SACHIN NAGINCHAND CHORDIYA vs. PR. COMMISSIONER OF INCOME TAX-2, NASHIK

PDF · subscribers
ITA/4/2018HC BombayHCBM03040773201716 January 2018Author: HON'BLE SHRI JUSTICE S V GANGAPURWALA,HON'BLE SHRI JUSTICE ARUN M. DHAVALE3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal noted that the Commissioner's order remitting the matter back to the Assessing Officer had already taken effect, and a further assessment order had been passed. The Commissioner (Appeals) had subsequently allowed the appeal filed by the present assessee, finding favour with the assessee's arguments. The Tribunal observed that the grounds agitated in the present appeal were to be considered by the authority where the appeal is pending (i.e., the Tribunal, in the Department's appeal against the Commissioner (Appeals)'s order). The Tribunal also noted that a fair opportunity had been given to the party by the Commissioner by remitting the matter back. In view of these circumstances, the Tribunal was not inclined to invoke its jurisdiction, stating that the appellant was entitled to raise all contentions in the pending appeal. The income tax appeal was accordingly disposed of.

What were the facts?

The assessee, Sachin Naginchand Chordiya, is appealing an order. The Assessing Officer (AO) made an addition by calculating gross profit at 5% and passed an assessment order under Section 143(3) of the Income Tax Act. Subsequently, the Commissioner of Income Tax invoked revisional powers under Section 263. The assessee contended that the Commissioner could not have invoked these powers, especially since no appeal was filed by the department. The Commissioner's order remitted the matter back to the AO, who then passed a fresh assessment order. The assessee appealed this fresh order to the Commissioner (Appeals), who allowed the appeal. The Department has challenged the Commissioner (Appeals)'s decision before the Tribunal, and that appeal is pending.

What were the issues?

1. Whether the Commissioner erred in invoking revisional powers under Section 263 of the Income Tax Act when two views were possible and the Assessing Officer had adopted one permissible view. 2. Whether the Commissioner was justified in directing that the provisions of Section 40A of the Income Tax Act be considered, and if so, whether the assessee would be entitled to protection under Rule 6DD of the Income Tax Rules. Assessee's Contentions: The assessee argued that the Commissioner could not have invoked revisional powers under Section 263 because the AO had adopted a permissible view based on gross profit, and there were two possible courses of action. The assessee relied on the Supreme Court judgment in CIT (Central) Ludhiana vs. Max India Limited to support the argument that revisional jurisdiction cannot be invoked if the AO has adopted a legally permissible course. The assessee also contended that even if Section 40A were applied, they would be entitled to protection under Rule 6DD. Revenue's Contentions: The revenue's advocate supported the order passed by the Commissioner.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 263,Section 40A

AI-generated summary — verify with the full judgment below

1 ita 04.18 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO. 04 OF 2018 Sachin Naginchand Chordiya ..    Appellant Versus The Commissioner of Income Tax ­ 2, Nashik ..    Respondent Shri Subhodh P. Shah, Advocate for the Appellant. Shri Alok Sharma, Advocate for the Respondent/sole. CORAM : S. V. GANGAPURWALA AND ARUN M. DHAVALE, JJ. DATE : 16TH JANUARY, 2018. FINAL ORDER : . Mr. Shah, the learned advocate for the appellant submits that,   the   assessing   officer   calculated   gross   profit   at   5%   and addition was made.  Thereafter assessment order U/Sec. 143(3) of the Income Tax Act was passed.   The Commissioner suo­motu invoked its revisional powers U/Sec. 263 of the Income Tax Act. According to the learned counsel, the Commissioner could not have   invoked   his   revisional   powers   and   more   particularly   no appeal was filed before the Commissioner by the department. There were two views possible.  The Assessing Officer assessed it on the basis of gross profit, as such it was not open for the Commissioner to direct that provisions of Sec. 40­A of the Income

2 ita 04.18 Tax At are not considered.   Even if, provisions of 40­A of the Income Tax Act are invoked, the appellant would be entitled for the protection under Rule 6­DD of the Income Tax Rules.   The learned advocate relies on the judgment of the Apex Court in a case of  Commissioner Income Tax (Central) Ludhiana Vs. Max India Limited reported in (2007) 15 SCC 401 to contend that, if two courses are available and the assessing officer adopts one course permissible in law, then it will not be open to invoke revisional jurisdiction. 2. Mr.   Sharma,   the   learned   advocate   for   the   respondent supports the order. 3. It is not disputed that, after the Commissioner remitted the matter to the Assessing Officer, the Assessing Officer passed assessment order afresh.  The same was assailed by the present appellant before the Commissioner Appeals.  The Commissioner Appeals allowed the appeal filed by the appellant and it is stated that, the Department has challenged the said decision before the Tribunal and the said appeal is subjudice before the Tribunal. 4. The order of Commissioner remanding matter back to the Assessing   Officer   has   already   taken   effect   and   further assessment order was passed.  The Commissioner Appeals found favour with the arguments of present appellant and has allowed

3 ita 04.18 the appeal of the present appellant. 5. The grounds agitated here, naturally, are to be considered by the authority, where the appeal is pending after the assessing officer has passed the order.   The order remitting the matter back and re­opening assessment has already taken effect and further order pursuant to it are also passed.  It appears that, fair opportunity   is   given   to   the   party   by   the   Commissioner   by remitting the matter back. 6. In view of the aforesaid circumstance, we are not inclined to invoke our jurisdiction.  The appellant is entitled to raise all the contentions raised herein in the appeal.   The income tax appeal accordingly is disposed of.  No costs. [ARUN M. DHAVALE, J.]           [S. V. GANGAPURWALA, J.] bsb/Jan. 17

More judgments on Section 263

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

Recent GST High Court judgments

Search GST case law →