SHRI. SUDHIR BANSAL,AGRA vs. PCIT-1 AGRA, AGRA
Facts
The appeals were filed against orders passed by the Principal Commissioner of Income-tax-1, Agra, under section 263 of the Income-tax Act, 1961. The assessees argued that these orders were passed without affording them adequate opportunity of hearing. The notice issued under section 263 was dated 28.03.2022, served on 29.03.2022, directing a reply by 30.03.2022, and the order was passed on 31.03.2022 without any reply.
Held
The Tribunal held that the orders passed under section 263 were unsustainable due to a gross breach of the principle of natural justice arising from the inadequate opportunity for hearing. Citing decisions from the Apex Court in Sona Builders and the Delhi High Court in Tulsi Tracom Private Ltd., the Tribunal concluded that the matter could not be remanded for reconsideration.
Key Issues
Whether the orders passed under section 263 of the Income-tax Act, 1961, are sustainable when the assessee was not afforded adequate opportunity of hearing.
Sections Cited
263, 269-UD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SMT. ANNAPURNA GUPTA & SHRI SUNIL KUMAR SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No.53/Agr/2022 Assessment Year: 2017-18
Ritu Bansal, Vs. Pr. CIT, Income-tax-1 17, Kailash Vihar, Agra-282007. Agra. PAN : AEDPB6637B (Appellant) (Respondent)
ITA No.54/Agr/2022 Assessment Year: 2017-18
Sudhir Bansal, Vs. Pr. CIT, Income-tax-1 17, Kailash Vihar, Agra-282007. Agra. PAN : AEDPB6639B (Appellant) (Respondent)
ITA No.55/Agr/2022 Assessment Year: 2017-18
Sinwan Ahmad Shah, 17/99, Vs. Pr. CIT, Income-tax-1 Mewa Katra, Seo Ka Bazar, Agra. Agra-282004. PAN : AOAPS4105C (Appellant) (Respondent)
Assessee by Ms. Ishita Farsaiya, Advocate Department by Sh. Sukesh Kumar Jain, CIT/DR
ITA No.53 to 55 and 151 & 100/Agr/2022
ITA No.151/Agr/2022 Assessment Year: 2017-18
Shree Balaji Concast Private Vs. Pr. CIT, Income-tax-1 Limited, 1, Jammanlal Agra. Compound, Agra Road, Durga Puri, Aligarh. PAN : AAICS8706L (Appellant) (Respondent)
Assessee by Sh. Pratiyush Jain, CA Department by Sh. Shailender Shrivastava, Sr. DR
ITA No.100/Agr/2022 Assessment Year: 2017-18
Ganpati Enterprises, 94, Old Vs. CCIT (OSD)/PCIT-1, Vijay Nagar Colony, Agra- Agra. 282005 PAN : AANFG3520G (Appellant) (Respondent)
Assessee by None Department by Sh. Sukesh Kumar Jain, CIT/DR
Date of hearing 27.03.2025 Date of pronouncement 24.04.2025
ORDER Per Annapurna Gupta, Accountant Member: The present appeals have been filed by different assessees argued by different counsels, against separate orders passed by the learned
Principal Commissioner of Income-tax-1, Agra u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
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The common argument of the counsels in these appeals was that all
these appeals were covered in favour of the assessee by recent judgment
passed by ITAT, Agra Bench in group of 21 appeals in ITA No. 33/Agr/2023
and Others vide order dated 21.02.2025. Learned counsels for the
assessees pointed out that the impugned appeals were all against the
orders passed u/s. 263 of the Act by ld. PCIT/CIT and all the impugned
orders had been passed without affording any opportunity of hearing to the
assessees.
In all the cases, facts relating to grant of opportunity of hearing were
almost identical that the notice issued u/s. 263 of the Act being dated
28.03.2022 served on the assessee on 29.03.2022 directing the assessees
to file reply by 30.03.2022 and the order u/s. 263 being passed on
31.03.2022 without any reply being filed by the assessees. The absence of
adequate opportunity of hearing to the assessees, it was pointed out, was
evident from the chronology of events as noted above and it was
contended that in the order dated 21.02.2025 passed by ITAT in case of
ITA No. 33/Agr/2023 & Ors. , the facts were identical and ITAT had followed
the decision of Hon’ble Allahabad High Court in M.L. Chains vs. PCIT, 461
ITR-457 (All) while quashing all the orders passed by the PCIT u/s. 263 of
the Act. Copy of the order was placed before us. Our attention was drawn
to the relevant findings of ITAT at para-5 of its order as under : 3 | P a g e
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We have given out thoughtful consideration to the vehement rival pleadings. We find no reason to sustain any of the impugned revision direction forming subject matter of our adjudication in all these cases. This is for the precise reason that apart from reproducing the corresponding show-cause notices which went un-responded by the most of the assessees, there is not even a single instance wherein the learned revisional authority has arrived at any categorical finding on merits after having discussed the relevant error as well as prejudice caused to the interest of the Revenue. Needless to say, the law on exercise of the impugned revision jurisdiction stand very well settled since long in light of Malabar Industries Ltd. vs. CIT (2000) 243 ITR 83(SC) that before the same is invoked, the assessment has to be simultaneously erroneous as well as causing prejudice to the interest of the Revenue. Meaning thereby that till the time such a conclusion is not arrived at by the learned revision authority, an assessment could not be held as liable to be revised merely because of the fact that the corresponding show-cause notice(s) issued to the taxpayer have gone un- responded. We are further informed that case law M. L. Chains Vs. PCIT (2024) 461 ITR 457 (All.) has already decided the very issue involving a similar revision direction, as not sustainable, in para 20 thereof. We thus accept the assessees identical submissions in all these cases to this extent and reverse the learned PCIT’s section 263 corresponding identical revision directions. Ordered accordingly. All necessary computation shall follow.”
Learned DR, though was unable to controvert any of the contentions
made by the ld. Counsels for the assessees before us, as noted above,
both with respect to the facts of the case – the order u/s. 263 having been
passed by giving only one day’s notice to the assessee, as also with
respect to identical orders passed in the cases of different assessees being
caused by ITAT in its order passed on 21.02.2025, learned DR, however,
contended that the right course of action was that when the assessee was
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not granted opportunity, the matter was to be restored back to the ld. PCIT
for reconsideration.
Having heard the contentions of both the parties and noting the
uncontroverted contentions of the counsels for the assessees that the issue
stood covered in favour of the assessee by the order of ITAT in ITA No.
33/Agr/2023 & Ors. dated 21.02.2025 and that no distinguishing facts being
pointed out, we hold all the appeals to be covered by the said decision and
following the same, we hold the orders passed by ld. PCIT in the cases of
all the assessees to be not sustainable.
As for the contention of the ld. DR that the orders passed u/s. 263
without affording adequate opportunity be restored back for
reconsideration, we are not inclined to agree with the same. Reason for the
same being that the Apex Court in the case of Sona Builders vs. Union of
India, 251 ITR 197 has categorically held that where there is gross breach
of the principle of natural justice, matter could not be remanded back to the
appropriate authority. In the said case notice of hearing gave only five days’
time to the parties to respond, which could not be responded. In such
circumstances, it was held that there was gross breach of principle of
natural justice on account of inadequate time given to respond and
therefore, considering the statutory limit within which appropriate authority
was to act in the said case and noting his failure to act in conformity with 5 | P a g e
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the principle of natural justice, Hon’ble Apex Court held that the matter
could not be remanded to the appropriate authority and must be set aside.
Relevant findings of the Apex Court are as under :
“3. We are quite unable to agree with the view taken by the High Court. The notice was addressed on 21-5-1993 from Delhi to the appellant in Jaipur fixing the hearing on 31-5-1993. It was patent that it would take two or three days for that notice to be received in Jaipur even though dispatched by speed post. In effect, therefore, the notice gave five days to the addressees to respond, and we are told that two of those days were Saturday and Sunday. Under Section 269-UD the Appropriate Authority had two months to act commencing from the end of the month in which the 37(I) form was filed. The form was filed on 9th March so that the Appropriate Authority had about two months and twenty days to take action. He did not take action until only one week from the last available date, and then it gave the appellant, in reality, only three days to respond. This was, plainly, most inadequate. 4. Further, the notice alleged that the apparent consideration of the transaction between the appellant and the transferor was low based on the sale instance mentioned therein. To be able adequately to respond to that allegation, it was necessary for the appellant to ascertain what the merits and demerits were of that property which had been auctioned, and to know what were the terms and conditions of the auction. No copy of any document relating to the sale instance was furnished by the Appropriate Authority to the appellant along with the notice, or at any time whatsoever. 5. There is no doubt in our minds that on both counts there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant. 6. Having regard to the statutory limit within which the Appropriate Authority has to act and its failure to act in conformity with the principles of natural justice, we do not Activate Windows think we can remand the matter to the Appropriate Authority. We must set its orders aside.”
Identical view was taken by Hon’ble Delhi High Court in the case of
Tulsi Tracom Private Ltd .v. CIT (2018) 161 DTR 148 (Delhi)(HC), wherein
Hon’ble High Court held that the Commissioner who had issued order u/s.
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263 ought to have been fully satisfied that adequate opportunity had been
given to the assessee to controvert the facts stated in the notice and to
explain the situation concerning such facts. Further, considering the
limitation for passing of order u/s. 263, Hon’ble Court had held that no
useful purpose would be served in giving opportunity of hearing to the
assessee at this stage again. The order passed by ld. CIT was accordingly
set aside in the facts of the said case.
In the light of the above, we do not find any substance in the
contention of the ld. DR that the matter be restored back to the PCIT for
reconsideration. Accordingly, finding all the present appeals to be covered
by the decision of ITAT in ITA No. 33/Agr/2023 & others dated 21.02.2025,
we hold all the orders passed by ld. PCIT u/s. 263 of the Act in the case of
all the assessees before us to be not sustainable.
All the appeals of different assessees are accordingly allowed.
Order pronounced in the open court on 24.04.2025.
Sd/- Sd/- (SUNIL KUMAR SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24.04.2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra
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Sl. Particulars Date No. 1. Date of dictation of Tribunal Order: 28.03.2025 2. Date on which typed draft of Tribunal order is placed before the Dictating Member: 3. Date on which the typed draft of Tribunal order is placed before the other Member: 4. Date on which the approved draft of Tribunal order comes to the Sr. PS/PS: 5. Date on which fair order is placed before the Dictating Member for pronouncement: 6. Date on which the signed order comes back to the Sr. PS/PS: 7. Date on which the final order is uploaded by the Sr. PS/PS on official website: 8. Date on which the file goes to the Bench Clerk along with Tribunal Order: 9. Date of killing off the disposed of files on judiSIS portal of ITAT by the Bench Clerks 10. Date on which file goes to the Supervisor (Judicial) 11. Date on which file goes to the Assistant Registrar for endorsement of the order: 12. Date of dispatch of order:
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