Commissioner of Income Tax-II vs. M/s EP Industrial AND Agro Chemicals Pvt Ltd.,

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ITTA/682/2014HC TelanganaHBHC01044735201427 November 20143 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the learned Tribunal was correct in quashing the order of the Commissioner of Income Tax. The Tribunal had found that the Commissioner of Income Tax (Appeals) lacked jurisdiction under Section 263 of the Income Tax Act, 1961, to substitute his own opinion for that of the Assessing Officer. The High Court noted that when two possible views exist, and the Assessing Officer has taken one view, the Commissioner cannot invoke Section 263 powers. This principle, supported by various judicial pronouncements, was correctly applied by the Tribunal. Therefore, the Tribunal was right in quashing the Commissioner's order and granting relief to the assessee. The appeal was dismissed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax-II, Hyderabad (appellant) against the judgment and order of the Income Tax Appellate Tribunal (ITAT) dated June 6, 2014. The ITAT's order pertained to the assessment year 2007-2008 and had quashed orders passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961. The assessee is M/s. E.P. Industrial & Agro Chemicals Private Limited, Hyderabad (respondent). The core of the dispute lies in the CIT's invocation of Section 263 powers, which the ITAT found to be without jurisdiction.

What were the issues?

1. Whether the Hon’ble Tribunal (ITAT) is perverse and incorrect in law in quashing the orders of the Commissioner of Income Tax issued under Section 263 of the Income Tax Act, 1961, when the subject assessment order was erroneous and prejudicial to the interest of the revenue for the facts and reasons mentioned in the said orders of the Commissioner of Income Tax? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The ITAT's decision was based on its finding that the CIT had no jurisdiction under Section 263 to substitute his opinion for that of the Assessing Officer. Revenue's Contention: The appellant (Revenue) urged the High Court to admit the appeal on the suggested question of law, arguing that the assessment order was erroneous and prejudicial to the revenue's interest, justifying the CIT's action under Section 263.

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

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

I.T.T.A. No. 682 of 2014

Date: 27.11.2014

Between:

Commissioner of Income Tax-II, Hyderabad. … Appellant

And

M/s. E.P. Industrial & Agro Chemicals Private Limited Hyderabad. … Respondent

This Court made the following:

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

I.T.T.A. No. 682 of 2014

JUDGMENT: (Per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against the judgment and order of the learned Tribunal dated 06.06.2014 in relation to the assessment year 2007-2008 on the following suggested question of law.

“In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is not perverse and correct in law in quashing the orders of the Commissioner of Income Tax issued under Section 263 of the Income Tax Act, 1961 when the subject assessment order was erroneous and prejudicial to the interest of the revenue for the facts and reasons mentioned in the said orders of the Commissioner of Income Tax?”

Mr. B. Narasimha Sarma, learned counsel for the appellant, urged to admit the appeal on the aforesaid ground. We are unable to do so, as we notice that the learned Tribunal has found that the Commissioner of Income Tax (Appeals) has no jurisdiction under Section 263 of the Income Tax Act, 1961 (for short, “the Act”) in order to substitute his opinion in place of the Assessing Officer’s opinion.

When two views and opinions are possible and if one view is taken up by the Assessing Officer, it is settled law that invocation of power under Section 263 of the Act by the Commissioner of Income Tax (Appeals) is not called for and the learned Tribunal has also taken note of the same made by various judicial pronouncements. Therefore, we are of the view that the learned Tribunal is right in quashing the order of the

Commissioner and granting relief. Accordingly, the appeal is dismissed. No order as to costs.

___________________ K.J. SENGUPTA, CJ

___________________ SANJAY KUMAR, J Date: 27.11.2014 ES

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