2018 (10) TMI 1512 - HC - Income Tax

Revision u/s 263 - the contents of the order u/s 263 were not related to the said show cause notice issued in this regard - Held that - The issue raised before us has been answered by the Hon ble Supreme Court in the case of Amitabh Bachchan 2016 (5) TMI 493 - SUPREME COURT wherein an identical contention as advanced by the learned counsel for the appellant herein was advanced before the Hon ble Supreme Court contending that no show cause notice was given prior to the order passed under Section 263 of the Act and that the reasons stated in the order passed under Section 263 of the Act were totally different. The above decision of the Hon ble Supreme Court in the case of Amitabh Bachchan would squarely apply to the facts and circumstances of this case, that the Commissioner of Income Tax was not denuded of his powers to decide the matter as detailed in the order dated 30.3.1998 and that there was no requirement of issuance of any show cause notice. - Decided against assessee.

Summary

Issues:
1. Jurisdiction of the Commissioner of Income Tax in passing an order under Section 263 without a related show cause notice.
2. Requirement of a show cause notice prior to passing an order under Section 263 of the Income Tax Act.

Analysis:

Issue 1: Jurisdiction of the Commissioner of Income Tax
The appeal under Section 260A of the Income Tax Act, 1961 challenged the order passed by the Income Tax Appellate Tribunal remanding the matter back to the Commissioner after finding discrepancies between the notice issued under Section 263 and the final order. The appellant contended that the order passed by the Commissioner was on a new ground not mentioned in the show cause notice, leading to a lack of jurisdiction. The Tribunal accepted this argument but remanded the matter for fresh consideration. The appellant relied on the Delhi High Court case of CIT Vs. Ashish Rajpal to support the argument that the order was based on a different ground. However, the Senior Standing Counsel for the Revenue argued that a show cause notice was not a prerequisite for passing an order under Section 263, citing the Supreme Court case of CIT Vs. Amitabh Bachchan.

Issue 2: Requirement of a Show Cause Notice
The High Court referred to the Supreme Court decision in the case of Amitabh Bachchan, which clarified the conditions for exercising jurisdiction under Section 263. The Supreme Court emphasized that the satisfaction that an order is erroneous and prejudicial to the Revenue is essential for invoking Section 263. It was highlighted that the power of revision under Section 263 does not require a specific show cause notice but mandates an opportunity for the assessee to be heard. Failure to provide this opportunity would render the revisional order legally fragile due to a violation of natural justice principles. The Court concluded that the Commissioner was not stripped of powers to decide the matter without issuing a show cause notice, as clarified in the Amitabh Bachchan case.

In summary, the High Court dismissed the tax case appeal, emphasizing that the requirement of a show cause notice prior to passing an order under Section 263 was not mandatory as per the Supreme Court's interpretation in the Amitabh Bachchan case. The decision in the Ashish Rajpal case was found to be factually distinguishable and did not support the appellant's case. The Court upheld the Tribunal's decision and answered the issues against the appellant, leading to the dismissal of the appeal without costs.