The Court reasoned that proceedings were initiated within the statutory time limit, and the assessee was afforded a reasonable opportunity of hearing, despite the short notice period. The adjournment application filed on the day of the hearing was also noted. The Court distinguished the case of *Ashutosh Bhargava* by stating that it involved different factual circumstances and the ITAT's order in that case was not binding on the High Court. The Court found that the ITAT's decision to remand the matter back to the PCIT for fresh consideration, due to the assessee not being accorded sufficient opportunity, was a valid exercise of discretion and not perverse. The Court also referred to the Supreme Court's decision in *Steel Authority of India Ltd. vs. Designated Authority* regarding the admission of appeals on substantial questions of law, concluding that no substantial question of law arose as substantial relief had already been granted by the ITAT's remand order.

Key Issues

1. Whether the ITAT erred in remanding the matter back to the PCIT instead of setting aside the entire revisional proceedings initiated under Section 263 of the IT Act, considering the alleged violation of principles of natural justice. Assessee's contentions: The assessee argued that in similar circumstances, the ITAT in *Ashutosh Bhargava vs. PCIT-2 Jaipur* (ITA No. 20/JP/2021) had set aside the entire revisional proceedings. The assessee also relied on the Supreme Court judgment in *Maneka Gandhi vs. Union of India* and the Allahabad High Court judgment in *M/s M.L. Chains vs The Pr. Commissioner of Income Tax-1 & Ors.* to support its claim for setting aside the proceedings. Revenue's contentions: The judgment does not record specific contentions from the revenue.