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2022 (5) TMI 1285 - HC - Income TaxRevision u/s 263 - Services provided by the petitioner should not be treated as a consultancy services and taxed under section 9(1)(vii) - AO has determined the PF of the assessee in India but has not thoroughly examined the applicability of 115JB - case of the petitioner was selected for scrutiny under CASS and a notice under section 143(2) was issued to the petitioner - HELD THAT - A reading of the Explanation, makes it clear the power of the Principal Commissioner or Commissioner under sub-section extends to such matters as had not been considered and decided in an appeal. The appeal has not been considered and decided. Thus, there is no embargo under Section 263 of the Income Tax Act, 1961 for the 1st respondent to pass order. The scope of appeal before the Appellate Commissioner is confined to tax ability of receipts towards technical services only. The Assistant Commissioner has not been considered the issue from the point of view Section 115 JC of the Income Tax Act, 1961. Whether the facts on merits warrants invocation of Section 11JB of the Income Tax Act, 1961 or not would render the proceedings without jurisdiction. Invocation of Section 263 of the Income Tax Act, 1961 by the first respondent on 15.03.2021 vide notice bearing Reference No.CIT/IT/CHE/113/2020-21 which has culminated in the impugned order dated 30.03.2021 cannot be said to be without jurisdiction merely because the intimation of DIN to the order passed under Section 263 was one day after the order was passed. Para No.5 of the CBDT Circular No.19/2019 dated 14.08.2019 makes it clear that communication issued manually can be regularised within 15 days of the issuance. As the scope of judicial review under Article 226 of the Constitution of India is limited, I am refraining for discussing on merits of the case. Suffice to state that the proceeding initiated by the 1st respondent was not without jurisdiction. The argument of the petitioner that the assessment order was not prejudicial to the interest of revenue and therefore the proceeding under Section 263 was liable to be quashed cannot be countenanced. A proceeding under Section 263 of the Income Tax Act, 1961 cannot be scuttled. Further, the petitioner participated in the proceeding initiated under Section 263 of the Income Tax Act, 1961. Therefore, it is not open to the petitioner to turn around to state that the proceeding was without jurisdiction. Thus find any merits in the present writ petition. This writ petition is therefore liable to be dismissed with liberty to the petitioner to work out the Appellate remedy before the Appellate Tribunal under Section 254.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act, 1961. 2. Applicability of Section 115JB of the Income Tax Act, 1961. 3. Taxability of receipts under India-UK DTAA. 4. Procedural compliance regarding Document Identification Number (DIN). Detailed Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act, 1961: The petitioner challenged the impugned order dated 30.03.2021 on the grounds that it was without jurisdiction and contrary to Section 263 of the Income Tax Act, 1961. The petitioner argued that the Commissioner is barred from revising an order of assessment that is the subject matter of an appeal under Explanation 1(c) to Section 263(1). The petitioner contended that the receipts were already under appeal before the CIT (Appeals), and therefore, the Commissioner could not revise the order. The court, however, clarified that the power of the Principal Commissioner or Commissioner under Section 263 extends to matters not considered and decided in the appeal. The court found no embargo under Section 263 for the 1st respondent to pass the order since the appeal had not been decided yet. 2. Applicability of Section 115JB of the Income Tax Act, 1961: The impugned order noted that the Assessing Officer failed to examine the applicability of Section 115JB despite the finding that the petitioner had a Permanent Establishment (PE) in India. The court observed that the issue of Section 115JB was not considered by the Assistant Commissioner in the original assessment. The Commissioner, therefore, had the jurisdiction to invoke Section 263 to ensure that the assessment was not erroneous and prejudicial to the interest of the revenue. The court upheld the Commissioner's direction for a thorough examination of the applicability of Section 115JB. 3. Taxability of receipts under India-UK DTAA: The petitioner argued that the receipts were not taxable in India under the India-UK Double Taxation Avoidance Agreement (DTAA). The petitioner claimed that the services provided did not fall under "technical services" or "consultancy services" as per Article 13 of the DTAA. The court noted that the Assessing Officer had already determined the taxability of the receipts as "Fees for Technical Services" under Article 7(9) of the DTAA. The court found that the Assessing Officer had taken a legally tenable position and the order was not erroneous on this ground. 4. Procedural compliance regarding Document Identification Number (DIN): The petitioner contended that the impugned order was issued without a Document Identification Number (DIN), violating Circular No. 19 of 2019. The court acknowledged that the DIN was communicated one day after the order was passed. However, the court referred to Para 5 of the Circular, which allows for manual communication to be regularized within 15 days. The court held that the delay in issuing the DIN did not render the proceedings without jurisdiction. Conclusion: The court dismissed the writ petition, finding no merit in the petitioner's arguments. The court held that the proceedings under Section 263 were not without jurisdiction and that the petitioner had the liberty to pursue an appellate remedy before the Appellate Tribunal under Section 254 of the Income Tax Act, 1961. The court also noted that the petitioner participated in the proceedings under Section 263, and therefore, could not claim the proceedings were without jurisdiction. The writ petition was dismissed with no costs, and the connected miscellaneous petition was closed.
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