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2020 (3) TMI 1389 - HC - Income TaxRevision u/s 263 by CIT - HELD THAT - As applying the meanings attached may implied to section 263 of the Income-tax Act mentioned above the power has been vested with the Principal Commissioner who may call for the records and may after giving the assessee an opportunity of being heard pass the order. Using of word in the present context may is capable of meaning must or shall where a discretion is conferred upon a public authority coupled with an obligation thereby the use of word may has to be construed to mean a command. In view of the provisions contained in section 263 the Commissioner is duty bound to give an opportunity of being heard while exercising the revisionary jurisdiction to the appellant while enhancing or modifying the assessment or cancelling the assessment or directing for fresh assessment in conformity with the provisions contained under section 263 of the Income-tax Act. As applying the meanings attached may implied to section 263 of the Income-tax Act mentioned above the power has been vested with the Principal Commissioner who may call for the records and may after giving the assessee an opportunity of being heard pass the order. Using of word in the present context may is capable of meaning must or shall where a discretion is conferred upon a public authority coupled with an obligation thereby the use of word may has to be construed to mean a command. In view of the provisions contained in section 263 the Commissioner is duty bound to give an opportunity of being heard while exercising the revisionary jurisdiction to the appellant while enhancing or modifying the assessment or cancelling the assessment or directing for fresh assessment in conformity with the provisions contained under section 263 of the Income-tax Act.
Issues Involved:
1. Jurisdiction exercised by the Principal Commissioner of Income-tax under section 263 of the Income-tax Act, 1961. 2. Examination of excise duty provisions and outstanding liabilities. 3. Compliance with section 263 of the Income-tax Act, 1961, including the opportunity of hearing. 4. Justification of the Income-tax Appellate Tribunal's decision. Detailed Analysis of the Judgment: 1. Jurisdiction Exercised by the Principal Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961: The appellant-assessee challenged the order dated November 13, 2019, passed by the Income-tax Appellate Tribunal, which upheld the Principal Commissioner of Income-tax's (PCIT) order revising the assessment order dated September 29, 2016. The PCIT invoked his revisionary powers under section 263 of the Income-tax Act, 1961, on the grounds that the Assessing Officer (AO) did not examine the provisions of excise duty of closing stock of finished goods, which was shown as outstanding liabilities in the balance sheet. 2. Examination of Excise Duty Provisions and Outstanding Liabilities: The appellant-firm, engaged in manufacturing and trading of iron and steel, submitted its return of income on September 30, 2014. The AO completed the assessment on September 29, 2016, determining the total income after disallowing certain expenses. However, the PCIT observed that the AO failed to examine the excise duty provisions debited to the profit and loss account and shown as outstanding liabilities. Consequently, the PCIT directed the AO to revise the assessment order by disallowing the sum of ?25,73,921. 3. Compliance with Section 263 of the Income-tax Act, 1961, Including the Opportunity of Hearing: The appellant contended that the PCIT did not comply with section 263 of the Income-tax Act, 1961, as no opportunity of hearing was provided before revising the assessment order. The court examined section 263, which mandates that the PCIT must give the assessee an opportunity of being heard before passing any order. The court referred to several judgments, including *Gita Devi Aggarwal v. CIT*, *CIT v. Electro House*, and *CIT v. Amitabh Bachchan*, which emphasized the necessity of providing an opportunity of hearing to the assessee as a requirement under section 263. 4. Justification of the Income-tax Appellate Tribunal's Decision: The court found that the PCIT did not consider the provisions of section 263 in the proper perspective and failed to provide the appellant with an opportunity of being heard. The Income-tax Appellate Tribunal also did not address this issue adequately. Therefore, the court concluded that the order dated March 28, 2019, passed by the PCIT and the subsequent confirmation by the Income-tax Appellate Tribunal could not sustain in the eye of law. Conclusion: The court allowed the appeal, quashing the orders passed by the PCIT and the Income-tax Appellate Tribunal. The matter was remitted back to the PCIT for reconsideration in conformity with the provisions of section 263 of the Income-tax Act, 1961. The appeal was allowed with no order as to costs.
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