M/S FORTUNE METALIKS LIMITED,LUDHIANA vs. PR.CIT(CENTRAL), LUDHIANA

per record, the ld. PCIT in the 263 proceedings is relooking at

the very same facts, are facts on record. Thus, it was his

submission that once a view has been taken on the same set of

facts, the exercise of powers u/s 263 without pointing out to

any error and that too such an error which causes prejudice to

the Revenue, the authority is not vested with the powers to

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.

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.

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.

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.

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

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 :

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.

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.”

appeal of the assessee is allowed.

Order pronounced on 09 March,2022.

Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा सद�य सद�य/ Accountant Member �याियक �याियक सद�य सद�य/ Judicial Member लेखा लेखा लेखा सद�य सद�य �याियक �याियक सद�य सद�य “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2..��यथ�/ The Respondent 3.आयकर आयु�/ CIT4.आयकर आयु� (अपील)/ The CIT(A)5.िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6.गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar