PR. COMMISSIONER OF INCOME TAX V. DEE VEE PROJECTS LTD.

TAXC/12/2024

AI Insights

The case revolves around an appeal by the Principal Commissioner of Income Tax, Raipur against Dee Vee Projects Ltd., concerning the revision order under Section 263 of the Income Tax Act, 1961. The PCIT had initially revised the assessment order passed by the Assessing Officer, which was challenged by the assessee before the ITAT. The ITAT set aside the PCIT's order, leading to the present appeal by the Revenue. The core legal issue was whether the ITAT was justified in quashing the revision order without delving into the merits of the case, particularly focusing on the adequacy of the show cause notice and the opportunity provided to the assessee to respond.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 700097 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 19-03-2025
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Mumbai v. Amitabh Bachchan, Gita Devi Aggarwal v. CIT, CIT v. Electro House
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NEELABH DUBEY
• Assessee Lawyers: AMIT CHAUDHARI; VIJAY CHAWLA
• Keywords: Erroneous order; Income Tax; Natural Justice; Prejudicial to revenue; Revision of Orders
• Section: 143(3); 263; 260A

Judgement Text

"Page 1 of 8 (Tax Case No.12/2024) 2025:CGHC:13104-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 12 of 2024 (Arising out of order dated 11-10-2021 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in ITA No.27/RPR/2021) Pr. Commissioner of Income Tax, Raipur, District Raipur, Chhattisgarh ... Appellant versus Dee Vee Projects Ltd., 1st Floor, Vikas Complex, P .H. Road, Korba, District Korba, Chhattisgarh ... Respondent For Appellant : Mr. Amit Chaudhari and Mr. Vijay Chawla, Advocates. For Respondent : Mr. Neelabh Dubey, Advocate on behalf of Mr. S. Rajeswara Rao, Advocate. Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Sanjay Kumar Jaiswal, JJ. Order on Board (19/03/2025) Sanjay K. Agrawal, J. 1. This appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) was admitted for hearing on 6- SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2025.03.26 15:31:35 +0530 Page 2 of 8 (Tax Case No.12/2024) 3-2024 by formulating the following substantial question of law: - “Whether on the points of law and on the facts and circumstances of the case, the Ld. ITAT was justified in quashing the revision order of the CIT passed u/s 263 of the Act, without going into the merits of the case and appreciating that proper show cause notice was issued and was duly received by the assessee to furnish his reply but the assessee failed to comply with the notice u/s 263.” 2. The respondent herein i.e. the assessee Company has declared its total income of 22,56,28,290/- and accordingly its case ₹ was selected for scrutiny through CASS and assessment was completed under Section 143(3) of the Act on 27-12-2018 by making dis-allowances of expenses for 20,00,000/- out of ₹ ₹ 10.52 crores i.e. less than 2% of total expenses claimed, thereby assessing total income at 22,76,28,290/-. ₹ Thereafter, the Principal Commissioner of Income Tax in exercise of his revisional jurisdiction under Section 263 of the Act passed order on 27-3-2021 holding that the order passed by the Assessing Officer, dated 27-12-2018 under Section 143(3) of the Act for the year under consideration, is erroneous and prejudicial to the interest of revenue which was challenged before the ITAT and which was entertained by the ITAT holding that it is in violation of principles of natural Page 3 of 8 (Tax Case No.12/2024) justice against which this tax appeal has been preferred, which has been admitted for consideration by formulating the substantial question of law as mentioned in the opening paragraph of this order. 3. Mr. Amit Chaudhari, learned counsel appearing for the appellant herein / Revenue, would submit that reasonable opportunity was granted to the assessee to place his case before the court and therefore the ITAT is absolutely unjustified in allowing the appeal by setting aside the order of the Principal Commissioner of Income Tax (PCIT) passed under Section 263 of the Act, as such, the appeal deserves to be allowed. 4. Mr. Neelabh Dubey, Advocate, appearing on behalf of Mr. S. Rajeswara Rao, learned counsel for the respondent herein / assessee Company, would submit that the ITAT is absolutely justified in quashing the order passed by the PCIT holding that the order so passed was in violation of the provisions contained in Section 263 of the Act and he relied upon the decision of the Supreme Court in the matter of Commissioner of Income Tax, Mumbai v. Amitabh Bachchan1 to buttress his submission and as such, the appeal deserves to be dismissed. 1 (2016) 11 SCC 748 Page 4 of 8 (Tax Case No.12/2024) 5. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. 6. In order to consider the plea raised at the Bar, it would be appropriate to notice Section 263(1) of the Act which states as under: - “263. Revision of orders prejudicial to revenue.—(1) The Principal Chief Commissioner or Chief Commissioner or 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 necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.” 7. A careful perusal of Section 263(1) of the Act would show that before passing the order under the aforementioned provision, the PCIT is required to afford reasonable opportunity of hearing to the assessee and after making inquiry, he has to pass order under Section 263 of the Act. 8. Section 263 of the Act came up for consideration before the Supreme Court in Amitabh Bachchan’s case (supra) in which it Page 5 of 8 (Tax Case No.12/2024) has been held by their Lordships that Section 263 of the Act contemplates an opportunity of hearing to be afforded to the assessee and failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Further, their Lordships of the Supreme Court following its earlier decisions in the matters of Gita Devi Aggarwal v. CIT2 and CIT v. Electro House3 observed as under:- “10. Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic precondition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the section to give the assessee an opportunity of being heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of revision under Section 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been understood not to require any specific show-cause notice to be served on the assessee. Rather, what is required under the said provision is an opportunity of hearing to the assessee. The two requirements are different: the first 2 (1970) 76 ITR 496 (SC) 3 (1971) 2 SCC 647 : (1971) 82 ITR 824 Page 6 of 8 (Tax Case No.12/2024) would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Reference in this regard may be illustratively made to the decisions of this Court in Gita Devi Aggarwal v. CIT, (1970) 76 ITR 496 (SC), and in CIT v. Electro House, (1971) 2 SCC 647 : (1971) 82 ITR 824.” 9. Notice is the first limb of the principle that no one should be condemned unheard. It must be precise and unambiguous. It should apprise the party determinatively of the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of most important principles of natural justice. (See Canara Bank and others v. Debasis Das and others4.) 10.Coming to the facts of the case in light of the principles of law laid down by the Supreme Court in Amitabh Bachchan’s case 4 (2003) 4 SCC 557 Page 7 of 8 (Tax Case No.12/2024) (supra), admittedly, in this case, notice under the provision contained in Section 263 of the Act was issued on 25-3-2021 fixing the date of hearing on 26-3-2021 at 1.00 p.m. and the order was passed by the PCIT on 27-3-2021 overturning the plea of the respondent herein / assessee Company for adjournment seeking time by application dated 26-3-2021 and as such, no proper opportunity much less adequate / reasonable opportunity was granted to the assessee Company before passing the order under Section 263(1) of the Act. 11.In that view of the matter, time given to the respondent herein / assessee Company to respond to the notice under Section 263 of the Act was wholly inadequate, as notice was issued on 25-3-2021, the date of hearing was fixed on 26-3-2021 at 1.00 p.m. and the order was passed by the PCIT on 27-3-2021. Thus, the respondent was not afforded sufficient and adequate opportunity to meet the case whether the case is made out for invoking Section 263 of the Act, for revoking the order passed by the assessing authority and as such, the decision rendered by the revisional authority (PCIT) invoking Section 263 of the Act is in teeth of principles of natural justice in view of the decisions of the Supreme Court in Gita Page 8 of 8 (Tax Case No.12/2024) Devi Aggarwal (supra) and Electro House’s case (supra) followed in Amitabh Bachchan’s case (supra). 12.For the foregoing reasons, the learned ITAT is absolutely justified in setting aside the order passed by the PCIT on 27-3- 2021. Consequently, the substantial question of law is answered in favour of the assessee and against the Revenue. Resultantly, the tax case deserves to be and is accordingly dismissed, leaving the parties to bear their own cost(s). Sd/- Sd/- (Sanjay K. Agrawal) (Sanjay Kumar Jaiswal) Judge Judge Soma "