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2005 (7) TMI 289 - ITAT CALCUTTA-BChallenged the Order passed u/s 263 - No Opportunity Of Being Heard - erroneous or prejudicial - nonpayment to certificate-holders - Violation Of principles of natural justice - HELD THAT:- We have noted that the CIT had given the assessee less than one day's time to comply to his query with respect to the said sum of Rs. 657 crores, inasmuch as he issued the notice/letter on 29th March, 2005, which was served upon the receiving section of the assessee at 5.30 p.m. and, thereafter, required the assessee to reply to his query by 11.30 a.m. the very next day, i.e., 30th March, 2005. Admittedly, the assessee could not comply with such requisition. However, the fact remains that granting an opportunity to comply with the query raised in a proceeding u/s 263 of the Act within less than a day, cannot under any stretch of imagination, be held to be a reasonable opportunity of hearing and such unreasonable short time should be condemned as violating the principles of natural justice, as laid down by the Hon'ble Calcutta High Court in the case of Bagsu Devi Bafna vs. CIT & Ors.[1964 (7) TMI 43 - CALCUTTA HIGH COURT]. Therefore, in our view, the order of the CIT passed u/s 263 of the Act, dt. 31st March, 2005, and also the proceedings initiated u/s. 263 of the Act vide the notice dt. 18th March, 2005, read with the letter dt. 29th March, 2005, to the extent the same revises the assessment order passed u/s 143(3) of the Act dt. 31st March, 2003, with a view to set aside the issue of allowability of the liability on account of return to certificate-holders amounting to Kb. 657 crores to the file of the AO for fresh verification, is to be treated as bad in law and ab initio void in view of the binding principles of the Hon'ble Calcutta High Court. We find in the instant case that there was no material before the CIT to even come to a conclusion that the payment of Rs. 584 crores to the certificate-holders on maturity of the certificates, which was a balance sheet item, could have any impact on the taxable profits of the assessee for the relevant assessment year. The CIT has alleged in the order passed u/s 263 of the Act that the AO had failed to examine whether tax had been deducted at source by the assessee on payments made to certificate-holders. We agree with the submissions of the learned Authorised Representative that examination of such matters does not fall within the jurisdiction of the AO and the CIT, under whom the AO works. It is a matter of concern of the TDS Officer and, therefore, the CIT had no occasion to say that the AO had failed to carry out such examination, when the same was not even warranted by law. Thus, in a nutshell we are of the considered opinion that the revision of the assessment order by the CIT u/s. 263 of the Act with respect to the said sum of Rs. 584 crores is an attempt on the part of the CIT to initiate a fishing and roving enquiry while acting on mere suspicion and without having any material on record and the same is without necessary jurisdiction and thus, the order of the CIT passed u/s 263 of the Act to the extent the same relates to the CIT setting aside the said issue to the file of the AO for fresh verification, is totally arbitrary and erroneous. We, therefore, reverse the order passed u/s 263 of the Act to the said extent also. Therefore, in totality, the order passed u/s 263 of the Act is quashed and/or set aside in its entirety and the appeal of the assessee is, therefore, fully allowed.
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