Invocation of Revisionary Jurisdiction on same issues for which Reopening proceedings was done by AO: Calcutta HC quashes Order [Read Order]

The Calcutta High Court quashed order on the ground that the invocation of revisionary jurisdiction on same issues for which reopening proceedings was done by the Assessing Officer (AO).

The Respondent in the present matter is Karan Polymers Pvt Ltd.

The appeal by the revenue filed under Section 260A of the Income Tax Act, 1961 is directed against the order passed by the Income Tax Appellate Tribunal, Kolkata (Tribunal) in for the assessment year 2011-12. The short issue involved in the instant case is whether the assumption of jurisdiction by the Principal Commissioner of Income Tax,( PCIT ) under Section 263 of the Act was justified.

The Tribunal has passed an elaborate order, firstly taking note of the legal position under what circumstances the power under section 263 of the Act could be invoked. The Tribunal referred to the decision of the Supreme Court in Malabar Industrial Co. Pvt Ltd. vs. CIT,and the decision in the case of CIT vs. Max India Limited, and the other decisions of the various High Courts and then proceeded to examine the factual aspect.

TheTribunal noted that the issue based on which the PCIT assumed jurisdiction under Section 263 of the Act was the very same issue which was the subject matter of the reopening proceedings which was done by the Assessing Officer under Section 148 of the Act.

The Tribunal also noted that the assessee had filed a detailed submission to the reopening proceedings by reply and records were placed before the Assessing Officer in the form of a paper book and after examining all the documents the Assessing Officer was satisfied that the assessee had not entered into any bogus/accommodation entry/transaction with the party in question and there is no element of undisclosed income.

A Division Bench of the Court comprising Justices TS Sivagnanam and Hiranmay Bhattacharyya noted that “Thus, in our considered view, the learned Tribunal rightly applied the legal position and also took note of the facts and held that the power under Section 263 of the Act could not have been invoked.”

To Read the full text of the Order CLICK HERE

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