AMBALAL SARABHAI ENTERPRISES LTD.,BARODA V. THE PRINCIPAL COMMISSIONER OF INCOME TAX-1, BARODA

ITA 903/AHD/2016

AI Insights

The case involves Ambalal Sarabhai Enterprises Ltd., which appealed against the order of the Principal Commissioner of Income-tax, Vadodara-1, exercising revisionary powers under Section 263 of the Income-tax Act, 1961. The PCIT had set aside the assessment order passed by the Assessing Officer for the Assessment Year 2011-12, which involved the addition of a liability under the Drugs Prices Control Order, 1995 to the book profit under Section 115JB of the Act. The Tribunal, however, dismissed the appeal as infructuous due to the absence of a consequential order from the Assessing Officer within the prescribed time limit, rendering the matter barred by limitation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669125 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Other Referred Cases: K.A. Ramaswamy Chettiar vs. CIT, Swarup Vegetable Products vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR; B.P. SRIVASTAVA
• Assessee Lawyers: BANDISH SOPARKAR
• Keywords: Set aside; Opportunity of being heard; Revision of order
• Section: 143(3); 263; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 903/Ahd/2016 (Assessment Year: 2011-12) Ambalal Sarabhai Enterprises Ltd., Wadi Wadi, Sarabhai Marg, Vadodara [PAN: AABCA 6893 K] The Principal Commissioner of Income-tax, Vadodara-1 (Appellant) .. (Respondent) Assessee by : Shri Bandish Soparkar, AR Revenue by: Shri Alpesh Parmar, CIT-DR & Shri B.P. Srivastava, Sr DR Date of Hearing 19.06.2025 Date of Pronouncement 25.06.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the assessee against the order passed by the learned Principal Commissioner of Income-Tax, Vadodara-1[hereinafter referred to as “PCIT”], dated 29.02.2016, in exercise of his revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year (AY) 2011-12. 2. The assessee has raised following grounds of appeal:- “The CIT has grievously erred in fact and in law in Invoking provisions of sec.263 for revising assessment order u/s.143(3), dated 28.3.2014, passed by AO for AY 2011-12, for adding, merely on the basis of audit query, to the book profit u/s.115JB of the Income Tax Act, 1961, the liability of Rs.5,24,57,203 under The Drugs Prices Control Order, 1995 (DPCO), raised by Government of India, recognized in the books of account and claimed in return of income by appellants by alleging that liability is unascertained liability since it is disputed by appellant.” 3. The brief facts of the case are that the return of income for the year under consideration was filed by the assessee on 17.01.2013 declaring loss at Rs.(-) ITA No. 903/Ahd/2016 Ambalal Sarabhai Enterprises Ltd Vs. PCIT Asst. Year :2011-12 - 2– 90,84,828/- under normal provisions of the Act and book profit was declared at Rs.2,05,14,186/-. The assessment was completed on 28.03.2014 u/s 143(3) of the Act, determining the total income at Rs.2,03,58,800/- under normal provisions of the Act and Book Profit was determined u/s 115JB of the Act at Rs.3,94,60,143/-. 3.1 The Ld. PCIT held that the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue for the following reasons:- “2.1 On verification of record, it is revealed that while computing income as per Income Tax Act, Rs.2,62,28,601/- is provided as DPCO liability on the basis of amount pre-deposited (as directed by Hon'ble Gujarat High Court), including interest expenses & another Rs.2,62,28,601/- provided as DPCO liability on the basis of bank guarantee given as directed by Hon’ble Gujarat High Court), including interest. On further verification, it is noticed that the Hon’ble Supreme Court had allowed Company's Civil Appeals against the judgement of Hon’ble High Court and ordered to execute a guarantee favoring the Bank in respect of the dues in the suit filed by the Banks, which is pending before the Depts Recovery Tribunal. Hence, it is clear that the aforesaid liabilities have been created for bank guarantee in response to the suit filed by Banks, which are not ascertained as on 31.03.2011. Therefore, Rs.5,24,57,202/- (Rs.2,62,28,601 + Rs.2,62,28,601) was to be added back to the Book Profit u/s 115JB of the IT Act.” 3.2 After considering the submissions and contentions made by the assessee, the Ld. PCIT set aside the assessment order u/s 263 of the Act. The Ld. PCIT directed the Assessing Officer to frame a fresh assessment after conducting proper enquiries and verification on the issues highlighted in the reasons for revision, and after duly examining the assessee's accounts and records. The relevant paragraphs of the order are reproduced hereunder for ready reference:- ITA No. 903/Ahd/2016 Ambalal Sarabhai Enterprises Ltd Vs. PCIT Asst. Year :2011-12 - 3– “4. I have carefully considered the submissions made by the assessee and contentions put forth therein. The essence of the submissions is that, the liability is ascertained & therefore, the same is not disallowable. Assessee has further rebutted the current proceedings and has also contended that the alleged amount has been offered for taxation. Considering the totality of facts, I am of the view that the issue requires thorough verification/inquiries and A.O. has failed to make proper enquiries, examine the records and appreciate the facts and the law while deciding the issue. 5. In the case of K.A. Ramaswamy Chettiar (220 ITR 657) the Hon'ble Madras High Court has held that when the ITO is expected to make an enquiry of a particular item of income and if he does not make an enquiry as expected, that would be a ground for the Commissioner of Income Tax to interfere u/s 263 with the order passed of the ITO, since such an order passed by the ITO is erroneous and prejudicial to the interest of the revenue. 6. In the case of Swarup Vegetable Products vs. Commissioner of Income Tax (1990) 187 (TR 412 (All, it was held by Hon'ble Allahabad High Court as under: \"It is beyond dispute that, U/s. 263 of the IT Act, the CIT does have the power to set aside the assessment order send the matter for a fresh assessment if he is satisfied that further enquiry is necessary, and that the order of the ITO is prejudicial to the interest of the Revenue.\" 7. Failure on the part of the A.O. with regard to examination/verification of the vital issues put forth by assessee, as discussed in Para 4 herein above has rendered the assessment erroneous, in so far as, it is prejudicial to the interest of revenue. Therefore, in exercise of the powers conferred by the Section 263 of the Income-tax Act, 1961, the assessment is set aside with the directions that the assessment should be framed afresh by the A.O. after proper enquiries / verification on the aforementioned issue, examining the accounts and records of the assessee and after allowing reasonable opportunity of being heard to the assessee.” 4. We heave heard the rival contentions and perused the material available on record. We find that the similar matter of allowability of DPCO liability is pending before the Tribunal. Further, neither the Assessee nor the Revenue could file the order of the Assessing Officer passed consequent to the revisional order of the Ld. PCIT dated 29.02.2016. Hence, keeping in view the settled legal position that if the order of the ITA No. 903/Ahd/2016 Ambalal Sarabhai Enterprises Ltd Vs. PCIT Asst. Year :2011-12 - 4– Assessing Officer is not passed within the stipulated time prescribed under sub-Section (2A) of Section 153 of the Act, the order shall be deemed to be barred by limitation. Since no consequential order has been passed, the appeal of the assessee is dismissed as infructuous. 5. In the result, the appeal of the assessee is dismissed as infructuous. The order is pronounced in the open Court on 25.06.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 25/06/2025 **btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(E)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ……20.06.2025.. 2. Date on which the typed draft is placed before the Dictating Member ……23.06.2025….. 3. Other Member……23.06.2025…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ……24.06.2025….………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …25.06.2025…. 6. Date on which the fair order comes back to the Sr.P.S./P.S ……25.06.2025.………………. 7. Date on which the file goes to the Bench Clerk ……25.06.2025. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "