2022 (1) TMI 1297 - HC - Income Tax

Revision u/s 263 by CIT - PCIT has called for proposal from the JCIT/Assessing Officer to exercise jurisdiction under Section 263 - HELD THAT - After noting the said decision the Tribunal points out that the appellant department has not controverted the contents of the letter of the Joint Commissioner of Income Tax dated 18th August 2016 and has recorded that the said letter clearly brings out that the PCIT has called for proposal from the JCIT/AO to exercise jurisdiction u/s 263 - Therefore Tribunal concluded that the PCIT has not exercised jurisdiction u/s 263 of the Act himself but he exercised jurisdiction at the instance of the Assessing Officer/JCIT which is against the provisions of law. The argument made by the learned Standing Counsel is that it is the PCIT who has exercised jurisdiction under Section 263 of the Act. From the order passed by the Tribunal we find that the department could not controvert the contents of the letter dated 18th August 2016. If according to the department the contents of the letter were otherwise then it is for the department to approach the Tribunal for necessary rectification or clarification and the correctness of the order of the Tribunal cannot be decided by us in an appeal under Section 260A of the Act by bringing certain submissions which were never made before the Tribunal. Therefore we are not inclined to interfere with the order passed by the Tribunal and accordingly the appeal is dismissed. However we leave it open to the appellant/department to approach the Tribunal for clarification or rectification of the order if they are so advised.

Summary

Issues:
Interpretation of Section 263 of the Income Tax Act, 1961 regarding the exercise of jurisdiction by the Principal Commissioner of Income Tax.

Analysis:
The High Court of Calcutta heard an appeal by the revenue challenging an order passed by the Income Tax Appellate Tribunal for the assessment year 2012-13. The revenue raised substantial questions of law regarding the correct interpretation of Section 263 of the Income Tax Act, 1961. The main contention was whether the Principal Commissioner of Income Tax had properly exercised jurisdiction under Section 263 or if it was at the instance of the Joint Commissioner of Income Tax. The revenue argued that the Tribunal erred in holding that the Principal Commissioner of Income Tax did not exercise jurisdiction independently.

Upon reviewing the Tribunal's order, the High Court noted that the Tribunal referenced a decision in another case where it was pointed out that the Principal Commissioner of Income Tax had called for a proposal from the Joint Commissioner of Income Tax to exercise jurisdiction under Section 263. The Tribunal concluded that the Principal Commissioner did not independently exercise jurisdiction but did so at the instance of the Assessing Officer/JCIT, which was deemed contrary to the law. The revenue contended that it was indeed the Principal Commissioner who exercised jurisdiction under Section 263.

The High Court found that the department failed to dispute the contents of a crucial letter dated 18th August, 2016, which indicated that the Principal Commissioner sought a proposal from the JCIT/Assessing Officer to exercise jurisdiction under Section 263. The Court emphasized that if the department had issues with the contents of the letter, they should have sought clarification or rectification from the Tribunal instead of raising new arguments during the appeal. Consequently, the High Court declined to interfere with the Tribunal's order and dismissed the appeal. However, the Court allowed the department to approach the Tribunal for clarification or rectification if needed.

In conclusion, the High Court answered the substantial questions of law against the revenue and dismissed the appeal, leading to the dismissal of the stay application as well.