No adverse Inference Drawn against Assessee: Calcutta HC notes that PCIT could not have Ignored Order u/s 153A as Immaterial and Irrelevant [Read Order]

The Calcutta High Court noted that the Principal Commissioner of Income Tax (PCIT) could not have ignored order under Section 153A of the Income Tax Act as immaterial and irrelevant as no adverse inference drawn against assessee, M/s Techno Tracom Pvt Ltd.

The appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (Act) is directed against the order dated 18th April, 2022 passed by the Income Tax Appellate Tribunal, “B” Bench, Kolkata (the Tribunal) in ITA No.205/Kol/2021 for the assessment year 2009-10.

The short issue which falls for consideration in this appeal is whether the assumption of jurisdiction by thePrincipal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act was justified and whether the order passed under the said provision was valid and sustainable in law.

The original assessment under Section 143(3) of the Act was completed for the assessment year under consideration and the PCIT exercised its jurisdiction under Section 263 of the Act and passed by the order.While the matter was pending, the Assessing Officer completed the assessment pursuant to the search and seizure operation under Section 153A read with Section 143(3) of the Act.

The assessee had filed the details of shares allotted and documents filed before the ROC as well as the bank statement including the bank book filed. It is noted that after the assessee having filed the details of the twenty five share subscribers, the AO had issued notice under Section 133(6) of the Act to all the shareholders in order to examine their respective identity, creditworthiness and genuineness which is available from page nos.72 to 94 of the paper book.

The Court of Justices TS Sivagnanam and Hiranmay Bhattacharyya observed that “In our opinion the PCIT could not have ignored the order passed under Section 153A of the Act as being immaterial and irrelevant. The Tribunal not stopping with that has also examined as to the exercise undertaken by the Assessing Officer while completing the assessment under Section 153A of the Act and found that the entire records were examined and no adverse inference was drawn against the assessee.”

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