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Facts
The assessee filed three appeals challenging the revision orders passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act. The appeals for Assessment Years 2018-19, 2019-20, and 2020-21 were heard together due to identical grounds. The core issue revolved around the PCIT directing the Assessing Officer to recompute tax liability at 60% under Section 115BBE for undisclosed commission income, which the assessee argued was added under Section 28.
Held
The Tribunal found merit in the assessee's submission that the principles of natural justice were violated because an adequate opportunity to be heard was not provided by the PCIT. The PCIT issued only one notice with an insufficient response period, and proceeded ex-parte without proper service. Therefore, the revision orders were set aside.
Key Issues
Whether the revision order passed by the PCIT under Section 263 violated the principles of natural justice by not providing an adequate opportunity of being heard to the assessee.
Sections Cited
263, 153A, 144, 115BBE, 28, 68, 69D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, D BENCH, MUMBAI
Date Conclusion of hearing : 23.07.2024 Pronouncement of order : 29.07.2024 O R D E R Per Rahul Chaudhary, Judicial Member: 1. These are three appeals preferred by the Assessee for the Assessment Years 2018-19, 2019-20 and 2020-21, since identical grounds were raised in these three appeals the same were heard together and are, therefore, being disposed off by way of common order.
Assessment Year 2018-19
We would first take up appeal for the Assessment Year 2018-19 [ITA No. 2493/MUM/2024] preferred by the Assessee challenging 2494 & 2495/MUM/2024 Assessment Year: 2018-19 to 2020-21 the order, dated 20/03/2024, passed by the Learned Principal Commissioner of Income Tax (Central), Mumbai-1, [hereinafter referred to as the ‘PCIT’] under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) revising the Assessment Order, dated 30/09/2021, passed by the Deputy Commissioner of Income Tax Central Circle-2(4), Mumbai under Section 153A read with section 144 of the Act.
3. The Appellant has raised following grounds of appeal in ITA No. 2493/Mum/2024:
“The appellant company prefers an appeal against the revision order passed u/s.263 dated 20/03/2024 by Ld. Principal Commissioner of Income Tax (Central)- 1. Mumbai on following amongst other grounds each of which are without prejudice to any other :- 1. On facts and circumstances of the case and in law, the Pr. CIT erred in passing the revision order u/s.263 without providing an adequate opportunity of being heard to the appellant, thereby seriously violated the principle of natural justice; 2. On facts and circumstances of the case and in law, the Pr. CIT erred in passing the revision order u/s.263, though the assessment order is not erroneous and in so far is not prejudicial to interest of the revenue; 3. On facts and circumstances of the case and in law, the Pr. CIT erred seriously in directing the AO to compute the tax u/s 115BBE @ 60%, though the addition has been made in the assessment order of undisclosed commission income u/s 28 of Rs 2,40,79,519/-; 4. The Ld. Pr. CIT, before passing the revision order u/s.263, ought to considered the vital facts, being; a) The provision of Sec 115BBE shall not apply since the addition has not been made in the assessment order u/s 68 to 69D of the Act; b) It is not a case of lack of enquiry, since the AO upon conducting adequate enquires, had passed the assessment order on making the addition of commission income u/s 28 of the Act; Assessment Year: 2018-19 to 2020-21 c) The AO, on due application of mind, had adopted a legally sustainable view, thus such reassessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue.”
When the appeal was taken up for hearing the Learned Authorised Representative submitted that assessment was framed on the Appellant vide Assessment Order, dated 30/09/2021, and addition of INR 2,34,46,000/- was made in the hands of the Appellant by the Assessing Officer holding the same to be undisclosed commission income of the Appellant. The tax liability was computed as per the applicable slab rates. However, subsequently the Learned PCIT passed order under Section 263 of the Act directing the Assessing Officer to compute tax liability of the Appellant by adopting the rate of 60% as per Section 115BBE of the Act. The Learned Authorized Representative for the Appellant submitted that the addition of undisclosed commission income of INR 2,35,05,825/- was made by the Assessing Officer under Section 28 of the Act and therefore, the provisions contained in Section 115BBE of the Act were not applicable. In this regard reference was made to paragraph 7.5 of the Assessment Order. In response to the query, regarding the manner in which the Learned PCIT had dealt with the aforesaid submission of the Appellant, it was submitted that the notice, dated 06/03/2024, whereby the Appellant was granted only a period of 7 days to respond to the notice, was not served upon the Appellant. Therefore, the Appellant was not able to file reply/response before the Ld. PCIT. It was submitted that very short period of time was granted to the Appellant to respond to the notice and that the Appellant was proceeded ex-parte without service of any further notice. Referring to Ground No. 1 raised in the present appeal, the Learned Authorized Representative for the Appellant submitted that the order impugned was passed in violation of the principles of natural justice. Assessment Year: 2018-19 to 2020-21
On perusal of the impugned order passed under Section 263 of the Act we find that only one notice, dated 06/03/2024, was issued giving Appellant whereby time till 13/06/2024 was given to the Appellant to file a response. The impugned order records that no response was received from the Appellant. The Appellant was proceeded ex-parte and order under Section 263 was passed on 20/06/2024. We note that Section 263 of the Act mandates that before passing order under Section 263 of the Act, opportunity of being heard should be granted to the assessee. It is the case of the Appellant that the effective opportunity of being heard was not granted in the present case. Given the facts and circumstances of the present case we find merit in the aforesaid submission of the Appellant. It is apparent that the Appellant was proceeded ex- parte after the failure to respond to the first notice itself. Accordingly, we set aside the order, dated 20/03/2024, passed under Section 263 of the Act with the directions to the Learned PCIT to pass order under Section 263 afreash after giving the Appellant herein opportunity of being heard. The Appellant is directed to co-operate and file reply/submission before the Ld. PCIT diligently without seeking unnecessary adjournments. Thus, in terms of the aforesaid, Ground No. 1 raised by the Appellant is allowed for statistical purposes. In view of the aforesaid, Ground No. 2, 3 and 4 are dismissed as being infructuous.
Assessment Year 2019-2020 & 2020-2021
We note that identical facts prevail in Assessment year 2019-2020 and 2020-2021. There being no change in facts and circumstances of the case and the applicable legal position, our reasoning, findings and adjudication in appeal for the Assessment Year 2018- 19 shall apply mutatis mutandis to corresponding grounds raised
in the present appeals. Accordingly, in view of paragraph 3 & 4 above, we set aside the order, dated 20/03/2024, passed under Assessment Year: 2018-19 to 2020
21. Section 263 of the Act for the Assessment Years 2019-2020 & 2020-21 with the directions to the Learned PCIT to pass order under Section 263 afreash after giving the Appellant herein opportunity of being heard. The Appellant is directed to co-operate and file reply/submission before the Ld. PCIT diligently without seeking unnecessary adjournments. Thus, in terms of the aforesaid, Ground No. 1 raised by the Appellant in both the appeals is allowed for statistical purposes while all the other grounds (i.e. Ground No. 2, 3 and 4) are dismissed as being infructuous.
In result, all the three appeal preferred by the Assessee are treated as allowed for statistical purposes.