A Division Bench of the Calcutta High Court has recently set aside the Income Tax Revision order passed under Section 263 of the Income Tax Act, 1961. The revision order was quashed as the same was passed against the assessee, Britannia Industries Limited without any due enquiry or application of mine by the Principal Commissioner of Income Tax.
The assessee had filed its return of income for the assessment year under consideration (A.Y. 2016-2017), declaring a total income of Rs. 1062.44 Crores. Subsequently a revised return was filed, declaring a total income of Rs. 1054.14 Crores and the case was selected for scrutiny.
The assessment was completed by order under Section 143(3) of the Act. The Principal Commissioner of Income Tax, Calcutta (PCIT) issued a show cause notice under Section 263 of the Income Tax Act.
Pointing out non verification, of the issue of debited amounts in excess from the Profit and Loss account not being added back to the total income, the PCIT also opined that the amount debited to profit and loss account for advertising pertained to a period prior to the assessment year and observed that the same should also be disallowed.
The PCIT after briefly setting out the objections raised by the assessee to the show cause notice issued under Section 263 of the Act came to the conclusion that the assessing officer has passed the assessment order without making enquiries or verification and set aside the order and passed revision order.
In light of the ruling of the Supreme Court in Malabar Industrial Company Limited Versus Commissioner of Income Tax, wherein it was held that every loss of revenue cannot be treated as prejudicial to the interest of revenue and that the assessee had only taken one of the courses permissible as per law, the Calcutta High Court Bench of Justice T S Sivagnanam and Justice Hiranmay Bhattacharya set aside the revision order.
It was further observed that, “the PCIT has not carried out any enquiry on his own and merely set aside the assessment order and sent the file back to the assessing officer to re-examine the issues which is contrary to the law”.
Accordingly, the order of the ITAT, that quashed the revision order of PCIT under Section 263 was upheld by the Calcutta High Court.
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