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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal is filed by assessee against the order passed under section 263 of the Income Tax Act, 1961 [ The ACT] by The Principal Commissioner of Income Tax (Central)- 3, Mumbai [ The Ld. PCIT] for A.Y. 2015-16 on 18.03.2021 wherein it is held that the assessment order passed under section 143(3) of the Income Tax, 1961 [ The Act] on 30.06.2017 by the DCIT-CC 5/2, Mumbai (The Learned AO) is erroneous and so far as prejudicial to the interest of revenue.
”1. On the facts and in the circumstances of the case and in law, the Ld. Principal Commissioner of Income tax, Central-3 (‘PCIT’) erred in passing the order dated 18 March 2021, under section 263 of the Act, in the name BIC Cello Exports Private Limited, an entity which is not in existence on the date of passing the impugned order on account of its merger with the Appellant.
It is the humble prayer of the Appellant that the order dated 18 March 2021 passed under section 263 of the Act by the Ld. PCIT be held as bad in law, null and void-ab-initio and as such deserves to be quashed.
Incorrect invocation of jurisdiction under section 263 of the Act
On the facts and in the circumstances of the case and in law, the Ld. PCIT erred in invoking section 263 of the Act for revising the assessment order dated 30 June 2017 passed by the Ld. Assessing Officer (‘AO’) under section 143(3) of the Act without appreciating that the assessment order is neither erroneous not prejudicial to the interest of revenue.
It is the humble prayer of the Appellant that the revision proceedings initiated by the Ld. PCIT undersection 263 of the Act be quashed.
3. Without prejudice to ground no’s 1 and 2 above, on the facts and in the circumstances of the case and in law, the Ld. PCIT erred in passing the order under section 263 of the Act on 18 March 2021 without granting adequate opportunity of being heard.
It is the humble prayer of the Appellant that the order dated 18 March 2021 passed under section 263 of the Act by the Ld. PCTT be held as bad in law and as such deserves to be quashed.
Allowability of claim on merits
Without prejudice to the above, on the facts and in the circumstances of the case and in law, the learned PCIT erred in not allowing the claim of "Other current assets written off" under the head other expenses amounting to ₹7,15,32,254/- and remanded back the matter to the Assessing officer for fresh adjudication.
It is prayed that the claim of "Other current assets written off” under the head Other expenses amounting to ₹7,15,32,254/- be allowed as a business deduction/business loss.”
At the inception itself the assessee does not want to press Ground No. 3 wherein violation of principles of natural justice were challenged. Therefore, Ground No. 3 is dismissed.
Learned PCIT pursued the record and noticed that assessee has claimed „other current assets- write off‟ under the head „other expenses‟ of ₹ 7,15,32,254/- which has not been examined by the learned assessing officer, as no question relating to the above expenses were asked and examined during the course of assessment proceedings. No details of such expenses were also available on record. Thus, the learned Assessing Officer allowed this expenditure without making any verification or enquiry. The learned Assessing Officer simply accepted the above expenses as genuine expenditure without examining the nature of this expenses and hence, it was not ascertained by him that how the claim is allowable. Further, the assets being part of the balance-sheet is prima facie on capital nature and write off a capital expenditure is not allowable under section 37 of the Act.
Based on this, a notice under section 263 was issued to the assessee on 11-03-2021. The assessee did not respond to the same. And, therefore, the revision order
The assessee is aggrieved with the same preferred this appeal.
First ground of appeal is that the order under section 263 of the Act has been passed in the name of “Bic Cello Exports private limited” an entity which is not at all in existence on the date of passing of the impugned order. The learned authorized representative submitted a paper book containing 59 pages. He referred letter dated 30.07.2018, by which the DCIT, Mumbai was intimated stating that the scheme of amalgamation of “Bic Cello Exports Private Limited” has been proposed and the copy of the Company Application No. 87 of 2018 was submitted. According to that letter, the scheme of amalgamation was
Subsequently, assessee complied with thenotice by submitting a paper book by covering letter on 24.03.2021 at 21.17 hours. However, unfortunately the learned PCIT passed the order under section 263 of the Act on 18.03.2021. This order was also passed in the name of „Bic cello Exports Private Limited”. Therefore, the contention of the learned AR is that revisionary order is passed in the name of non-existing companies and
The learnedDR submitted that there is no intimation given by the assessee to the PCIT that „Bic Cello Exports Private Limited‟ has merged with „Bic Cello Exports India Private Limited‟. It was stated that show cause notice was issued to the assessee on 11.03.2021 fixing the date of hearing on 17.03.2021, the assessee did not file any response to the above notice thereby the matter was decided ex-parte on merits of the case. Learned CIT DR stated that in absence of any response by the assessee, within due time, order was passed ex parte. He also enclosed the proceedings of ITBA portal. The learned CIT DR also relied on the decision of the Hon‟ble Supreme Court in case of
We have carefully considered the rival contentions and the relevant decisions submitted before us. We find that in this case the notice u/s 263 of the income tax act was issued on 11 March 2021 wherein the hearing was fixed on 17th of March 2021 at 3 PM. Assessee responded above notice by seeking an adjournment on 17 March 2021 at 6.19 p.m. Thus, the response submitted by the assessee was after the appointed time. No doubt the detailed reasons attached with the above communication clearly shows that assessee mentioned that pursuant to the scheme of amalgamation u/s 230 to 232 of the companies act, 2013, Bic Cello export private limited has been amalgamated with Bic Cello (India) private limited with effect from 1 April 2017 by order of the national company law tribunal, Ahmedabad on November 12, 2018. The learned PCIT passed an order u/s 263 of the income tax act on 18 March 2021.naturally in this case, the window was open for apply till 17 March 2021 at 3 PM on ITBA. Till that time, there was no intimation to the learned PCIT about the amalgamation. The response filed by the assessee on
However, as we have gone the intimation about the amalgamation, this appellate order is passed in the name of Bic Cello ( India) private limited i.e. in the name of existing amalgamated company. Therefore, ground number 1 of the appeal of the assessee fails and hence dismissed.
Adverting to ground number 2,The learned authorized representative further submitted that the order passed under section 263 of the Act is not in order as same was issued without mentioning the DIN.. The learned authorized representative referred to the Circular No. 19 of 2019 dated 14thAugust 2019 and submitted that any communication which is not inconformity with the above
The learned Departmental Representative referred to the affidavit of PCIT dated 10.08.2022. According to that affidavit it was stated that order under section 263 of the Act was passed on 18.03.2022 and it was also generated on the same date in ITBA system Bearing DIN No. ITBA/Rev5/M/2021/1031620657(1). The printout of ITBA system with the above DIN was also submitted. Affidavit also contain the case history on ITBA portal. Thus, the affidavit states that the order generated under section 263 in case of the assessee was sent by email on 18.03.2021. However, the Email bounced, and such copy was also attached as per annexure 3. It was stated that as the order under section 263 dated 18.03.2021 bounced and it was sent by an Email through attachment vide letter dated 19.03.2021 which also bounced. Same was also submitted as per annexure 4. He also referred to intimation letter for order under section 263 wherein it was mentioned that order under section 263 dated 18.03.2021 having a DIN is generated. Therefore, the affidavits state that the 263 order contains the valid DIN. The learned DR further referred to the decision of the Hon‟ble Madras High Court in 138 taxmann.com 566 wherein the revisionary order passed by the Commissioner under section 263 of the Act could not be set to be without jurisdiction merely because of the reason that the DIN of the impugned order was
We have carefully considered the rival contention and find that revisionary order u/s 263 of the income tax act was passed on 18th of March 2022 and generated on ITBA system with a proper DIN. This is also supported by way of an affidavit by the learned PCIT along with the relevant annexures showing that there was proper din generated at the time of passing of the order. Further the case history on ITBA also supports and relied upon by the learned PCIT. It was also shown that on the same date the order was sent by email to the assessee which bounced. The adequate evidences in the form of print out were also shown. Further the PCIT further tried by sending another email which also bounced. Thereafter, the assessee was given copy which is stated to be Manual order. Further on 19 March 2021 the learned PCIT also intimated the assessee about the passing of the order u/s 263 dated 18 March 2021 and it‟s DIN. Honourable Madras High Court in 138 taxmann.com 566 in case of Taxmo precision castings UK Ltd versus CIT wherein paragraph number 48
The next issue that arises that the order u/s 263 of the income tax act was passed ex parte. On the appointed date on 17 March 2021, though only after almost 3 hours of the appointed time, assessee requested for adjournment of 7 days. This adjournment application has not at all been considered by the learned PCIT. on 24th of March 2021 assessee furnished reply in detail raising all the arguments before the learned PCIT, but unfortunately same could not be considered as adjournment application filed by the assessee was overlooked, not rejected. The explanation is placed before us at page number 26 – 58 of the paper book. The above explanation is also uploaded on the ITBA website by E-Proceedings response acknowledgement dated 24 March 2021 at 21.17 hours.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 09-11-2022.