Case Law Details
Lakhotia Diagnostic Service Pvt. Ltd Vs PCIT (ITAT Kolkata)
ITAT Kolkata allowed appeals filed by Lakhotia Diagnostic Service Pvt. Ltd. against orders passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, for assessment years 2018-19, 2019-20, and 2020-21. The dispute arose from an assessment order dated March 30, 2022, where the Assessing Officer (AO) had relied on the then-prevalent decision of the Calcutta High Court in CIT vs. Vijay Shree Ltd. However, the PCIT subsequently revised the order based on the Supreme Court’s ruling in Checkmate Services P. Ltd., which was issued after the assessment date. The ITAT found that at the time of the assessment, the AO had followed the binding jurisdictional High Court ruling, and thus the order could not be deemed erroneous or prejudicial to the Revenue’s interest under Section 263. The tribunal also considered the Calcutta High Court’s ruling in SPPL Property Management Pvt. Ltd., which reaffirmed that revisions under Section 263 cannot apply retrospectively based on later court decisions. Consequently, the ITAT set aside the PCIT’s orders, allowing the appeals in favor of the assessee. The judgment highlights the importance of adhering to legal precedents applicable at the time of assessment.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The instant appeals filed by the assessee pertaining to the Assessment Years (in short ‘AY’) 2018-19, 2019-20 & 2020-21 are directed against separate orders passed u/s 263 of the Income Tax Act, 1961 (in short the ‘Act’) by the Pr. Commissioner of Income Tax [hereinafter referred to Ld. ‘Pr. CIT’] dated 26.03.2024.
1.1. The brief facts of the case of the appellant are that the original return of income had been filed by the assessee for AY 20 18-19 declaring total income of Rs. 56,98,030/-. Search and seizure operation was carried out at the residential and office premises of Health Care Group as Lakhotia Diagnostic Service Pvt. Ltd. belongs to this group and after issuance of show cause notice and hearing the ld. AR unsecured loan of Rs. 7.50 Lakh is added u/s 68 of the Act by disallowing Rs. 4,53,131/-. Penalty notice u/s 271AAC of the Act has been initiated separately. The said order has been taken into consideration u/s 263 of the Act and it is observed that contribution received from the employees towards PF & ESI amounting to Rs. 10,69,696/- were not debited to the account of the concerned authorities on or before the due date as specified in the provisions of Section u/s 36(1)(va) of the Act and accordingly, initiated action by taking the provisions of Section 263 of the Act for revising the order passed u/s 153A/ 143(3) of the Act dated 30.03.2022. Notice was issued and after considering the law laid down by the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. vs. CIT in Civil Appeal No. 2833 of 2016 the assessment order dated 30.03.2022 has been set aside and the Assessing Officer (hereinafter referred to as ld. ‘AO’) has been directed to decide the matter as per law after giving reasonable opportunity to the assessee of being heard.
Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred.
1.2. The assessee has taken the sole ground by citing a decision of the Hon’ble Calcutta High Court passed in PCIT vs. M/s. SPPL Property Management Pvt. Ltd. reported in ITAT/49/2023 IA NO: GA/1/2023, GA/2/2023 thereby submitting that order under revision was not legal as the Hon’ble Calcutta High Court had discussed the matter at length and also discussed the Hon’ble Apex Court’s decision passed in the case of Checkmate Services P. Ltd. (supra). The ld. Counsel for the assessee submits that assessment order was framed by the ld. AO on 30.03.2022 when the decision in the case of CIT vs. Vijay Shree Ltd. reported in [2014] 43 taxmann.com 396 (Calcutta) passed by the jurisdictional High Court was prevalent and was in force. The ld. Counsel for the assessee submits that on the date of passing the assessment order there was no error at all and it has also been discussed in Checkmate Services P. Ltd. (supra) by quoting from own case law in the case of Ajmera Housing Corpn. Vs. CIT reported in [2010] 193 taxmann.com 178.
1.3. On the contrary, the ld. D/R supports the impugned order.
2. We have gone through the record and the decision of the Hon’ble High Court of Calcutta. It admits of no doubt that assessment order was passed on 30.03.2022. There was a decision of the Hon’ble High Court in the case of Vijay Shree Ltd. (supra) which was prevalent and was in force. Under Section 263 of the Act, ld. Pr. CIT has placed his reliance on the decision of the Hon’ble Apex Court passed in Checkmate Services P. Ltd. (supra) which was passed later on. We have gone through the recent decision of the Hon’ble Calcutta High Court in the case of M/s. SPPL Property Management Pvt. Ltd. (supra) in which issues were as follows:
“(a) WHETHER on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal has erred in law in quashing the order passed by the Pr. CIT-1 under Section 263 of the Income Tax Act, 1961 without considering the fact that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue?
(b) WHETHER on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal has erred in law in disposing the appeal without considering that air conditioner expenses its capital in nature and is not allowable as expenses?
(c) WHETHER on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal has erred in law in disposing the case without considering that delay in payment of employees contribution to P.F. & other welfare funds under Section 36(1)(va) of the Income Tax Act, 1961 is not an allowable expense if the contribution deposited beyond the due date of next month in the light of the judgment of the Hon’ble Supreme Court in Civil Appeal No. 2833 of 2016 in the case of Chekmate Services P. Ltd. CIT?”
3. Keeping in view the above cited decision of the Hon’ble Calcutta High Court in which Hon’ble Court has discussed the Hon’ble Apex Court’s decision in Checkmate Services P. Ltd. (supra) and thereafter quoted that “At the time of the assessment the AO has followed the decision of Hon’ble Jurisdictional High Court which held the field at the relevant point of time, the assessment cannot be held to be prejudicial to the interest of revenue.” The present facts of the case are squarely covered with the said decision of the Hon’ble Calcutta High Court that is binding upon this case. Accordingly, the appeals are hereby allowed, the order passed u/s 263 of the Act is set aside.
4. In the result, the appeals filed by the assessee are allowed.
Order pronounced in the open Court on 5th November, 2024.
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