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Income Tax Appellate Tribunal, CHANDIGARH
Before: SMT. DIVA SINGH & SHRI VIKRAM SINGH YADAV
pass a Revisionary order. It has also been canvassed that if at all some fresh information was available to the Tax authorities, then possibly provisions of Section 148 could have been resorted to, however on the very same facts, 263 order was not maintainable. However, before proceeding to address the issue on merits, if need be, as we have already observed, we deem it appropriate to first examine the claim of the assessee on the legal grounds that the order has been passed ignoring the submissions of the assessee admittedly received on the ITBP portal and incorrectly noting that no reply has been given by the assessee. The said fact, in the backdrop where Show Cause Notice is issued to the assessee on 23.11.2020 expecting a reply latest by 27.11.2020 and admittedly reply of the assessee on 23.11.2020 is available on record. We are left
ITA 82 /CHD/2021 A.Y. 2016-17 Page 27 of 35 with the position where two situations were possible. First, possibility could have been that the said reply had not been noticed by the ld. PCIT as the ld. PCIT re cords in the impugned order that no reply has been given by the assessee. The said possibility reflects an attitude of careless exercise of power and may support the argument that there was a total lack of application of mind on the part of the ld. PCIT or alternately the reply informing that the assessee had opted for 'Vivad Se Vishwas Scheme' was considered irrelevant, hence equivalent to no reply as canvassed by the ld. CIT(A). However, the fact remains that the assessee has sought time. In the said backdrop the argument of the ld. AR that the assessee re mained sanguine in the be lief that the re ply offered is accepted and the proceedings are closed, are plausible and on the other hand, when juxta posed with the finding in the order that no reply has been given, it clearly demonstrates a mechanical exercise of power coupled with the fact that the ld. PCIT did not even care to issue any further notice to the assessee before the passing of the order. The fact that no further opportunity was given to the assessee is a fact on record which is not disputed by the ld. CIT-DR also. It is seen that the ld. PCIT made no efforts to gather any information either from the public domain or refer to any efforts made by the Investigation Wing or any other authority to show that the order passed is ITA 82 /CHD/2021 A.Y. 2016-17 Page 28 of 35 an order which is erroneous and prejudicial to the interests of the Revenue.
9. We have taken into consideration the orders and the decisions relied upon by the parties. We have seen that the subject matte r of mechanical exercise of 263 power and the questions whether still another lifeline be given to the Revenue has been taken into consideration by the Courts and the Tribunals in the various decisions cited before us.
10. In the facts of the present case, it has been seen that at the very first instance, the ld. PCIT as per record has given inadequate time to the assessee to respond to the detailed queries addressed in the Show Cause Notice. The fact that knowingly and consciously, inadequate time was given is a fact which raises a flag when the issues for consideration are whether a fair exercise of power has been done by the ld. PCIT in the facts of the present case or not ? The lack of adequate time itself demonstrates that at the very first instance, there was no such intention to give any effective opportunity of being heard to the assessee as admittedly time of only 4 days was given which cannot be said to be adequate especially since there was sufficient time available with the ld. PCIT unde r the Statute to pass a correct order in accordance with law. The fact that the opportunity so being given is illusory and farcical
ITA 82 /CHD/2021 A.Y. 2016-17 Page 29 of 35 is further aggravated with the other facts patent on the face of the record itself. When this fact is coupled alongwith the other facts which are not in dispute namely that there was a reply give n by the asse ssee which has remained ignored. No doubt, the reply available was not sufficient and complete to address the issues, the fact that the assessee sought time and also apprised the said authority that qua the increase in share application pending before the CIT(A), the assessee had opted for 'Vivad Se Vishwas Scheme'. So far as the assessee is concerned, the reply was available on record. The fact that it was not considered by the ld. PCIT is again another glaring fact on record. The evidence that it was made available is also not disputed by the ld. CIT-DR and who has instead countered the same stating that since the reply was not relevant hence it amounts to a case where no reply has been given, hence the ld. PCIT is correct in noting that no reply has been filed.
We have considered the said argument also and given our utmost consideration to the rival claims and on consideration thereof, we have considered that if for a moment we go alongwith with the submissions of the ld. DR that the reply was seen by the ld. PCIT and considered to be not relevant, the fact that the assessee was seeking time was patently evident from the said reply itself, what stopped the ld. PCIT to give an opportunity of being heard within a reasonable
ITA 82 /CHD/2021 A.Y. 2016-17 Page 30 of 35 time. On this glaring shortcoming on this fact patently available on the face of the record, there is no submission.
Examining the claim further , we deliberate that if the ld. PCIT who knowingly gives inadequate time to the assessee to file its reply considering the reply filed irrelevant notices that the assessee is seeking time, we do not find any reason why the ld. PCIT could not grant a hearing saying that time has been granted fix a date and then pass the order after hearing the assessee. Howeve r, in the facts of the present case, ld. PCIT fails to do so. So, whether the reply was noticed or re mained un-noticed, the consequences are that if it was noticed, ld. PCIT failed to do what he was required to do and if it was not noticed, then he passed an orde r mechanically. These facts when further noticed in the backdrop where the ld. PCIT after issuing the Short Cause Notice on 23.11.2020 sat over the very same information, made no efforts from any source, whatsoever to address the specific facts or the specific concerns from any other information in the public domain or made any efforts seeking information from the Investigation Wing of the Departme nt, sat over the information for a period of almost 5 months and passed the order upsetting a statutory order which has been passed without any compunction. The said arbitrary exercise of power, we find cannot be upheld. Notwithstanding the fact that the right to be he ard is very important and ITA 82 /CHD/2021 A.Y. 2016-17 Page 31 of 35 salient right which cannot be allowed to be trifled with. It has been noted judicially across all common law countries of the world. Audi alteram partem is well understood and expected to be adhered to in all orders passed by any administrative or quasi-judicial authority. No decisions need be cited to quote that it is a well settled legal position that no party can be visited by an adverse order without being heard. The blatant fact staring on the face of the record is that not only the power has been exercised in an arbitrary, unfair manne r contrary to settled legal positions, it has also been exercised where the ld. PCIT himself failed to do what he was required to do. The fact also appears that the provisions of the Act nece ssitated that the ld. PCIT be fore upsetting a statutorily passed order exercising the revisionary powers is expected to do the basic exercise of undertaking enquiries etc. at his end. It is incumbent upon him to undertake an enquiry and set out the facts. This exercise, in the facts of the present case has not been done. Accordingly, conside ring the position of law as held by the Delhi High Court in the case of PCIT Vs Delhi Airport Metro Express Pvt. Ltd. 398 ITR 8, the decision of the jurisdictional High Court in the case of CIT Vs Kanda Rice Mills 178 ITR 446. We find that the appeal has to be allowed. The position of law as considered for service of notice which proceeds on the footing that effective opportunity of being
ITA 82 /CHD/2021 A.Y. 2016-17 Page 32 of 35 heard was denied to the assessee, we find the order passed deserves to be quashed. For this, reference may be made to CIT Vs Girdh ari Lal 147 ITR 379 (Raj). Reference may also be made to the decision of the Apex Court in the case of Sona Builders Vs Union of India 251 ITR 197 (S.C) which, no doubt was in the context of acquisition of immovable property , wherein the Appropriate Authority had not granted sufficient opportunity of being heard to the parties, the Court considering the statutory limit within which the Appropriate Authority, had to act and its failure to confirm to that time limit invoking the principles of natural justice, the Apex Court quashed the order and did not remand the matter back. The position of law as considered by the Hon'ble Gauhati High Court in the case of Smt. Leela Chaudhary Vs CIT (2007) 289 ITR 226 (Gau) which mandates that the explanation offered by the assessee must be considered is also drawn support from.
Accordingly, considering the factual background as discussed above at length and the position of law, we deem it appropriate to quash the order passed on the legal grounds itself. Hence, the arguments advanced by the parties on merits though noticed in the order need not be adjudicated upon consequently.
ITA 82 /CHD/2021 A.Y. 2016-17 Page 33 of 35
At this stage it would be worthwhile to extract the valuable words of wisdom which their Lordships deemed it necessary to highlight. In the said decision rendered by the Apex Court in the case of CIT Vs Amitabh Bachchan 384 ITR 200 (S.C), no doubt conside ring t he f acts of the spe cific case Re vision of the asse ssme nt orde r was he ld to be justifie d on facts, howe ve r, the discussion on the rele vant statu tory provisions and the ir are a of ope ration has bee n ve ry cle arly e nunciate d by the m. The ir Lordships have he ld :
Under the Act different shades of power have been conferred on different authorities to deal with orders of assessment passed by the primary authority. While Section 147 confers power on the Assessing Authority itself to proceed against income escaping assessment, Section 154 of the Act empowers such authority to correct a mistake apparent on the face of the record. The power of appeal and revision is contained in Chapter XX of the Act which includes Section 263 that confer suo motu power of revision in the learned C.I.T. The different shades of power conferred on different authorities under the Act has to be exercised within the areas specifically delineated by the Act and the exercise of power under one provision cannot trench upon the powers available under another provision of the Act. In this regard, it must be specifically noticed that against an order of assessment, so far as the Revenue is concerned, the power conferred under the Act is to reopen the concluded assessment under Section 147 and/or to revise the assessment order under Section 263 of the Act. The scope of the power/jurisdiction under the different provisions of the Act would naturally be different. The power and jurisdiction of the Revenue to deal with a concluded assessment, therefore, must be understood in the context of the provisions of the relevant Sections noticed above. While doing so it must also be borne in mind that the legislature had not vested in the Revenue any specific power to question an order of assessment by means of an appeal.
Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic pre-condition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of revision under Section 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been understood not to require any specific show cause notice to be served on the assessee. Rather, what is required under the said provision is an opportunity of hearing to the assessee. The two
ITA 82 /CHD/2021 A.Y. 2016-17 Page 34 of 35 requirements are different; the first would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Reference………………………………….”.
13.1 Deliberating further on the mandatory procedure @ 211 in para 11, their Lordships have clearly enunciated :
“…………………Of course, there can be no dispute that while the C.I.T. is free to exercise his jurisdiction on consideration of all relevant facts, a full opportunity to controvert the same and to explain the circumstances surrounding such facts, as may be considered relevant by the assessee, must be afforded to him by the C.I.T. prior to the finalization of the decision.” 13.2 The need was also felt by their Lordships to further elaborate @ 216 in para 21 as under :
“There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from………………………..” 13.3 We draw support from the above legal position as enunciated by the Apex Court.
Before parting it may not be out of context to also refer to the guiding principles in the cautious and the over arching multi- tudonous conflicting interests which are witnessed in the polity often by the Apex Court which possibly could be kept in mind by the Revenue Officers. The following salutary words expressed by the Apex Court in the case of Parashuram Pottery Works Co. Ltd. V ITO 106 ITR 1 (S.C) throw a beacon of light in the darkness where the rival claims/issues at stake for the parties are of consideration. The Hon'ble Judges opined, “……It has been said
ITA 82 /CHD/2021 A.Y. 2016-17 Page 35 of 35 that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity.”
Accordingly, for the detailed reasons given herein above, the appeal of the assessee is allowed.
In the result appeal of the assessee is allowed.
Order pronounced on 09 March,2022.