CHAMBAL FERTILISERS AND CHEMICALS LTD. ,KOTA vs. ACIT, CIRCLE-2, KOTA, KOTA

On 29.06.2021, a notice u/s 143(2) was issued to the assessee.

It may be mentioned here that after perusing the information furnished by the assessee and verifying the same with reference to the ITR and TAR, the Assessing Officer was of the opinion that no variation was proposed on following 10 , out of the abovesaid 11 issues:- i. Double Taxation Relief u/s 90/91. ii. Stock Valuation iii. Increase in TDS in Revised Return iv. High creditors/liabilities. v. Ind-AS compliance and adjustment vi. Refund claim SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota vii. ICDS compliance and adjustment viii. Expenses incurred for earning exempt income ix. Taxability of business liability written off u/s 41 or any other section x. Deduction from total income under Chapter VI-A” In other words, the Assessing Officer proceeded to deal with only following issue:- “Claim of Any Other Amount Allowable as Deduction in Schedule BP”

Ultimately, the Assessing Officer made an addition of Rs. 7,74,04,212/- on the abovesaid only issue, and thereby assessed total income of the assessee at Rs. 3,71,04,05,492/-.

As noticed above, vide impugned order, Learned PCIT has directed the Assessing Officer for completion of assessment as regards the only issue of dividend. Contentions 8. Ld. AR for the appellant has submitted that in the previous year, the Assessing Officer felt satisfied , specially taking into consideration reply and documents submitted by the assessee, that the income earned was in the nature of dividend income.

On the other hand, Ld. DR for the department has referred to para 6 of the impugned order passed by Learned PCIT and also to para 4.1(iv), (V) and (vi) of the impugned order, and contended that Learned PCIT was justified in holding the assessment order to be erroneous and also prejudicial of the interest of the Revenue as the given amount of Rs. 71,80,35,464/- paid to the assessee in the form of dividend, should have been included in the profits of the assessee as its business income and subjected to taxation, in view of provisions of Article – 9 of the Convention between the Republic of India and the Kingdom of Morocco for the Avoidance of double Taxation and for the prevention of fiscal evasion. Discussion 10. As already noticed above, case of the assessee was selected for complete scrutiny as regards the above mentioned 11 points, but the SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota Assessing Officer felt satisfied as regards all the issues except on the issue under the head “ Claim of any other amount allowable as deduction in schedule BP”. The Assessing Officer categorically recorded in para 3.4 of the assessment order as to why verification was not required on the above 10 issues. He so expressed his satisfaction after perusing the information provided by the assessee and having verified the same with reference to the ITR and TAR. This goes to shows that the Assessing Officer had satisfied himself even on the first mentioned issue of double taxation relief u/s 90 and 91 of the Act, which Ld. PCIT picked up to hold the assessment order as erroneous. Assessing Officer must record reason(s), even though same may be in brief, to apprise the higher authorities that he had applied his mind in recording his satisfaction and while framing the assessment. Otherwise, how the higher authorities would come to know about application of mind by the Assessing Officer. It is true that here, the Assessing Authority should have recorded, even though in brief, some reason in respect of each of the 10 points selected for scrutiny, but he did not record.

In the given circumstances, we find merit in the contention raised by Ld. AR for the appellant –assessee that this is a case of subsequent opinion given by Learned PCIT which is different from the opinion already given by the Assessing Officer on the same issue.

As per well settled law, no resort can be made to the provisions of section 263 of the Act in such like situation i.e. where a different view is expressed by the higher authority or say, two views are possible from the same material.

Another point raised on behalf of the appellant is that already in respect of assessment year 2018-19 same issue had cropped up. Therein, after passing of assessment order, Learned PCIT had exercised powers u/s 263 of the Act, but, the Coordinate Bench of ITAT, Jaipur Benches quashed the said order passed by Learned PCIT. Said decision by the SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota Coordinate Bench is dated 25.10.2024. The impugned order under challenge herein is dated 19.03.2025. Admittedly, the decision by the Co-ordinate Bench was brought to the notice of Ld. PCIT. While dealing with same point raised on behalf of the assessee, Ld. PCIT observed that the said order had been challenged by the department before Hon’ble High Court. Even if said decision by the Coordinate Bench has been challenged before Hon’ble High court, it is not case of the department that operation of the said order has been stayed by the Hon’ble High Court. Therefore, simply because the said decision is under challenge before Hon’ble High Court, there is no merit in the abovesaid observations made by Ld. PCIT in exercising powers u/s 263 of the Act. Result 14. In view of the above discussion and the findings, we find that Learned PCIT fell in error while observing that the impugned assessment order dated 28.09.2022 passed by the Assessing Officer was erroneous and also prejudicial to the interest of the revenue as regards the above said issue of dividend.