ZS Associates India Pvt.Ltd, Pune V. Principal Commissioner of Income-tax-4, Pune

ITA 191/PUN/2021

AI Insights

The case involves ZS Associates India Private Limited appealing against the revision order of the Principal Commissioner of Income Tax, Pune-4, which invoked section 263 of the Income Tax Act, 1961. The revision was based on the grounds that the Assessing Officer did not investigate the assessee's substantial service tax refunds amounting to Rs.11,44,99,901 during the assessment year 2016-17. The Tribunal considered the legal precedents which support the view that failure to make necessary inquiries by the Assessing Officer can lead to the assessment being termed erroneous and prejudicial to the interests of the Revenue. The Tribunal also noted the incorrect application of section 145A by the PCIT but decided that the core issue of the lack of inquiry by the Assessing Officer justified the upholding of the revision order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137349 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 20-05-2021
• Other Referred Cases: Malabar Industrial Company Ltd. vs. CIT [2000] 243 ITR 83 (SC), Rampyari Devi Saraogi vs. CIT [1968] 67 ITR 84 (SC), Tara Devi Aggarwal vs CIT 1973 SCR (2)1035, Gee Vee Enterprises vs. Addl. CIT [1975] 99 ITR 375 (Del.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA.No.191/PUN./2021 Assessment Year 2016-17 ZS Associates India Private Limited, Tower-3, World Trade Centre, Kharadi, Pune PIN – 411 014. PAN AAACZ2157Q vs. The Principal Commissioner of Income Tax, Pune-4, Room No.322, 3 rd Floor, Aayakar Sadan, Bodhi Towers, Salisbury Park, Gultekadi, Pune. Maharashtra. PIN – 411 037. (Appellant) (Respondent) For Assessee : Shri Ketan Ved For Revenue : Shri B. Koteswara Rao Date of Hearing : 12.01.2023 Date of Pronouncement : 27.01.2023 ORDER PER SATBEER SINGH GODARA, J.M. This assessee’s appeal for assessment year 2016- 2017, arises against the PCIT, Pune-4, Pune’s DIN & Order No.ITBA/REV/F/REV5/2020-21/1032120827(1), dated 31.03.2021, involving proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties. Case file perused. 2. We straightaway come to the learned PCIT’s impugned revision directions assuming his sec.263 jurisdiction for terming the Assessing Officer’s regular 2 ITA.No.191/PUN./2021 ZS Associates India Private Limited, Pune, Maharashtra. assessment herein dated 21.01.2018 as erroneous as well as prejudicial to the interest of Revenue. 3. Mr. Ketan Ved invited our attention to the impugned revision discussion rejecting its vehement contentions as follows : 3 ITA.No.191/PUN./2021 ZS Associates India Private Limited, Pune, Maharashtra. 4 ITA.No.191/PUN./2021 ZS Associates India Private Limited, Pune, Maharashtra. 5 ITA.No.191/PUN./2021 ZS Associates India Private Limited, Pune, Maharashtra. 3.1. Mr. Ved vehemently argued that the PCIT herein has erred in law and on facts in taking recourse to his sec.263 revision jurisdiction in the facts and circumstances of the instant case. He submitted very fairly at the same time during the course of hearing that the Assessing Officer had nowhere issued or raised any specific query at all qua the assessee’s service tax refund(s) totalling to Rs.11,44,99,901/- whilst framing the above stated assessment. We hardly see any reason therefore to deviate from the settled legal proposition as per hon'ble apex court’s landmark decisions in Malabar Industrial Company Ltd. vs. CIT [2000] 243 ITR 83 (SC), Rampyari Devi Saraogi vs. CIT [1968] 67 ITR 84 (SC), Tara Devi Aggarwal vs CIT 1973 SCR (2)1035 holding that such a failure on the Assessing Officer’s part in making inquiry(ies) at all indeed attracts both the limbs of an assessment being erroneous as well as prejudicial to the interest of Revenue, simultaneously. Case law Gee Vee Enterprises vs. Addl. CIT [1975] 99 ITR 375 (Del.) also holds that the Assessing Officer’s role in framing a regular assessment is that of an investigator as well as an adjudicator. Mr. Ved at this stage submitted that sec.145A has been wrongly invoked in case of a mere service provider entity. 4. The Revenue has placed strong reliance on the PCIT’s impugned revision directions. 6 ITA.No.191/PUN./2021 ZS Associates India Private Limited, Pune, Maharashtra. 5. We have given our thoughtful consideration to the foregoing rival contentions and see no reason to interfere with the learned PCIT’s detailed discussion and findings seeking to invoke sec.145A of the Act at this stage. This is for the precise reason that although the assessee’s arguments qua applicability of sec.145A prima facie deserve to be accepted, but at the same time, we are indeed mindful of the fact that we have upheld the PCIT’s revision jurisdiction in principle in preceding paragraphs once it has come on record that the Assessing Officer had not carried-out any inquiries at all regarding the impugned service tax refund during the course of assessment proceedings. We, therefore, are of the considered opinion that even if we apply the “Doctrine of Severability” for concluding that the PCIT has correctly invoked his revision jurisdiction but wrongly applied sec.145A, the net result would remain the same only since the Assessing Officer is yet to apply his mind on the issue in consequential assessment. Faced with the situation, we refrain ourselves from commenting upon merits of the instant issue of service tax refund vis-à-vis the applicability of sec.145A of the Act at this premature stage and leave it open for the taxpayer herein to raise all of his factual as well as legal arguments before the departmental authorities in consequential proceedings as per law. Ordered accordingly. 7 ITA.No.191/PUN./2021 ZS Associates India Private Limited, Pune, Maharashtra. 6. This assessee’s appeal is dismissed in above terms. Order pronounced in the open Court on 27.01.2023. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 27 th January, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A) concerned. 4. The CIT concerned 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches Pune.