AUTOMARK INDUSTRIES (INDIA)PVT. LTD, YAVATMAL V. PRINCIPAL COMMISSIONER OF INCOME TAX-2, NAGPUR

ITA 62/NAG/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0156 (ITAT-NAGPUR)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 06-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP HEDAOO
• Keywords: Revision of order; Transfer pricing; Set aside
• Section: 263; 143(3); 72; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JM & SHRI O.P. KANT, AM ITA No. 62/NAG/2021 Assessment Year: 2016-17 Automark Industries (India) Pvt. Ltd., Datta Square, Yavatmal-445001 (MH). Vs. P.C.I.T. Nagpur-2, Nagpur. PAN No.: AABCA 5098 C Appellant Respondent Assessee by: Shri Mahavir Atal (CA) Revenue by : Shri Pradeep Hedaoo (CIT-DR) Date of Hearing: 28/10/2021 Date of Pronouncement: 17/01/2022 ORDER PER: SANDEEP GOSAIN, J.M. This appeal has been filed by the assessee against the order of the ld. Pr.C.I.T.-2 Nagpur dated 25/02/2021 passed U/s 263 of the Income Tax Act, 1961 (in short, the Act) for the A.Y. 2016-17, wherein following grounds have been raised: “1. Whether the revision order passed by the ld. Pr.CIT by taking a recourse to Section 263 is illegal and bad in law. 2. Whether the ld. Pr.CIT was justified in setting aside the assessment order, specifically referring to provision of the Section 92BA(1), which has been omitted by the Finance Act, 2017. 3. Whether the ld. Pr.CIT erred in stating that it is mandatory for assessing officer to refer the specified domestic transaction to the Transfer Price officer as per Section 92CA of the Income Tax Act, 1961 which he failed to do so, in spite of the fact that the Section 92CA of the ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 2 Income Tax Act, 1961 is very clear about the discretionary power given to assessing officer, if he consider it necessary or expedient so do to, he may refer the matter to Transfer pricing Officer. 4. Whether the revision order passed by the ld. Pr.CIT without referring to the relevant clause of Explanation 2 is illegal and bad in law. 5. Whether the ld. Pr.CIT was justified in setting aside the entire assessment order for fresh assessment instead on the issues on which according to him additional verification should have been done. 6. Assessee craves leave to add and alter any other ground that may be taken at the time of hearing.” 2. There is delay of 72 days in filing the present appeal, for which the assessee has filed an application for condonation of delay. The contents of the condonation application reads as under: “The statute provides 60 days from the date of service of order of Commissioner of Income Tax appeals for filing appeal before the Income Tax Appellate Tribunal. In this case order has been received by the Appellant on 25/02/2021 and the appeal was filed on 28/06/2021 i.e. beyond the limit provided by the statute. However, the Hon’ble Supreme Court vide the order dated 27/04/2021 in Miscellaneous Application No. 665/2021 has extended the period of limitation as prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings till the further orders. The Hon’ble Supreme Court has further adjourned the case to 19/07/2021. Therefore, the period of limitation from 01/03/2020 to 19/07/2021 has been excluded till the further order by the Hon’ble Supreme Court. ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 3 In case of present appeal, the period of limitation falls within the aforementioned period. Therefore, the appeal filed by the Appellant are not barred by limitation. I humbly request your kindness to accept our appeal. For this act of kindness we shall always remain obliged.” 3. On the other hand, the ld CIT- DR opposed the prayer but could not rebut the facts submitted by the assessee before us for seeking condonation of delay. 4. We have heard the rival contentions and pursued the material available on record. There is no dispute and is an admitted fact that there has been a delay in filing the present appeal by 72 days. It is also an undisputed fact that the Hon’ble Supreme Court vide the order dated 27/04/2021 in Miscellaneous Application No. 665/2021 has extended the period of limitation as prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings till the further orders. There is also no dispute that under section 253(5) of the Income Tax Act, 1961 (in short, the Act) the Tribunal may admit an appeal filed beyond the period of limitation where it is satisfied that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation of the assessee therefore becomes relevant to determine whether the same reflects sufficient and reasonable ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 4 cause on his part in not presenting the present appeal within the prescribed time. 5. In case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107, the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It was further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. It was also held by the Hon’ble Supreme Court that there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of male fides. A litigant does not stand ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 5 to benefit by resorting to delay. In fact, he runs a serious risk. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. 6. In light of aforesaid discussions, in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there was sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted for adjudication on merits. 7. The brief facts of the case are that the assesee is engaged in the business of trading and civil contracts. In this case the return of income has been electronically furnished by the assessee on 16.10.2016 declaring total income of Rs 3,52,44,910/-. The case was ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 6 selected for scrutiny through CASS under the category of "Limited Scrutiny" and statutory notices were issued and served upon the assessee. Finally the assessment was completed U/s 143(3) of the Act on 01/12/2018 by accepting the total income declared by the assessee through his return of income. Thereafter, the ld. Pr. CIT initiated the proceedings U/s 263 of the Act on the ground that the A.O. has passed the assessment without referring the domestic transaction to the TPO despite the fact that the value of transactions was Rs. 79,78,74,049/- and it was mandated in the reasons for selection of the case for scrutiny. The assessment order was also in contradiction to the CBDT Instruction No. 3/2016 dated 10/03/2019 and the assessment order passed by the A.O. is erroneous and prejudicial to the interest of revenue. Finally, the ld. Pr.CIT has passed the impugned order U/s 263 of the Act by holding that the said assessment order passed by the AO is set aside to the A.O. and directed to reassess the income of the assessee afresh after examining the relevant details and such other issues and conduct proper and necessary enquiry. 8. Against the said impugned order passed by the ld. Pr.CIT, the assessee has preferred the present appeal before the ITAT on the grounds mentioned above. ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 7 9. The ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. Pr.CIT and has further submitted that exactly similar issue has been decided by the Coordinate Bench of this Nagpur at e-Court, Pune in the case of M/s S.B. Cotgin Pvt. Ltd. Vs Pr.CIT in ITA No. 88/Nag/2020 order dated 05/07/2021 and prayed to quash the proceedings initiated U/s 263 of the Act. 10. On the other hand, the ld. CIT-DR has vehemently supported the order of the ld. Pr.CIT but could not rebut the facts and submissions made by the ld. AR. 11. We have considered the rival contentions and carefully perused the material placed on record. From perusal of the record we observed that the assessment order has been set aside as the ld. PCIT was of the opinion that the Assessing Officer has erred in not referring case of the assessee to the Transfer Pricing Officer. It is undisputed fact that the issue involved in the present appeal is for A.Y. 2016-17. Vide Finance Act, 2017 the Statute was amended by the Legislature, wherein clause (i) of section 92BA was omitted from the statute and the said omission of section is applicable retrospectively and therefore even for the A.Y. 2016-17 non reference to the TPO is not prejudicial to the interest of the revenue. In this regard, we draw strength from the decision of Coordinate Bench of this Tribunal in the ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 8 case of M/s S B Cotgin Pvt. Ltd Vs PCIT-2, Nagpur ITA 88/2020 order dated 05/07/2021 wherein identical issue has been decided by the Bench by holding as under: “17. In this case, Section 92BA(i) of the Act was omitted w.e.f.01.04.2017 and after its omission, the Ld. Pr. Commissioner of Income Tax passed order u/s.263 dated 28.02.2020. Since Section 92BA(i) of the Act was unconditionally omitted without a saving clause in favour of pending proceedings, therefore, the Ld. Pr. Commissioner of Income Tax ought not to have proceeded u/s.263 of the Act. Since such omission in Section 92BA(i) of the Act is unconditional i.e. it does not say that pending proceedings under clause (i) of Section 92BA would continue in future even after its omission on 01.04.2017. Therefore, the Ld. Pr. Commissioner of Income Tax erred in exercising jurisdiction u/s.263 of the Act, in so far as clause (i) of Section 92BA is concerned, the reason being in the eyes of law after omission of clause (i) of Section 92BA of the Act, it would be treated as if it never existed in the statute book. Similar views have been taken by the Co-ordinate Benches of the Tribunal in the following decisions : i) Swastik Coal India Pvt. Ltd. Vs. Pr. CIT, ITA No.486/Ind/2018 for the assessment year 2014-15 ii) M/s. Raipur Steel Casting India Pvt. Ltd. Vs. Pr.CIT, ITA No.895/Kol/2019 for the assessment year 2014-15 iii) M/s. Bhartia- SMSIL (JV) Vs. ITO, ITA No.117/Gau/2019 for the assessment year 2014-15 ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 9 18. Therefore, without even going into the merits of the order passed u/s.263 of the Act, on this legal ground itself, we hold that the exercise of jurisdiction u/s.263 of the Act by the Ld. Pr. Commissioner of Income Tax was void and not legally valid and hence, the impugned order is hereby quashed.” Since, identical issue has already been decided by the Coordinate Bench of this Tribunal in ITA No. 88/Nag/2020 order dated 05/07/2021, therefore, by following the order of the Coordinate Bench of this Tribunal, we quash the impugned order passed U/s. 263 of the Act and the assessment framed by the A.O. U/s. 143(3) of the Act is upheld. 12. In the result, this appeal of the assessee stands allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (O.P. KANT) (SANDEEP GOSAIN) Accountant Member Judicial Member Nagpur Dated:- 17/01/2022 *Ranjan Copy of the order forwarded to: 1. The Appellant- Automark Industries (India) Pvt. Ltd., Yavatmal 2. The Respondent- The P.C.I.T. Nagpur-2, Nagpur. 3. CIT 4. The CIT(A) ITA 62/NAG/2021_ Automark Industries (I) P Ltd. Vs PCIT 10 5. DR, ITAT, Nagpur 6. Guard File (ITA No. 62/Nag/2021) By order, Asst. Registrar