DARWIN PLATFORM INDUSTRIES LIMITED ,MUMBAI vs. PCIT MUMBAI -1, MUMBAI
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & MS PADMAVATHY S, AM
Per Padmavathy S, AM:
This appeal by the assessee is against the order of Principle Commissioner of Income Tax, Mumbai-1, [for short 'the PCIT'] passed under section 263 of the Income Tax Act, 1961 (the Act) dated 12.11.2024 for the AY 2021-22. The assessee through various grounds is contending the order passed by the PCIT under section 263 of the Act ex-parte without giving the proper opportunity to the assessee tor represent the case.
M/s Darwin Platform Industries Ltd.
“1. On the facts and circumstances of the case and in law, the Ld. Principal
Commissioner of Income Tax (PCIT) erred in passing an order of revision under section 263 of the Income-tax Act, 1961 (Act) in violation of principles of Natural Justice as the Assessee could not attend the proceedings and the act was without any mala fide intentions.
On the facts and circumstances of the case and in law, the Ld. PCIT erred in passing an order of revision under section 263 of the Act when the Order of the Ld. Assessing Officer (AO) is neither erroneous nor prejudicial to the interest of Revenue.
On the facts and circumstances of the case and in law, the Ld. PCIT erred in passing an order of revision under section 263 of the Act without specifying in the show-cause notice how the Assessment Order is erroneous or prejudicial to the interest of the revenue.
On the facts and circumstances of the case and in law, the Ld. PCIT erred in passing an order of revision under section 263 of the Act on issues which were the subject matter of scrutiny and hence, the revision order may be quashed and set aside.
On the facts and circumstances of the case and in law, the Ld. PCIT erred in passing an order of revision under section 263 of the Act when a specific issue was inquired about and verified by the Ld. AO during the scrutiny proceedings, hence the revision order may be quashed and set aside.
On the facts and circumstances of the case and in law, the Ld. PCIT erred in passing an order of revision under section 263 of the Act as the revision proceedings cannot be initiated on a report furnished by the Ld. AO.
On the facts and circumstances of the case and in law, the Ld. PCIT erred in passing an order of revision under section 263 of the Act stating that section 68 of the Act is attracted when there is no credit in the books of accounts of the assessee.
On the facts and circumstances of the case and in law, the Ld. PCIT has erred in invoking Explanation 2 to section 263(1) of the Act without invoking the same in the Show-cause Notice under section 263 of the Act.”
The assessee is a company engaged in the business of retail trading. The assessee filed the return of income for AY 2021-22 on 16.02.2021 declaring a total M/s Darwin Platform Industries Ltd.
income of Rs. 2,53,134/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The AO completed the assessment by making addition of Rs. 41,81,95,468/- towards unaccounted sales net of unaccounted purchases. The PCIT subsequently on verification of records noticed the following issues:
“i) On perusal of the Assessment Order for A.Y.2022-23 dated 18.03.2024, it is noticed that under the head "The Legacy issue", Balance Sheet of F.Y.
ended on 31.03.2019 is mentioned at page No.11. In the said balance sheet it is observed that the assessee has shown Rs.250.90 Crores under "Revaluation of Reserves".
(ii) Further, it is noticed that under the head "The legacy issue", Balance
Sheet of F.Y. ended on 31.03.2021 is mentioned at page No.13. In the said balance sheet it is observed that the amount of Rs.250.90 Crores under Revaluation Reserve stood at Nil and the said amount was shown under the head "Loans and advances from related parties".
(iii) In view of the above facts, the entries of creating the Revaluation of Reserves and subsequently transferring the amount under the head "Loans and advances from related parties", in subsequent years seems unusual and suspicious.”
Accordingly, the PCIT was of the view that the order of the AO is prejudicial to the interest of the revenue therefore, issued a show-cause notice under section 263 of the Act. The first opportunity was given by the PCIT vide letter dated 02.08.2024 and in response the assessee filed an adjournment letter seeking 30 days time. The PCIT gave subsequent opportunity to the assessee vide letters dated 28.08.2024 and 11.10.2024. The assessee however did not respond and therefore, the PCIT passed an ex-parte order setting aside the assessment order dated 27.12.2022 with a direction to the AO to conduct the proper enquiry with regard to the revaluation reserve created by the assessee in books of account. M/s Darwin Platform Industries Ltd.
We heard the parties and perused the material on record. The ld. AR prayed that though the assessee has responded to the first notice seeking time to file the required documents the assessee could not respond to the second and third notices. The ld. AR submitted a Paper Book containing the relevant details pertaining to the impugned issue due to which the PCIT has held the assessment order as erroneous and prejudicial to the interest of the revenue. The ld AR further submitted that the issues for which the revision proceeding has been initiated are already examined by the AO. The ld. AR therefore prayed for an opportunity to represent the case properly before the PCIT in the proceedings under section 263 of the Act and to submit the relevant documents which were submitted before the AO during assessment proceedings. Considering the peculiar facts in assessee's case we are inclined to give one final opportunity to the assessee in the interest of natural justice and fair play. Accordingly, we are remitting the appeal back to the PCIT with a direction to examine the impugned issues afresh taking into consideration the relevant details filed by the assessee and decide in accordance with law. The assessee is directed to file the necessary details before the PCIT without seeking unnecessary adjournments and co-operate with revision proceedings. It is ordered accordingly.
In result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 27-02-2025. (AMIT SHUKLA) (PADMAVATHY S)
Judicial Member Accountant Member
*SK, Sr. PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
M/s Darwin Platform Industries Ltd.
DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER,
(Dy./Asstt.