M/S Humboldt Wedag India Private. Limited v. Cit, Circle- 3, Kolkata

Order dasti.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J FEBRUARY 26, 2018 rc

* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 26.02.2018 + M/S HUMBOLDT WEDAG INDIA PRIVATE LIMITED. ..... Appellant Through Mr. Kamal Sawhney, Mr. Shikhar Garg and Mr. Upkar Agrawal, Advs. versus CIT, CIRCLE- 3, KOLKATA ..... Respondent Through Mr. Asheesh Jain, Senior Standing Counsel. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA HON'BLE MR. JUSTICE S. RAVINDRA BHAT (ORAL) % 1. Admit. 2. The following question of law arises for consideration: "Did the ITAT fall into error in upholding the revisional order made by the Commissioner of Income Tax under Section 263 of the Income Tax Act in the circumstances of the case.?" 3. The assessee for the AY 2007-08 was issued with notice by the CIT under Section 263 of the Income Tax Act, 1961 ('the Act') on 6.12.2012. The order stated that the sum of `1973.59 lacs, reflected for the year as provisional for warranty/promise obligation was added by the AO without enquiry as to whether such deduction was calculated on the basis of a scientific method. The assessee/appellant resisted the notice. During the course of the proceedings, the CIT (A) provided a ledger extract from the account of Tuticorin and Taral in March, 2013. The assessee submitted its response to these materials protesting that apart from the ledger copy, the documents indicated statement of one Mr. Praveen Agarwal, copy of which was not provided to them. The Commissioner proceeded to pass the final order requiring the AO to re-examine the matter afresh. The ITAT concurred with the view of the Commissioner. Revenue urges on the strength of the Supreme Court's decision in CIT Vs. Amitabh Bachchan, (2016) 384 ITR 200 (SC), where it was held that whilst notice on a particular point cannot be a pre-condition to exercise of revisional jurisdiction, nevertheless, the Commissioner ought to provide the material which will be basis of the final order without which the effort could be rendered questionable on account of lack of opportunity to controvert it. Likewise, decision of Madras High Court in Cairn India Ltd. vs. Director of Income Tax (IT), (2017) 87 taxmann.com 310 (Madras) and a previous judgment of this Court in Commissioner of Income Tax vs. Ashish Rajput, (2009) 180 Taxman 623 (Del) has been cited. 4. Ld. counsel for the Revenue urges that the ITAT has not committed any error of law much less a substantial error of law. Mere upholding of facts – even if the material ultimately has not resulted in prejudice to the assessee, who will get a chance to urge all contentions. This would include naturally the request for a cross- examination. That stage, it is submitted, has not yet arisen and would occur only in the course of fresh assessment proceedings mandated by the Commissioner. 5. In Amitabh Bachchan's (supra) even while holding that the Commissioner can proceed on an issue, upon which notice has not been given to the assessee, the Court sounded a note of caution in the following terms: "11.5. The judgment of the Supreme Court rendered in CIT Vs. Amitabh Bachchan, (2016) 384 ITR 0200 (SC), on which reliance was placed by the learned counsel for the Revenue, to our minds, does not articulate a principle, which is any different from what is stated hereinabove by us. This is, clearly, evident, if, one were to have regard to the observations made in paragraph 11 of the judgement. For the sake of convenience, the same are extracted hereafter : 11. It may be that in a given case and in most cases it is so done a notice proposing the revisional exercise is given to the assessee indicating therein broadly or even specifically the grounds on which the exercise is felt necessary. But there is nothing in the section (Section 263) to raise the said notice to the status of a mandatory show cause notice affecting the initiation of the exercise in the absence thereof or to require the C.I.T. to confine himself to the terms of the notice and foreclosing consideration of any other issue or que