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2023 (5) TMI 419 - HC - Income TaxRevision u/s 263 - assumption of jurisdiction by the PCIT - Tribunal has held the initiation of revisional proceedings against the assessee is bad - HELD THAT - It is seen that PCIT has exercised jurisdiction u/s 263 of the Act on the very same information furnished by the DDIT (Investigation) Unit 2 (2) - On perusal of the order passed by the PCIT in which the show cause notice issued u/s 263 has been extracted, the PCIT has not recorded any finding that he has reason to believe that income that is assessable to tax has escaped assessment. Tribunal was right in coming to the conclusion that the PCIT erred in exercising its jurisdiction. Our view is supported by the decision in the case of PCIT Vs. ANINDITA STEELS LIMITED 2022 (2) TMI 397 - CALCUTTA HIGH COURT Appellant relied upon the decision of MALABAR INDUSTRIAL CO. LTD. Vs. COMMISSIONER OF INCOME TAX, KERALA STATE 2000 (2) TMI 10 - SUPREME COURT The said decision would support the case of the respondent assessee and would lead us to affirm such an order. Thus, in the light of the factual aspect brought out by the Tribunal while granting relief to the assessee, we find no substantial questions of law, much less substantial questions of law arising for consideration in this appeal. Appeal dismissed.
Issues:
1. Delay in filing the appeal 2. Jurisdiction of Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 3. Validity of revisional proceedings against the assessee 4. Treatment of unaccounted funds in the assessee company's bank account Delay in filing the appeal: The High Court of Calcutta addressed the issue of a delay of 301 days in filing the appeal. The Court, after reviewing the affidavit supporting the condone delay petition, found sufficient cause for the delay and allowed the application, condoning the delay in filing the appeal. Jurisdiction of Principal Commissioner under Section 263: The core issue in this case was whether the assumption of jurisdiction by the Principal Commissioner of Income Tax, Kolkata, under Section 263 of the Income Tax Act was justified. The Tribunal had previously allowed the assessee's appeal, stating that the PCIT did not have a valid reason to believe that income assessable to tax had escaped assessment. The High Court noted that the PCIT had not recorded any such finding, leading to the conclusion that the PCIT erred in exercising jurisdiction. The Court's decision was supported by a previous case law, PCIT Vs. ANINDITA STEELS LIMITED. Validity of revisional proceedings: The High Court examined whether the initiation of revisional proceedings against the assessee was valid. The revenue raised substantial questions of law, questioning the Tribunal's decision to quash the revisional proceedings and the assessment order related to unaccounted funds in the assessee company's bank account. The Court found that the PCIT had not provided a valid reason to believe that income had escaped assessment, leading to the dismissal of the appeal. Treatment of unaccounted funds: Another issue raised was the treatment of unaccounted funds in the assessee company's bank account. The revenue contended that the Tribunal's decision not to verify the issue of unaccounted funds was erroneous. However, the Court found that the PCIT's jurisdiction was not justified, and the Tribunal's decision to grant relief to the assessee was upheld based on factual aspects presented. In conclusion, the High Court dismissed the appeal, finding no substantial questions of law for consideration. The stay application was also dismissed accordingly. The Court's decision was based on the lack of valid jurisdiction by the PCIT and the absence of findings to support the revenue's contentions.
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