The Dy. CIT, Circle-1(1)(1), Ahmedabad V. M/s. A. Menarini India Pvt. Ltd., Ahmedabad

ITA 1645/AHD/2019

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(Appeals), which dismissed the appeal of the assessee as infructuous. The assessee's original appeal was against an assessment order that was passed following a Section 263 order by the Principal CIT. However, the ITAT had previously quashed the Section 263 order, leading to the CIT(Appeals) dismissing the subsequent appeal as the assessment order no longer had any legal standing. The Department contested this dismissal, leading to the current appeal before the ITAT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131377 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-12-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2019
• Other Referred Cases: Malabar Industrial Co. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; TDS; Set aside
• Section: 263; 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e DCIT, Circle-1 (1 )(1), Ah medabad (Appellant) Vs M/s. A Men arini India Pv t. Ltd. , A-10 1, Shapath-IV, Op p: Karn avati Club, S. G. Highway , Ah med abad PAN: AA AC19 822K (Resp ondent) Asses see b y : Shri Pa rimalsingh B. Parmar, A.R. Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 27-12 -2022 Date of pronouncement : 18-01 -2023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-1, Ahmedabad in Appeal no. CIT(A)-1/DCIT-Cir. 1(1)(1)/384/2016-17, in proceeding u/s. 143(3) r.w.s. 263 vide order dated 22/08/2019 passed for the assessment year 2011-12. ITA No. 1645/Ahd/2019 Assessment Year 2011-12 I.T.A No. 1645/Ahd/2019 A.Y. 2011-12 Page No. Dy. CIT vs. M/s. A. Menarini India Pvt. Ltd. 2 2. The Department has raised the following grounds: “(l)The ld. CIT(A) erred in law and in facts in holding the appeal of assessee as infructuous without adjudicating the appeal on merits even though the decision of the Hon'ble ITAT regarding the order passed by Pr. CIT-1, Ahmedabad u/s 263 of the Act is being contested before the Hon'ble High Court of Gujarat. (2) It is, therefore, prayed that the order of ld. CIT(A) may be set aside and that of the Assessing Officer be restored.” 3. The brief facts leading to the present appeal are that the assessee filed appeal against order passed by AO before Ld. CIT(Appeals), consequent to the order under passed under section 263 of the Act passed by Principal CIT(Appeals)-1, Ahmedabad. The assessee submitted before Ld. CIT(Appeals) that the order passed under section 263 of the Act (consequent to which the assessment order was passed, which is the subject matter of appeal befoe Ld. CIT(Appeals)) itself was quashed by ITAT in ITA number 1441/ Ahd/2016 vide order dated 07-08-2019. The assessee submitted copy of aforesaid order passed by ITAT dated 07-08-2019 before Ld. CIT(Appeals) in support of his contention. The assessee submitted that since the order passed under section 263 has been quashed by ITAT, the consequential order passed by AO (which is a subject matter of appeal before Ld. CIT(Appeals)) does not survive. 4. In view of the above submissions, Ld. CIT(Appeals) held as below: “3. It is seen from the copy of order submitted by the appellant that Hon'ble ITAT has quashed the order passed by Pr. CIT-1 u/s. 263 vide order dated 07/08/2019. As the impugned order against which appeal has been filed is consequent to the order passed by the Pr.CIT-1, the assessment order passed by I.T.A No. 1645/Ahd/2019 A.Y. 2011-12 Page No. Dy. CIT vs. M/s. A. Menarini India Pvt. Ltd. 3 the Assessing Officer does not survive. In view of the above, the appeal become infructuous and therefore, dismissed. 4. In the result, the appeal of the appellant is dismissed.” 5. The Department is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) holding that since the 263 order passed by Principal CIT itself has been quashed by ITAT by order dated 07-08-2019, the order passed by AO consequent to 263 order passed by Principal Ld. CIT(Appeals), also does not survive. Before us, the counsel for the assessee has placed before us the order passed by ITAT in ITA number 1441/ Ahd/2016 dated 07-08-2019 quashing the 263 order passed by Principal Ld. CIT(Appeals). The relevant extracts of the order is reproduced for reference: “4. Heard the respective parties and perused the relevant materials available on record, ft appears from the records that the case of the assessee is this that the service tax calculated by the service provider since not the income of the assessee it is not been reflected in the P&L account. Similarly, TDS effected on "reimbursement" of expenses of Rs. 1,46,78,806/- is neither the income of the assessee, hence not reflected in P&L account. So far as the difference on account of timing difference of Rs.2,32,16,538/- is concerned we find that reconciliation statement of difference between service income as per P&L account and as worked out on the basis of the TDS was also furnished before the appellate authority but the same was not taken into consideration in its proper prospective. Merely because there was some difference in the service income as per P&L Account and as worked out based on TDS the assessment order cannot be said to be erroneous and prejudicial to the interest of the Revenue. Further that while framing assessment u/s 143(3) by an order dated 25.03.2014 the Learned AO specifically mentioned in para 11 that the credit for "prepaid tax" (i.e. TDS) has been given after verification and its calculation as per ITNS 150. Thus the issue was already examined by the Learned AO. Apart from that, the legal point being fulfillment of twin conditions that the order of the AO be erroneous and also prejudicial to the interest of Revenue has not been satisfied before invoicing jurisdiction u/s 263 of the Act. In this regard we have gone through the judgment passed by the Hon'ble Supreme Court in the matter of Malabar Industrial Co. Ltd. So far as the issue regarding provision of non-achievement of target is concerned I.T.A No. 1645/Ahd/2019 A.Y. 2011-12 Page No. Dy. CIT vs. M/s. A. Menarini India Pvt. Ltd. 4 the same was examined at the original assessment stage as submitted by the Learned AR before us is also reflected from the records before us. Further that, the assessee has deducted tax at source on payment of Rs. 14,52,503/-. Though the details in respect of the same was provided to the Learned CIT(A) the same was not considered. The issue has been duly examined by the Assessing Officer during the original assessment proceeding but in the absence of any reflection of the same in the order passed by the Assessing Officer would not lead to a conclusion that the order of Learned AO calls for interference by the Learned CIT u/s 263 of the Act. The alternative submission made by the Learned assessee's counsel is this respect that when two views are possible as regards a particular issue and the AO adopts either of two such views then jurisdiction u/s 263 cannot be invoked by the Learned CIT is also acceptable. We take inspiration from the judgment passed in the matter of Malabar Industrial Co. Ltd. as been relied upon in this respect. Hence, we find that order impugned u/s 263 of Act cannot satisfy any of the conditions envisaged in the provision of law as discussed above. Fulfillment of twin conditions so as to the claim of the order being erroneous or prejudicial to the interest of Revenue also fails as already been discussed by us hereinabove. Thus the order impugned does not justify/fulfill any of the conditions within the four corners of law and hence liable to be quashed. Resultantly, the impugned addition upon invocation of jurisdiction u/s 263 of the Act by the Learned CIT is deleted.” 5.1 In view of the above, since the 263 order which formed the basis for the order passed by AO itself has been quashed by the ITAT (relevant extracts of order reproduced above), the consequential order passed by AO itself does not survive. In view of the above, the appeal of the Department against the order of Ld. CIT(Appeals) is hereby dismissed. 6. In the result, the appeal of the Department is dismissed. Order pronounced in the open court on 18-01-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER I.T.A No. 1645/Ahd/2019 A.Y. 2011-12 Page No. Dy. CIT vs. M/s. A. Menarini India Pvt. Ltd. 5 Ahmedabad : Dated 18/01/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद