Tribunal Being Fact-Finding Body, Unless Perversity Shown, High Court Can’t Interfere: Calcutta High Court

The Calcutta High Court has held that unless and until the order passed by the Tribunal suffers from any perversity or ignores any vital fact in an appeal under Section 260A of the Income Tax Act, the Court is not expected to interfere with the order.

The division bench of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharya has observed that the issues related to an erroneous and prejudicial order and the lack of proper inquiry on which the show-cause notice under Section 263 was issued are fully factual. The Tribunal, which is the last fact-finding authority, has elaborately considered the factual position and granted relief to the assessee.

The respondent and assessee filed a paper book containing all documents that were filed before the learned tribunal, including the written submissions filed by the assessee. The assessee also furnished the relevant extracts of the financial statement for the financial year 2015–2016, highlighting all the relevant details. The location-wise break-up of those items of expense as reflected in the profit and loss account was also placed before the tribunal. Thus, it was explained that the sum of Rs. 1,34,45,166/- was re-added to the income computation.

The tribunal has found that the sum was added back in the computation of income, and therefore there was absolutely no basis for the PCIT to invoke his power under Section 263. The records clearly showed that the assessing officer had issued notices to the assessee on the same issue, considering their reply and pointing out certain discrepancies, and issued a show cause notice for which the assessee had submitted a reply and that the assessment had been completed after a thorough investigation.

The respondent contended that it was not a case of a lack of inquiry or a lack of proper inquiry. The PCIT does not state in as many words that there was a lack of inquiry or a lack of proper inquiry, and all that is said is that the assessing officer did not verify these aspects, which is factually incorrect. Therefore, it is not a case where the PCIT could have invoked his jurisdiction under Section 263 of the Act.

The court held that every loss of revenue cannot be treated as prejudicial to the interest of revenue, and if the assessing officer has adopted one of the courses permissible under law, or where two views are possible and the assessing officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the assessing officer is unsustainable under law.

Case Title: PCIT Versus Britannia Industries Ltd.

Case No: ITAT/211/2022

Citation: 2023 LiveLaw (Cal) 3

Date: 23.12.2022

Counsel For Appellant: Advocate Amit Sharma

Counsel For Respondent: Advocates R.K. Muraka, Sutapa Roy Choudhury, Aratrika Roy

Click Here To Read The Order