2022 (11) TMI 1324 - HC - Income Tax

Revision u/s 263 - second round of proceedings u/s 263 - HELD THAT - Tribunal has carefully considered the factual position and noted that assessing officer has followed the direction issued in the earlier order passed by the Section 263 of the Act. The Assessing Officer has issued summons under Section 131 of the Act to the directors of the Shareholding Company M/s. Laxmi Timber Pvt. Ltd. in consonance with the direction issued by the Principal Commissioner of Income Tax under Section 263 of the Act. This finding would be seen from paragraphs 5 to 7 of the assessment order. Thus the learned Tribunal on re-verification of the facts found that this is not a case of non application of mind nor this is a case of failure to re-appreciate the facts and concluded that the view taken by the assessing officer was a plausible view. That apart we note that the assessing officer conducted thorough enquiry and has also examined the directors of the holding company. Thus the learned Tribunal rightly dismissed the appeal filed by the revenue. No substantial question of law

Summary

Issues:
1. Whether the Tribunal erred in not upholding the order passed under section 263 of the Income Tax Act, 1961?
2. Whether the Tribunal erred in holding that the revisionary power of PCIT under Section 263 of the Income Tax Act, 1961 is bad in law?
3. Whether the Tribunal erred in quashing the order under section 263 of the Act of PCIT?

Analysis:
1. The appeal before the High Court was against the order passed by the Income Tax Appellate Tribunal (ITA) for the assessment year 2013-2014. The appellant raised the issue of whether the Tribunal erred in not upholding the order passed under section 263 of the Income Tax Act, 1961. The High Court found that the Tribunal's finding was justified as it was the second round of proceedings under Section 263. The assessing officer had followed the direction issued earlier under Section 263 and conducted thorough inquiries, including summoning directors of the relevant company. The High Court concluded that the assessing officer's view was plausible, and the Tribunal rightly dismissed the appeal filed by the revenue.

2. The second issue raised was whether the Tribunal erred in holding that the revisionary power of Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961 is bad in law. The High Court noted that the Tribunal had carefully considered the factual position and found that the assessing officer had followed the direction issued by the PCIT under Section 263. The High Court cited that the assessing officer had conducted a thorough inquiry and examined the directors of the holding company. The High Court supported the Tribunal's conclusion that there was no failure to re-appreciate the facts, and the assessing officer's view was reasonable.

3. The third issue was whether the Tribunal erred in quashing the order under section 263 of the Act of PCIT. The High Court referenced a Supreme Court judgment regarding the scrutiny of unaccounted money through share capital and premium. The High Court found that the Tribunal's decision to quash the order under section 263 was not justified based on the thorough inquiry conducted by the assessing officer and the plausible view taken. The High Court held that there was no substantial question of law arising for consideration in the appeal, leading to the dismissal of the appeal and the disposal of the application.