M/S HEENA EXPORT CORP. V. CHIEF COMMISSIONER OF I T AND ANR.

ITA/380/2007

AI Insights

The case involves M/S Heena Export Corporation, the appellant, contesting an order by the Chief Commissioner of Income Tax, which was upheld by the Income Tax Appellate Tribunal. The Chief Commissioner had cancelled an earlier assessment under Section 263 of the Income Tax Act, 1961, and directed a fresh assessment, citing six reasons for this decision. The appellant challenged the legality of this order, arguing that the powers under Section 263 are exclusively vested in the Commissioner, not the Chief Commissioner. The Tribunal, after reviewing various judgments including the Supreme Court's decision in Malabar Industrial Company v. Commissioner of Income Tax, found that while some reasons for the cancellation of the assessment may not be erroneous, they were not perverse, thus upholding the Chief Commissioner's order.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 733089 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 02-09-2008
• Assessment Year: misc
• Other Referred Cases: Malabar Industrial Company v. Commissioner of Income Tax, 243 ITR 83
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: AKSHAY BHAN
• Keywords: Assessment Order; Erroneous; Income Tax; Prejudicial to revenue
• Section: 263

Judgement Text

"I.T.A No. 380 of 2007 ::1:: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A No. 380 of 2007 Date of decision : September 02, 2008 M/S Heena Export Corporation, Link Road, Faridabad ...... Appellant. through Mr.Akshay Bhan, Advocate v. Chief Commissioner of Income Tax, (OSD), Faridabad & another, ...... Respondents CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI *** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? *** AJAY TEWARI, J The present appeal proposes the following substantial questions of law :- “1. Whether the CCIT was justified in passing the order dated 30.3.2006 when under section 263 the powers are vested in the Commissioner and not any other officer even the Chief Commissioner ? 2. Whether the order passed by the learned Appellate Tribunal is legally sustainable in view of the fact that the Assessment Order passed in the present case was neither erroneous nor prejudicial to the interest of Revenue ? 3. Whether in the facts and circumstances of the I.T.A No. 380 of 2007 ::2:: present case, the essential attributes of Section 263 of the Income Tax Act, 1961 i.e the order of Assessment being prejudicial to the interest of the revenue or being erroneous, not being met, the impugned order of the learned Tribunal is legally sustainable in the eyes of law? The order impugned is of the Income Tax Appellate Tribunal, dated 13.4.2007 whereby the appeal of the appellant against the order passed by the Chief Commissioner of Income Tax dated 30.3.2006 under Section 263 of the Income Tax Act, 1961 (for short “the Act”) cancelling the assessment earlier made and directing the Assessing Officer to make the assessment afresh, has been dismissed. A perusal of the impugned orders reveals that the Chief Commissioner found as many as six reasons to support the order of cancellation of the earlier assessment. Learned counsel for the appellant has relied upon the decision of the Hon'ble Supreme Court in Malabar Industrial Company v. Commissioner of Income Tax, 243 ITR 83 to canvass that the impugned orders do not satisfy the condition that the assessment was prejudicial to the revenue. He further states that the reasons spelt out only indicate that two views are possible and that if it is so, it cannot be held that the assessment order was prejudicial to the revenue. Learned Tribunal, after discussing a catena of judgments including Malabar Industrial Company's case (supra), found that the assessment order does not contain any discussion, does not refer to any correspondence, does not indicate that the Assessing Officer had made any inquiry to verify expenditure etc. and that no reasons have been given to I.T.A No. 380 of 2007 ::3:: support the findings. After a careful consideration of the matter, we feel that even though some of the reasons advanced by the Chief Commissioner may not meet the test of being erroneous, all of them cannot be held to be perverse. The other contention is that the order under Section 263 of the Act could have been passed only by the Commissioner and not by the Chief Commissioner of Income Tax. We find no such water tight compartmentalization in Section 263 of the Act. In view of the discussion above, none of the questions proposed can be held to be substantial questions of law. Consequently, the present appeal is dismissed with no order as to costs. ( AJAY TEWARI ) JUDGE ( ADARSH KUMAR GOEL ) JUDGE September 02, 2008 'kk' "