2023 (4) TMI 66 - HC - Income Tax

Revision u/s 263 by CIT - unexplained cash credit u/s 68 - Tribunal set aside the order passed under Section 263 and remanded the matter back to the PCIT for a fresh decision - While the matter was pending, AO completed the assessment pursuant to the search and seizure operation u/s 153A r.w.s. 143(3) - HELD THAT - As decided in S.M. Oil Extraction Pvt. Ltd. 1990 (10) TMI 33 - CALCUTTA HIGH COURT wherein it was held that the Commissioner is entitled for the purpose of exercising his revisional jurisdiction to look into the whole evidence. The Court explained the expression record as used in Section 263 of the Act to be comprehensive enough to include the whole record of evidence on which the original assessment order was based. As held that where any proceeding is initiated in the course of assessment proceedings, having a relevant and material bearing on the assessment to be made and the result of such proceedings was not available with the ITO before the completion of the assessment but the result came subsequently, the revising authority (PCIT) is entitled to look into the search material as it forms part of the assessment records of the particular assessment year. The finding rendered by Tribunal was perfectly justified as in our opinion the PCIT could not have ignored the order passed u/s 153A as being immaterial and irrelevant. Tribunal not stopping with that has also examined as to the exercise undertaken by the AO while completing the assessment u/s 153A and found that the entire records were examined and no adverse inference was drawn against the assessee. Tribunal rightly granted relief to the assessee and the order does not call for any interference. Substantial questions of law are answered against the revenue.

Summary

Issues Involved:
The appeal concerns the delay in filing, condonation of delay, and substantial questions of law raised by the revenue under Section 260A of the Income Tax Act, 1961.

Summary:
The High Court of Calcutta addressed the delay in filing the appeal and allowed the application for condonation of delay. The appeal by the revenue was against an order passed by the Income Tax Appellate Tribunal for the assessment year 2009-10. The substantial questions of law raised included the validity of quashing the revisionary order under Section 263 and ignoring findings by the Principal Commissioner of Income Tax.

The main issue in the appeal was whether the assumption of jurisdiction by the Principal Commissioner of Income Tax under Section 263 was justified and whether the order passed under that provision was valid. The Court considered the facts, including the original assessment, a search and seizure operation, and subsequent assessment orders. The Tribunal had set aside the initial order under Section 263 and remanded the matter back to the Principal Commissioner for a fresh decision.

The Court analyzed the legal principles regarding the revisional jurisdiction of the Principal Commissioner and the scope of examining records under Section 263 of the Act. It was noted that the Principal Commissioner had taken a narrow view by disregarding the order passed under Section 153A and deeming it irrelevant. The Tribunal found that the Principal Commissioner should have considered the entire record, including the post-search assessment proceedings, before making a decision.

Ultimately, the Court upheld the Tribunal's decision, stating that the Principal Commissioner could not ignore the assessment order under Section 153A and that no adverse inference was drawn against the assessee. The appeal was dismissed, the substantial questions of law were answered against the revenue, and the connected application for stay was closed.