S. ZAVERI PHARMAKEM P. LTD.,MUMBAI vs. PR. CIT-08, MUMBAI

This appeal is filed by the assessee against the order passed by the Pr. Commissioner of Income-tax-8, Mumbai (PCIT) dated 22nd March, 2021 under Section 263 of the Income-tax Act, 1961 (the Act) holding that the assessment order passed under Section 143(3) of the Act on 22nd December, 2018 by the Asst. Commissioner of Income-tax, Circle 8(2)(2), Mumbai (learned Assessing Officer) accepting the returned income of the assessee is erroneous and prejudicial to the interest of the Revenue.

The brief fact of the case shows that assessee is a company engaged in the business of importing pharmaceuticals raw material and sales. It also undertakes research and development activity.

The learned PCIT examined records and find that assessee has incurred expenditure in earlier years and has claimed and allowed deduction of the same during this year. Thus, assessee has been allowed prior period expenses as deduction. Accordingly, notice for hearing was issued on 19th March, 2021 fixing the date of hearing on 26th March, 2021 to show cause the assessee that why the order of assessment should not be held to be erroneous and prejudicial to the interest of the Revenue.

The learned PCIT has noted in paragraph no.3 that in response to the above notice assessee submitted its reply online. Assessee also asked for adjournment till second week of April, 21. This adjournment request was rejected stating that the case will get time barred on 31st March,

Thus, assessee is aggrieved with that order and is in appeal before us.

The learned Authorized Representative referred to the notice issued by the ld PCIT and stated that the date fixing for hearing was on 26th March, 2021, however, the order under Section 263 of the Act has been passed on 22nd March, 2021. Thus, before the date fixed for hearing the order under Section 263 of the Act was passed. She

She further submitted that ld PCIT rejected the adjournment application only for the reason that order is set aside and assessee will get enough opportunity to appear before the learned Assessing Officer and make submissions.

The learned CIT Departmental Representative supported the order of the learned PCIT.

We have carefully considered the rival contention and perused the orders of the lower authorities. Firstly, we find that on 19th March, 2021 the notice for hearing was issued fixing date of hearing on 26th March, 2021. On 22nd March, 2021, the learned Chief Commissioner of Income-tax (OSD) Pr. Commissioner of Income-tax-8 passed an order u/s 263 of the Act. We find that it is blatant violation of Principle of Natural justice. Assessee was denied opportunity of hearing. Further rejecting the adjournment application stating that the issue was getting time barred on 31st March, 2021 and stating that as the issue is set aside to the file of learned Assessing Officer where assessee will get enough time and opportunity to make its submissions to the learned Assessing Officer, which shows the callousness in the approach of the learned PCIT. Firstly, the notice was issued at the fag end of the time barred period on 19th March, 2021, the hearing is fixed on 26th March, 2021 and the order was passed on 22nd March,

Further holding that the assessee will get opportunity of hearing before the learned Assessing Officer once again relegating assessee to the multiple proceedings without considering the obligations and responsibility of the PCIT by deciding the issue on merits without granting an opportunity of hearing to assessee, is also not sustainable. It is also not the case that assessee was granted time even till 30th March, 2021. The learned PCIT was so much in hurry to pass the order on 22nd March, 2021 despite assessee was asked to appear till 26th march, 2021. If the orders are getting time barred on 31st March, 2021 and the learned PCIT is issuing notice on 19th March, 2021 for revising the assessment order, it is not the fault of the assessee that for initiation of proceedings taken up at the last moment. It is the responsibility of the learned PCIT to have initiated the proceedings sufficiently in advance. For the reason that learned PCIT initiated the proceedings late, assessee cannot be put to such harassment. As the proceedings and the orders clearly shows that the principle of natural justice have been thrown to winds, we are unable to sustain the order of the learned PCIT for this reason only. Accordingly, ground no. 1 of the appeal is allowed and the order passed by the learned PCIT is quashed.

In the result, appeal of the assessee is allowed.