M/S GURFATEH FILMS AND SIPPY GREWAL PRODUCTIONS (P) LIMITED, MOHALI V. PRINCIPAL COMMISSIONER OF INCOME TAX ( CENTRAL) , LUDHIANA

ITA 92/ASR/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5744 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 16-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRIJATINDER SHARMA
• Keywords: Search and seizure; Assessment record; Condonation of delay; TDS
• Section: 263; 132; 154; 143(3); 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & DR. M.L. MEENA, ACCOUNTANT MEMBER) ITA. No: 92/Asr/2020 (Assessment Years: 2013-14) M/s. Gurfateh films and sippy Grewal Productions (P.) Ltd. H No. 1013, Sector 67, Mohali PAN No. AAECG8982G V/S Pr. C.I.T., (Central), Ludhiana (Appellant) (Respondent) Appellant by:Shri Sudhir Seghal & ShriJatinder Sharma,AR Respondent by : Smt. Abha Rani Singh, CIT/DR (आदेश आदेशआदेश आदेश)/ORDER Date of hearing : 08 -12-2021 Date of Pronouncement : 23-12-2021 PER MAHAVIR PRASAD, J.M. 1. This appeal filed by the Assessee is directed against the order of the Ld. Pr. Commissioner of Income Tax order dated 23/02/2017 arising out of assessment order dated 25/03/2015. Assessee has taken following grounds of appeal: ITA No. 92/Asr/2020 . A.Y. 2013-14 2 1. That the Ld. Pr. CIT(Central), Ludhiana has erred in assuming the jurisdiction u/s. 263 of the Income Tax Act 1961 and holding that the assessment as completed by the Assessing Officer vide order, dated 25.03.2015 is erroneous and prejudicial to the interest of revenue. 2. That the Ld. Pr. CIT has also erred in conducting that the said receipts of Rs. 1,19,09,072/- are liable to be included in the total income of the assessee for the year under consideration and overlooking the fact that this issue has been examined by the Assessing Officer during the course of assessment proceedings as completed u/s. 143(3) and which has adequately been discussed in the assessment order itself. 3. That the Assessing Officer having also adopted his mind to the issue, which has also been taken by the Pr. CIT (Central) and, as such, the assumption of jurisdiction by the Ld. Pr. CIT (Central) is void abinitio. 4. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 2. In this appeal, there is a delay of 665 days. In support of its contention, assessee has filed an application supported by an affidavit wherein it is submitted that on account of in action of its erstwhile Authorized Representative appeal could not be filed on time and Ld. A.R. shown us e-mails and other relevant document have been sent to the said A.R. from time to time. The Hon’ble Supreme Court in the matter of Esha Bhattacharjee vs. Managing Committee of Raghunathpur Nafar Academy & Others (Civil Appeal Nos. 8183-8184 of 2013) wherein principle of condonation of delay have been laid down with following observations: The Hon’ble Bench in para 12 of the order has discussed the decision of the Hon'ble Supreme court in the case of Esha Bhattacharjee vs. Managing Committee of Raghunathpur Nafar Academy & Others (Civil Appeal Nos. 8183- 8184 of 2013) in which some of the decisions rendered by Hon’ble Apex Court on the principle to be followed white adjudicating the issue of condonation of delay have been discussed as under:- ITA No. 92/Asr/2020 . A.Y. 2013-14 3 12. “(a) In Collector, Land Acquisition, Anantnag and another v. Mst. Katiji and others (supra), a two-Judge Bench observed that the legislature has conferred power to condone delay by enacting Section 5of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression “sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice, for that is the life- purpose for the existence of the institution of courts. The learned Judges emphasized on adoption of a liberal approach while dealing with the applications for condonation of delay as ordinarily a litigant does not stand to benefit by lodging an appellate and refusal to condone delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated. It was stressed that there should not be a pedantic approach but the doctrine that is to be kept in mind is that the matter has to be dealt with in a rational common-sense pragmatic manner and cause of substantial justice deserves to be preferred over the technical considerations. It was also ruled that there is no presumption that delay is occasioned deliberately or on account of culpable negligence and that the courts are not supposed to legalize in justice on technical grounds as it is the duty of the court to remove in justice. In the said case the Division Bench observed that the State which represents the collective cause of the community does not deserve a litigant-non grata status, and the courts are required to be informed with the spirit and philosophy of the provision in the course of interpretation of the expression “sufficient cause”. In this context, we may refer with profit to the authority in Oriental Aroma Chemical Industries Limited v. Gujarat Industrial Development Corporation and another (2010) (5SGC 459), where a two-Judge Bench of this Court has observed that the law of limitation is founded on public policy. The legislature does not prescribed limitation with the object of destroying the rights of the parties but to ensure that they do not resort to dilatory tactics and seek remedy without delay. The idea is that every legal remedy must be kept alive for a period fixed by the legislature. To put it differently, the law of limitation prescribes a period within which legal remedy can be availed for redress of the legal injury. At the same time, the courts are bestowed with the power to condone the delay, if sufficient cause is shown for not availing the remedy within the stipulated time. Thereafter, the learned Judges proceeded to state that this Court has justifiably advocated adoption of liberal approach in condoning the delay of short duration and a strict approach where the delay is in ordinate. In Improvement Trust, Ludhiana v. Ujagar Singh and others (2010) (6SCC786),it has been held that while considering an application for condonation of delay no ITA No. 92/Asr/2020 . A.Y. 2013-14 4 strait jacket formula is prescribed to come to the conclusion if sufficient and good grounds have been made out or not. It has been further stated therein that each case has to be weighed from its facts and the circumstances in which the party act sand behaves. ” The principles that emanate from the above said decisions are that, in the matter of condonation of delay in filing appeals beyond the limitation period, the courts are empowered to condone the delay, provided the litigant is able to demonstrate that there was ‘‘sufficient cause” in preferring appeal beyond the limitation period. The Courts have also held that the expression “sufficient cause” should receive liberal construction so as to advance substantial justice. Hence the question of condonation of delay is a factual matter and the result would depend upon the facts of the case and the cause shown by the assessee for the delay. It has also been opined that generally delays in preferring appeals are required to be condoned in the interest of justice, where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay. 3. In view of the above arguments advanced by the Ld. A.R. and going through the contents of affidavit and respectfully following the judgment of Hon’ble Supreme Court, we are of the considered opinion, that assessee has sufficient reason to condone the delay. Thus, we condone the delay and proceed with the appeal on merit. 4. In this case, a search and seizure operation u/s. 132 of the Act was carried out at the office premises of M/s. Gurfateh Films & Sippy Grewal Productions Pvt. Ltd. During the course of search proceedings, certain documents relating to the Assessee company were found and seized. Thereafter a notice u/s. 142(1) of the Act was issued to the assessee. 5. The Assessee company is engaged in the business of production of films and distributions. In this case, return of income for the year under consideration was filed by declaring Nil income on 20.02.2015. The assessment in the case of the assessee was completed on 25.03.2015. The Ld. A.O. had thoroughly discussed the activities ITA No. 92/Asr/2020 . A.Y. 2013-14 5 for the year under consideration and production and distribution of the film by the name of “Singh vs Kaur” and also production of film by the name of “Lucky di Unlucky Story”. Thereafter a fresh enquiry notice u/s. 143(2) of the Act was issued on 31.08.2015 and also issued notice on 07.12.2015 asking a specific enquiry as to mismatch of disclosure of receipts in the ITR and 26AS was issued by the Ld. Assessing Officer In pursuant to the aforesaid notice, the assessee duly filed its reply vide letter dated 14.12.2015 along with the copy of profit and loss a/c for the year ending as on 3`1.08.2013 and 31.03.2014, the copy of ITR, 26AS and the copy of account of advance received by the assessee in the year under consideration. It was duly explained that amount of Rs. 1,19,09,069/- has been received as advance and the income pertaining to the same has been booked in the assessment year 2014-15. The assessee has even not claimed the TDS relating to the said income in the year under consideration. 6. Thereafter Ld. CIT issued notice dated 11.11.2016 u/s. 263 of the Act and was served on the assessee and the proceedings were initiated. Ld. CIT issued notice u/s. 263 of the Act on account of mis-match of receipts as per 26AS form and books of account which had already been discussed and verified by the Assessing Officer. It is astonished to note that Ld. A.O. has sent a proposal to Ld. Pr.CIT, Central vide his letter dated 29.12.2015 and same is part of paper book at page nos. 40-41 for revision of proceedings u/s. 263 of the Act, wherein the entire detail had already been specifically mentioned in the earlier proceedings u/s. 143(3) of the Act. 7. Section 263 contemplate that: 263: (1) The [Principal Commissioner or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems ITA No. 92/Asr/2020 . A.Y. 2013-14 6 necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessee and directing a fresh assessment. 8. In the Income Tax Act, no where mentioned that A.O. will send a proposal to the Pr.CIT/CIT for initiation of revisional proceedings u/s. 263. We are of the opinion, Ld. A.O. ought to not to have sent the aforesaid proposal to the Pr. CIT if there was any ambiguity in the order passed by the Ld. A.O. then he could have rectified he mistake u/s. 154 of the Income Tax Act. As we can see such exercise is not being done by the Ld. A.O. rather he chosen to send a proposal for revision of his order to the Ld. Pr. CIT. 9. In the case of Ambey Construction company vs. Pr.CIT in ITA No. 208/Asr/2017 order dated 07.05.2019 wherein Co-ordinate Bench has held that in revisional proceedings u/s. 263, Ld. Pr.CIT is required to apply his own mind and satisfaction before invoking the provision of Section 263 and not merely at the behest of the proposal forwarded by the A.O. is against the spirit of the Act as held by the Pune Tribunal in the case of Span Overseas Ltd. vs. CIT (ITA No. 1223/PN/2013. 10. The ITAT Kolkata Bench in the matter of Manish Chirania Vs. Pr.CIT in ITA No. 1161/Kol/2019 it is held as under: 9. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and the fact of the case including the findings of the Id CIT(A) and other materials available on record. We note that Id Principal Commissioner of Income Tax (Id. PCIT) has exercised his revision jurisdiction under section 263 of the Act on the basis of the proposal for revision made by the assessing officer. At this juncture, it is relevant to quote para No.2 of the order of Id PCIT( to the extent applicable for our discussion) under section 263 of the Act, which reads as follows: ITA No. 92/Asr/2020 . A.Y. 2013-14 7 “A proposal for revision of the Assessment Order u/s. 263 has been received from Assessing Officer i.e., ITO. Wd-45(3) Kolkata. On perusal of assessment order and the assessment records it is seen that in course of assessment proceedings, the following statutory additions and disallowances were not examined property....” First of all, let us examine whether Id PCIT has independently applied his mind to exercise his jurisdiction under section 263 of the Act. It is abundantly clear from para No.2 of the Id PCIT's order that Id PCIT exercised his jurisdiction under section 263of the Act based on the proposal received from Assessing Officer for revision of the Assessment Order. It means, the Id PCIT is using the mind of the assessing officer to revise the order of AO under section 263 of the Act, which according to us is not the scheme of section 263 of the Act. The Id PCIT ought to apply his own mind to examine whether order passed by the assessing officer is erroneous and prejudicial to the interest of revenue. That is, Id PCIT should examine the assessment records and assessment order made by AO to find out the error in the assessment order, as the power under section 263 is given to Id PCIT and not to Id AO. The Id PCIT need not to take guidance from AO to revise the assessment order. That is, the revisional jurisdiction vested with the Id PCIT as per the scheme of the Act. The Act gives various powers to various authorities to exercise powers and they have to exercise powers in their respective given sphere which is clearly ear- marked and spelled out by the statute. Thus, the revisional jurisdiction exercised by the Id PCIT is not in accordance to law therefore, order passed by the Id PCIT under section 263 of the Act is not sustainable in law. 10 Based on the facts and circumstances, as narrated above, we note that order passed by the Ld. PCIT is not sustainable in law, therefore, we quash the order under section 263 passed by the Ld. PCIT. 11. In the result, the appeal of the assessee is allowed. ITA No. 92/Asr/2020 . A.Y. 2013-14 8 11. In our considered opinion, Ld. A.O. ought not to have forwarded proposal to the Pr.CIT/CIT for revision of his own order have already remedy is available with the Assessing Officer to rectify his mistake u/s. 154 of the Income Tax Act, 1961. Ld. Pr.CIT ought to have applied his own mind independently than should have initiated proceeding u/s. 263 of the Income Tax Act. We are of the considered opinion; same is amount to miscarriage of justice. 12. Thus, in parity with the Co-ordinate Bench and Kolkata Bench order, we allow appeal of the assessee. 13. In the result, appeal filed by the Assessee is allowed. Order pronounced u/s Rule 34(4) on 23-12-2021 Sd/- Sd/- (DR. M. L. MEENA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 23/12/2021 Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER Deputy/Asstt.Registrar ITAT,Amritsar