PCIT Vs Sinhotia Metals And Minerals Pvt. Ltd. (Calcutta High Court)
Summary: The Revenue filed an appeal under Section 260A of the Income-tax Act, 1961 against the order dated 16 January 2019 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata in ITA No. 889/Kol/2017 for Assessment Year 2012-13. The Revenue raised substantial questions concerning the exercise of revisionary jurisdiction under Section 263 of the Income-tax Act, 1961, particularly whether the Principal Commissioner of Income Tax (PCIT) had exercised that jurisdiction himself or at the instance of the Assessing Officer/Joint Commissioner of Income Tax (JCIT).
The Revenue contended before the High Court that the Principal Chief Commissioner of Income Tax had directed the JCIT to re-submit the proposal after examining the records and drawing satisfaction that the Assessing Officer’s order was erroneous and prejudicial to the interests of the Revenue. The Revenue further contended that the PCIT had not exercised jurisdiction under Section 263 merely at the instance of the JCIT and that the Tribunal had wrongly interpreted the material.
The High Court examined the Tribunal’s order and noted that the Tribunal had considered the decision of its co-ordinate Bench in the case of M/s. Rapayan Udyog in ITA No. 1073/Kol/2012, dated 28 October 2018. The Tribunal had also recorded that the Revenue had not controverted the contents of the letter of the Joint Commissioner of Income Tax dated 18 August 2016. According to the Tribunal, that letter clearly showed that the PCIT had called for a proposal from the JCIT/Assessing Officer for exercising jurisdiction under Section 263.
On that basis, the Tribunal had concluded that the PCIT had not exercised jurisdiction under Section 263 himself, but had exercised it at the instance of the Assessing Officer/JCIT, which the Tribunal considered contrary to law.
Before the High Court, the Revenue argued that the PCIT had in fact exercised jurisdiction under Section 263 himself. The High Court, however, noted that the Department had not controverted the contents of the letter dated 18 August 2016 before the Tribunal.
The Court held that if, according to the Department, the contents of that letter were otherwise, it was for the Department to approach the Tribunal for necessary rectification or clarification. The correctness of the Tribunal’s order could not, in the circumstances, be decided by the High Court in an appeal under Section 260A by introducing submissions that had never been made before the Tribunal.
Accordingly, the High Court declined to interfere with the Tribunal’s order and dismissed the Revenue’s appeal. The Court nevertheless left it open to the Department to approach the Tribunal for clarification or rectification of the order, if so advised.
The substantial questions of law were answered against the Revenue. With dismissal of the appeal, the stay application, IA No. GA/1/2019, also stood dismissed.
Cases Discussed
- M/s. Rapayan Udyog, ITA No. 1073/Kol/2012, dated 28 October 2018 — referred to as the decision of the co-ordinate Bench of the Tribunal in which the issue concerning exercise of jurisdiction under Section 263 was considered; the Tribunal relied upon that decision while examining the contents of the JCIT’s letter and the manner in which the PCIT had exercised jurisdiction.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The Court : This appeal by the revenue under Section 260A of the Income Tax Act, 1961(the Act for brevity) is directed against the order dated 16th January, 2019 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata (Tribunal) in ITA No. 889/Kol/2017 for the assessment year 2012-13. The revenue has raised the following substantial questions of law for consideration:
a. Whether on the facts and circumstances of the case, the learned Tribunal on correct interpretation of law in Section 263 of the Income Tax Ac, 1961 set aside the revisional order and in holding that Principal C.I.T has not exercised its jurisdiction under Secton 263 of the Act himself?
b. Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal has erred in law in holding that the PCIT has exercised the jurisdiction under Section 263 at the instance of AO/JCIT which is a wrong interpretation as the PCIT after examining the case records has directed the JCIT to resubmit the proposal as per provision to explanation 2 to Section 263 of the Act?
We have heard Mr. P. K. Bhowmick, learned Standing Counsel appearing for the appellant/revenue and Mr. S. M. Surana, learned Counsel appearing for the respondent/assessee.
The contention of the revenue before us is that the Tribunal failed to appreciate that the Principal Chief Commissioner of Income Tax had directed the Joint Commissioner of Income Tax to re-submit the proposal after examining the records and after drawing satisfaction that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue and the order of the Tribunal is not sustainable. It is further contended before us that the Principal Commissioner of Income Tax has not exercised the jurisdiction under Section 263 of the Act at the instance of the Joint Commissioner of Income Tax and it is a wrong interpretation given by the Tribunal.
We have gone through the order passed by the Tribunal, wherein we find that the Tribunal has noted the decision of the coordinate Bench of the Tribunal in the case of M/s. Rapayan Udyog in ITA No.1073/Kol/2012, dated 28th October, 2018. After noting the said decision the Tribunal points out that the appellant department has not controverted the contents of the letter of the Joint Commissioner of Income Tax dated 18th August, 2016 and has recorded that the said letter clearly brings out that the PCIT has called for proposal from the JCIT/Assessing Officer to exercise jurisdiction under Section 263 of the Act. Therefore, the Tribunal concluded that the PCIT has not exercised jurisdiction under Section 263 of the Act himself, but he exercised jurisdiction at the instance of the Assessing Officer/JCIT, which is against the provisions of law.
The argument made by the learned Standing Counsel is that it is the PCIT who has exercised jurisdiction under Section 263 of the Act. From the order passed by the Tribunal we find that the department could not controvert the contents of the letter dated 18th August, 2016. If, according to the department, the contents of the letter were otherwise, then it is for the department to approach the Tribunal for necessary rectification or clarification and the correctness of the order of the Tribunal cannot be decided by us in an appeal under Section 260A of the Act by bringing certain submissions which were never made before the Tribunal. Therefore, we are not inclined to interfere with the order passed by the Tribunal and accordingly, the appeal is dismissed. However, we leave it open to the appellant/department to approach the Tribunal for clarification or rectification of the order, if they are so advised.
The substantial questions of law are answered against the revenue.
With the dismissal of the appeal, the stay application (IA No. GA/1/2019) also stands dismissed.
