Commissioner of Income Tax-II vs. M/s Green Fire Agri Commodities Limited

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ITTA/458/2014HC TelanganaHBHC01020546201424 July 20144 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, finding no element of law involved. The Tribunal had correctly held that the Commissioner's exercise of jurisdiction under Section 263 was not legally undertaken and that the Assessing Officer had followed the correct position of law. The Tribunal also found that the issue was covered by the decision of the Bangalore Tribunal in HCL EAI Services Ltd. v. Deputy Commissioner of Income Tax, which squarely applied. Consequently, the Tribunal concluded that the element of prejudice to the interest of the Revenue was missing and set aside the Commissioner's order. The High Court affirmed the Tribunal's decision, noting that the rule of consistency and legal principles were followed and that the Bangalore Tribunal's decision had not been upset. Therefore, the appeal was dismissed.

What were the facts?

The appeal is filed by the Commissioner of Income Tax-II, Hyderabad (the Revenue) against the judgment and order of the Income Tax Appellate Tribunal (ITAT) dated November 27, 2013. The ITAT had set aside an order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961. The assessment year in question is 2006-07. The dispute concerns whether the assessment order was erroneous and prejudicial to the interest of the Revenue, specifically regarding the realization of export proceeds within an extended time stipulated by the Reserve Bank of India (RBI) under the FEMA Act. The ITAT found that the Commissioner's exercise of jurisdiction under Section 263 was not legally undertaken and that the Assessing Officer had followed the correct legal position.

What were the issues?

1. Whether the Hon’ble Tribunal (ITAT) is correct in law in setting aside the order passed by the jurisdictional Commissioner of Income Tax under Section 263 of the Income Tax Act 1961, when the subject assessment order was erroneous and prejudicial to the interest of the Revenue and liable to be revised under Section 263 of the Act? 2. Whether the Hon’ble Tribunal (ITAT) is correct in law in holding that the subject assessment order was not prejudicial to the interest of the Revenue nor erroneous, as the export proceeds have been brought into India within the extended time stipulated by the Reserve Bank of India (RBI) relying on a circular issued by the RBI under the Foreign Exchange Management Act (FEMA Act), when there is no such provision under the Income Tax Act 1961? Assessee's Contentions: The assessee argued that the ITAT correctly found that the Commissioner's exercise of jurisdiction under Section 263 was not legally undertaken and that the Assessing Officer had followed the correct position of law. The assessee also relied on the decision of the Bangalore Tribunal in HCL EAI Services Ltd. v. Deputy Commissioner of Income Tax, which they contended squarely applied to the case, thus indicating the absence of prejudice to the interest of the Revenue. Revenue's Contentions: The Revenue contended that the assessment order was erroneous and prejudicial to the interest of the Revenue, making it liable for revision under Section 263. They questioned the ITAT's finding that the realization of export proceeds within the extended RBI period, without a corresponding provision in the Income Tax Act, did not render the assessment order erroneous or prejudicial.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH PRESENT

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR

I.T.T.A. No.458 OF 2014

DATED: 24.07.2014

Between:

Commissioner of Income Tax-II, Hyderabad … Appellant

And

M/s.Green Fire Agri Commodities Limited … Respondent

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR

I.T.T.A. No.458 of 2014

JUDGMENT: (per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta)

This appeal is directed against the judgment and order of the learned Tribunal dated 27.11.2013 passed in I.T.A.No.516/Hyderabad/2013 in relation to the assessment year 2006-07 on the following suggested questions of law. 1. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in setting aside the order passed by the jurisdictional Commissioner of Income Tax under Section 263 of the Income Tax Act 1961 when the subject assessment order was erroneous and prejudicial to the interest of the Revenue and liable to be revised under Section 263 of the Act? 2. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in holding that the subject assessment order was not prejudicial to the interest of the Revenue nor erroneous as the Export proceeds have been brought into India within the extended time stipulated by Reserve Bank of India (RBI) relying on the circular issued by the Reserve Bank of India (RBI) under Foreign Exchange Management Act (FEMA Act) when there is no such provision

under the Income Tax Act 1961?

In this case, the Tribunal on fact found that the exercise of jurisdiction under Section 263 of the Income tax Act, 1961 by the Commissioner was not legally undertaken and the Assessing Officer has followed the correct position of law. After appreciation of fact, the Tribunal also found that the issue was covered by the decision of Bangalore Tribunal in the case of HCL EAI Services Ltd. v. Deputy Commissioner of Income Tax[1] and the same squarely applies to this case. Therefore, the element of prejudice to the interest of the Revenue is missing. Accordingly, the order of the Commissioner was set aside.

We are of the view that the rule of consistency and the legal principles have been followed by the Tribunal. It is not the case before us that the decision of the Bangalore Tribunal has been upset as yet.

We therefore dismiss this appeal having found no element of law involved in this appeal. No order as to costs.

___________________ K.J. SENGUPTA, CJ 24th JULY, 2014. __________________ SANJAY KUMAR, J

kvni [1] (2013) 35 taxmann.com 146

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