CHHATTISGARH STATE MINOR FOREST PRODUCE ( TRADING AND DEVELOPMENT) CO-OPERATIVE FEDERATION LIMITED V. PR. COMMISSIONER OF INCOME TAX - 1

TAXC/182/2024

AI Insights

The case involves the Chhattisgarh State Minor Forest Produce (Trading and Development) Co-operative Federation Limited, Raipur, which appealed against the orders of the PCIT and ITAT concerning the assessment order for the year 2018-19. Initially, the assessee declared a NIL income return and claimed deductions under Section 80P(2)(d) of the Income Tax Act, 1961. The PCIT later issued a show cause notice under Section 263, leading to a remand of the matter to the Assessing Officer for fresh consideration. The ITAT affirmed the PCIT's order, which was contested by the assessee in the High Court. The court found procedural lapses in how the PCIT and ITAT handled the assessee's documents and replies, leading to the setting aside of their orders.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 672591 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 24-09-2024
• Assessment Year: misc
• Other Referred Cases: Tax Case Nos.163/2024, 164/2024 & 165/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMIT CHAUDHARI; ANKITA GOURAHA
• Assessee Lawyers: RAKESH GUPTA; MOHIT KUMAR
• Keywords: Assessment Order; Income Tax; ITAT; Principal commissioner of income tax; Remand; Section 263
• Section: 142(1); 143(2); 263; 253; 80P(2)(d)

Judgement Text

"Page 1 of 4 (Tax Case No.182/2024) 2024:CGHC:37552-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 182 of 2024 Chhattisgarh State Minor Forest Produce (Trading and Development) Co- operative Federation Limited, Raipur, District Raipur (C.G.) ... Appellant versus Pr. Commissioner of Income Tax-1, Raipur (C.G.) ... Respondent For Appellant : Dr. Rakesh Gupta and Mr. Mohit Kumar, Advocates. For Respondent : Mr. Amit Chaudhari and Ms. Ankita Gouraha, Advocates. Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Amitendra Kishore Prasad, JJ. Order on Board (24/09/2024) Sanjay K. Agrawal, J. 1. This tax appeal has been admitted for hearing by formulating the following substantial question of law: - “Whether the ITAT is justified in confirming the order of learned Principal Commissioner of Income Tax passed under Section 263 of the Act, 1961, whereby the assessment order was set aside without looking into the defence raised and application of mind?” SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2024.09.25 15:43:18 +0530 Page 2 of 4 (Tax Case No.182/2024) 2. The appellant herein / assessee submitted return of income for the assessment year 2018-19 on 31-10-2018 declaring total income as NIL after claiming deduction under Section 80P(2)(d) of the Income Tax Act, 1961 (for short, ‘the IT Act’). Thereafter, on 22-9- 2019, notice under Section 143(2) of the IT Act was issued by the Income Tax Officer, Ward 3(1), Raipur and notice under Section 142(1) was issued on 26-4-2020 and ultimately, assessment order was passed on 27-2-2021 accepting return of income and thereafter, on 1-2-2023, the Principal Commissioner of Income Tax-1, Raipur (PCIT) issued show cause notice under Section 263 of Act reproducing the proposals / reasons by the Assistant Commissioner of Income Tax-1(1), Raipur including all inaccuracies and incorrect facts and figures calling upon the appellant herein / assessee to submit reply which the appellant filed on 15-2-2023 and ultimately, on 29-3-2023, order was passed by the PCIT under Section 263 remanding the matter to the Assessing Officer for fresh consideration on two grounds against which the appellant herein on 2-5-2023, preferred appeal under Section 253 of the Act before the ITAT and by the impugned order dated 9-5-2024, the ITAT affirmed the order of the PCIT dated 29-3-2023. 3. Dr. Rakesh Gupta, learned counsel appearing for the appellant / assessee, would submit that the ITAT is absolutely unjustified in affirming the order of the PCIT ignoring the facts and grounds and Page 3 of 4 (Tax Case No.182/2024) the documents filed by the appellant were not considered and in slip-shot manner, the order impugned affirming the order of the PCIT has been passed, particularly, for three assessment years 2015-16, 2016-17 & 2017-18, this Court in Tax Case Nos.163/2024, 164/2024 & 165/2024, had already remanded the matters to the PCIT setting aside the order of the PCIT and the ITAT. Therefore, the impugned order also deserves to be set aside. 4. Mr. Amit Chaudhari, learned counsel for the respondent / Revenue, would submit that the above three tax cases had been remanded to the PCIT. 5. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. 6. True it is that common order was passed by the ITAT on 9-5-2024 affirming the order of the PCIT and three tax cases namely Tax Case Nos.163/2024, 164/2024 & 165/2024 had already been allowed by a coordinate Bench of this Court and the matters have been remanded to the PCIT. In Tax Case No.164/2024, following finding has been recorded by this Court in paragraph 7: - “7. The order of the Pr. CIT, therefore, necessarily would require to explain i.e. record reasons to exercise the power under Section 263 of the Act, 1961 to say that the order was prejudicial to the interest of Revenue. However, in case in hand after that proceedings were initiated, the enquiry was Page 4 of 4 (Tax Case No.182/2024) conducted and during such enquiry the reply and the documents were placed by assessee. Section 263 makes it incumbent to the Pr. CIT to conduct enquiry. The enquiry means not to shelve the reply and the documents but to deliberate upon it and the same cannot be set aside on the ground that the Officer is not satisfied with reply. The reasons for satisfaction or non-satisfaction are required to be recorded. In the instant case, after going through para 5 of the order, which is the substratum of the entire issue, it is manifest that the said procedure has not been followed.” 7. Since three tax appeals of assessment years 2015-16, 2016-17 & 2017-18 have already been allowed and the matters have been remanded to the PCIT for reconsidering the reply and documents of the assessee by following the correct procedure, this tax appeal is also allowed and the orders of the PCIT and the ITAT, both, are hereby set aside. Accordingly, the substantial question of law is answered in favour of the assessee and against the Revenue. It is directed that the PCIT shall reconsider the reply and documents of the assessee and pass order afresh after giving opportunity of hearing to both the parties. It is made clear that this Court has not expressed any opinion on the merits of the matter and the learned PCIT shall pass order in accordance with law, on its own merits. Sd/- Sd/- (Sanjay K. Agrawal) (Amitendra Kishore Prasad) JUDGE JUDGE Soma "