OD-2 ITA No. 169 of 2018 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKATA Versus M/S. KESORAM INDUSTRIES LTD. BEFORE: Hon'ble JUSTICE SANJIB BANERJEE And Hon'ble JUSTICE SUVRA GHOSH Date : August 2, 2019. Appearance: Mr. P.K. Bhowmick, Adv. Mr. Radhamohan Ray, Adv. Appellant Mr. J.P. Khaitan, Sr. Adv. Ms. Nilanjana Banerjee, Adv. Respondent Court : appeal was admitted by order of November 12, 2018 and following questions of law framed: i) Whether on facts and in circumstances of case Tribunal should have entertained and decided subject appeal without giving opportunity to Assessing Officer to make relook into assessment in terms of order of Principal Commissioner of Income Tax dated 29th March, 2016 under Section 263 of Income Tax Act, 1961? ii) Whether appeal before Tribunal was premature and Tribunal ought not to have entertained same? iii) Whether exercise of jurisdiction by Tribunal in passing its impugned order dated 4th November, 2016 was erroneous 2 without compliance of said order of remand made by Principal Commissioner of Income Tax? There is no dispute that appeal before Tribunal was maintainable. Certain matters had been directed by Commissioner of Income Tax to be looked into afresh by assessing officer. assessee perceived that such matters had already been gone into by assessing officer and did not require re-look. assessee was also entitled to carry appeal from order of Commissioner and Tribunal agreed with assessee that various matters that were sought to be opened up by order of Commissioner could not have been done. first and second questions framed appear to be one and same and they imply that Tribunal should have allowed fresh assessment or fact-finding enquiry to be completed by assessing officer. third question appears also to be same except third question may be bereft of any legal import. Appeals entertained in this jurisdiction are only on substantial questions of law. For guidance of Court, Revenue has referred to judgment reported at 243 ITR 83 (Malabar Industrial Co. Ltd. v. CIT) where Supreme Court emphasised that both limbs of provision had to be complied with before jurisdiction under Section 263 of Income Tax Act, 1961 could be assumed. Commissioner had to find that order of assessing officer sought to be revised was erroneous and that such error prejudiced interest of Revenue. Court reiterated that fulfilment of one condition in absence of other would not suffice in such situation as provision required compliance with both conditions. In present case, four broad aspects were questioned before Tribunal. By order impugned dated November 4, 2016, Tribunal held in favour of assessee. 3 first aspect pertains to order under Section 143(3) of Act which was found to be erroneous and prejudicial to interest of Revenue. specific matter pertained to difference in addition of fixed assets of about Rs.1.10 crore. notice under Section 263 of Act was issued to clarify difference. assessee clarified difference by its written submission and reconciliation statement was also used. However, Commissioner, instead of considering reply, recorded that issue had not been verified by assessing officer. Tribunal set aside decision of Commissioner on ground that show-cause notice indicated specific purpose but matter was dealt with on another count after receipt of reply. Tribunal relied on view taken by coordinate bench reported at 54 SOT 172 (Visuvius India Limited v. CIT) and judgment of Andhra Pradesh High Court reported at 211 ITR 336 (CIT v. G.K. Kabra). In both cases, it was held that if object of notice was one and matter was treated for different purpose in ultimate order, that may not be appropriate exercise of jurisdiction. In light of possible view taken on facts as they presented themselves in such regard, order of tribunal in respect of first of four heads does not call for any interference. tribunal found that Commissioner had not even indicated in show- cause notice that adequate enquiries were not carried out. tribunal found that assessing officer had conducted enquiry regarding addition of fixed assets. tribunal referred to notice issued under Section 142(1) of Act and reply of assessee. tribunal reasoned that order passed by assessing officer in such circumstances could neither be held to be erroneous nor prejudicial to interest of Revenue. In such regard, tribunal referred to judgment of Allahabad High 4 Court where it was observed that Commissioner could exercise his jurisdiction under Section 263 of Act only in cases where no enquiry is made by assessing officer. On second aspect pertaining to disallowance under Section 14A of Act read with Rule 8D (2) (ii) of Income Tax Rules, 1962, tribunal found that assessing officer had netted off interest paid with interest income for working out disallowance under Rule 8D. According to tribunal, assessing officer had applied his mind to issue and it was not something that escaped attention of assessing officer for Commissioner to assume jurisdiction under Section 263 of Act on ground that no enquiry in such regard had been conducted by assessee. Apropos third aspect pertaining to trade discount, tribunal found that Commissioner had issued notice for addition of trade discount on ground that assessee s claim for trade discount was not in order. tribunal also found that details of trade discount had been furnished by assessee to assessing officer at time of assessment under Section 143(3) of Act and details of such discount had been included in paper-book filed before tribunal. Further, tribunal found that Commissioner had changed his stand as indicated in notice and at time of passing order under Section 263 of Act. For same reasons, as in respect of first head pertaining to fixed assets, tribunal found that Commissioner had acted without basis. Finally, as regards fourth issue pertaining to depreciation, tribunal found that Commissioner had raised issue in notice under Section 263 of Act for excess depreciation but concluded in his order that proper enquiries had not been made by assessing officer. Again, tribunal found that there was change in stand with regard to notice and in revision order, which was impermissible. 5 In matters of present kind where there is specialized tribunal in place for dealing with matters pertaining to particular subject, scope of interference is limited in present jurisdiction. Once it is seen that plausible or reasonable view has been taken by tribunal upon fair discussion of matter, this Court in exercise of authority available in this jurisdiction would not supplant its view in place of tribunal s unless error is apparent and palpable. tribunal has given adequate reasons, and relied on precedents, as to why manner in which jurisdiction exercised by Commissioner under Section 263 of Act was found to be erroneous. There does not appear to be any legal error committed by tribunal in either taking up appeal or in deciding same, particularly since cogent grounds have been indicated for interfering with order of Commissioner passed under Section 263 of Act. questions framed are answered in negative in every case. ITA No. 169 of 2018 is dismissed. There will be no order as to costs. (SANJIB BANERJEE, J.) (SUVRA GHOSH, J.) sg/s.chandra. Principal Commissioner of Income-tax-2, Kolkata v. Kesoram Industries Ltd