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TMI Blog2022 (5) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director s Salary : Rs.54,47,732/- TDS : Rs.70,52,015/- Exchange Rate Difference : Rs.1,89,663/- 3. The assessee Company claimed that as per India UK DTAA Treaty, the receipts are not taxable in India and therefore claimed refund of the amount of TDS deducted by the Indian Firm. 4. In the assessment it was concluded that, the Marketing Services provided by TPC UK cannot be placed outside the bracket of Consultancy Services. The services rendered by the assessee Company has ultimately facilitated transfer of knowledge and experience that are made available to TPC India. Hence, the contention of the assessee was rejected and the receipts obtained towards these services are taxable in India as per India UK DTAA Treaty. Total receipts obtained from TPC India : Rs.4,19,86,627/- Tax payable thereon @ 15% : Rs.62,97,994/- 5. The order shows that the AO has determined the PF of the assessee in India but has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the earlier a draft assessment order dated 29.12.2017 was passed by the Deputy Commissioner of Income Tax [International Taxation] under Section 143(3) r/w 144C of Income Tax Act, 1961. The case of the petitioner is that the petitioner accepted the draft assessment order pursuant to which the assessment order dated 19.02.2018 came to be passed under Section 143(3) of the Income Tax Act, 1961 against which the petitioner preferred an appeal under Section 246A of the Income Tax Act, 1961 in Form No.35 before the CIT (Appeals). 4. Petitioner is a UK-based company engaged in services. The petitioner has entered into a Marketing Service Agreement dated 1.4.2009 with a Indian partnership firm called Texmo Precision Castings (TPC), from India. The petitioner received commission from the said partnership firm during 2014-15 for a sum of Rs.4,19,86,627/. While making payments to the petitioner, the said partnership firm deducted an amount of Rs.70,52,015/- towards tax and remitted the amount to the income tax department in Form 26 A S. 5. Under these circumstances, the petitioner filed refund claim for the aforesaid amount deducted as tax and remitted by the said partnership. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting company from UK and caters to the need of the manufacturing partnership firm viz., Texmo Precision Casting, which is engaged in manufacture of casting mould for medical equipments and aerospace equipments. It is submitted that the petitioner and the manufacturing firm in India have entered into marketing service agreement dated 01.04.2009 whereby the petitioner is required to provide marketing service to Texmo Precision Casting company. 13. It is the specific case of the petitioner that during the period in dispute for the relevant assessment year 2015-16 [Previous year 2014-15], the petitioner received a sum of Rs.4,19,86,627/- as consideration under the aforesaid agreement for providing marketing services. It is the further case of the petitioner that the aforesaid amount is not taxable in India and that the draft assessment order was passed on 29.12.2017 referred to supra, pursuant to which the final assessment order dated 19.02.2018 has been passed. 14. Learned Counsel for the petitioner further submits that under Explanation 1(c) to Section 263(1), the Commissioner is barred to revise an order of assessment which is subject matter of appeal. It is submitted that re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) in any other case, he may pass such orders in the appeal as he thinks fit Power of CIT u/s 263 263(1)- pass such order thereon as the circumstances of the case justify, including an order of enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 19. It is submitted that it is for this precise reason, there is a statutory bar under Section 263 to invoke provisions of Section 263 when the same income is subject matter of appeal, as appeal is a continuation of assessment proceedings. This has been confirmed by order of Division Bench of this Court in Renuka Philip v ITO , (2018) 409 ITR 567 (Mad), wherein it was held as under: 22. The above explanation makes it clear that when the appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act is barred. The Commissioner in the order dated 14.03.2012 states that the appeal pertains to the claim made by the assessee under Section 54 of the Act and it has got nothing to do with the order passed by the Assessing Officer under Section 54F of the Act. The said finding rendered by the Commissioner is wholly unsustainable, since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.62,97,994 Rs.42,41,489 22. However, in the impugned order, the Commissioner has not dealt with this issue and neither has come to any finding as to how the order dated 19/02/2018 is prejudicial to the interest of revenue. A reference was also made from the following passages which is reproduced below [CIT v Gabriel India Ltd . (1993) 203 ITR 108 (Bom)] :- 11. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice. However, the same was not considered by the Commissioner in the impugned order and it was erroneously assumed jurisdiction and concluded that the order dated 19/02/2018 is erroneous. CIT v Gabriel India Ltd . (1993)203 ITR 108 (Bom), it was observed as under:- 14. We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance, the accounting practice of the assessee is questioned. However, that basis of the order vanishes in thin air when we find that this very accounting practice, followed for a number of years, had the approval of the income-tax authorities. Interestingly, even for future assessment years, the same very accounting practice is accepted. 24 ........... Likewise, whether the Commissioner should have recorded a definite finding or not, may not be very relevant factor in the present case where on the facts of this case we have found that the opinion of the Assessing Officer in treating the expenditure as revenue expenditure was plausible and thus there was no material before the Commissioner of Income-tax to vary that opinion and ask for fresh inquiry. 26. The learned counsel also referred to the decision of this Court in Principal Commissioner of Income Tax v. Abhijit Bhandari (2009) 414 ITR 485 (Mad), it was observed as under:- 57.In view of the reasons stated above, we find no reason to interfere with the order of the learned Single Judge. The issues raised on facts have been finally decided. A possible view had been arrived at stating that there was only one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax for the first time has observed that the Assessing Officer has failed to make enquiry regarding the estimation of income and this failure makes the order erroneous and concluded that the Assessing Officer arrived at the estimated profits of 25% without any basis. Whereas as seen from the reasons provided in SCN, the CIT, nowhere calls upon the Petitioner to show-cause on the aspect of estimation of income at 25% being erroneous. 30. It is therefore submitted that the impugned order has travelled beyond the scope of show-cause notice and is liable to be quashed. [ Oryx Fisheries Private Ltd. v. Union of India and Others, (2010) 13 SCC 427]. 31. Finally, it was submitted that the impugned order was issued without Document Identification Number. It is submitted that Circular No. 19 of 2019, states that income-tax authorities shall not issue orders manually and without document identification number (DIN), except in exceptional circumstances. In these exceptional cases, the authority has to record reasons in the format provided in the circular as to why order is issued manually and without DIN . 32. In the present case impugned order dated 30/03/2021 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has an alternate and efficacious remedy and therefore the jurisdiction of this Court under Article 226 of Constitution of India not be invoked. 38. The learned counsel for the respondents submits that both under Section 246A r/w 251 of the Income Tax Act, 1961, the Appellate Commissioner as also the Commissioner of Income Tax under Section 263 of the Income Tax Act can nullify the assessment, save that in the appellate proceedings, the Appellate Commissioner can pass fresh order of assessment, as if it were the assessment order against which the remedy lies before the Tribunal. In this case, the petitioner's appeal has been allowed indirectly and the matter has been remitted back to the second respondent to pass fresh assessment order and therefore, there is no case made out for interference under Article 226 of the Constitution of India. 39. In this connection, a reference was made to the decision of the Honourable Supreme Court in Assistant Collector of Central Excise, Chandan Nagar, West Bengal vs. Dunlop India Ltd Others, (1985) 1 SCC 260. Learned Senior Standing Counsel for the respondents also placed reliance on the decision of the Honourable Supreme Court in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alid estimation or from the books of the petitioner was not done. It is therefore submitted that the order was erroneous and prejudicial to the interest of the revenue and therefore the jurisdiction has been rightly invoked Section 263 of the Income Tax Act, 1961 45. The issue that arises for consideration in this writ petition whether the notice issued to the petitioner under Section 263 of the Income Tax Act, 1961, pursuant to which, the impugned order dated 30.03.2021 was without jurisdiction or not . Explanation Section 1(c) of the Income Tax Act, 1961, Explanation 1(c) to Section 263 reads as under:- 1(c) : Where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal (filed on or before or after the 1st day of June 1988), the powers of the (Principal Commissioner or) Commissioner under this sub-section shall extend (and shall be deemed always to have extended) to such matters as had not been considered and decided in such appeal). 46. A reading of the above Explanation, makes it clear the power of the Principal Commissioner or Commissioner under sub-section extends to such matters as had not been consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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