M/s.UniversalMusicIndiaPvt.Ltd. ] SamirComplex,St.AndrewsRoad, ] Bandr (W),Mumbai–400050. ]
INTHEHIGHCOURTOFJUDICATUREATBOMBAY
ORDINARYORIGINALCIVILJURISDICTION
INCOMETAXAPPEALNO.238OF2018
Pr.CommisionerofIcomeTax-16 ]
AayakarBhawan,M.K.Road, ]
Mumbai–400020. ] Versus
M/s.UniversalMusicIndiaPvt.Ltd. ] SamirComplex,St.AndrewsRoad, ] Bandr (W),Mumbai–400050. ]
…...
…
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Appelant
Respondent
Mr.SureshKumarfortheAppelant.
Mr.MihirC.NaniwadekaralongwithMr.RutrajH.GurjarfortheRespondent.
…...
CORAM : K.R.SHRIRAM AND
N.R.BORKAR,JJ.
DATED: APRIL19,2022
ORALJUDGMENT(PERK.R.SHRIAM,J.):
1. Heardcounselandconsierdtheappealmemo.Folowingtwo subsantialquestionsoflawhavebeenproposedintheAppeal:
“(a)Wheteronthefacts,inthecircumsancesofthecas
andasperlaw,theHon’bleIAThaseredinholdingthatin
thervisionproceedingstheCITcannottravelbeyond the
reasonsgiven byhim forrevisionintheshow-causenotice
wihoutappreciatingthatthepowerofrvisionunderSection
263oftheI.T.Actisnotcontingentonthegivingofanotice
toshow cause?
(b) Whetheronthefacts,inthecircumsancesofthecas
andasperlw,theHon’bleITAThaseredinholdingthatin
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933-ITXA-238-2018.odt
therevisionproceedingstheCITcannottravelbeyond the
reasonsgivenbyhim forrevisionintheshow-causenotice
withoutappreciatingtheratiolaiddownbyHon’bleSuprme
CourtinthecaseofCITvs.AmitabhBachchan(384ITR200)
(2016)wherinitwasclearlyheldbytheApexCourtthat
thereisnothinginSection263tomake theCITconfine
himselftothetrmsofshowcausenotice?”
2. Respondenthad filedreturnofincomeon27 October,2010
declaringincomeof‘Nil’forA.Y.2009-2010.Subsequently,asesmentwas
completedbyanOrderdated20December,2011underSection143(3)ofthe IncomeTax,1961(theAct).
3. Therafter,noticeunderSection263wasisuedbyCITontwo
isues,namely,(a)disalowanceofFringeBenefitTax(FBT)paidof
Rs.10,72,532/-includedinmiscelaneousexpensesandnotalowedbythe
AsesingOficerand(b)provisionofRs.1,40,98,685/-inrespectofslow
movingandabsoleteinventories.TheCI directdAsessingOficerbyan
Orderdated20 March,2013tomakeenquiryandexaminethetwoisues
andathirdisuebeingparticularsofpaymentsmadetoperonsspecified
underSection 40A(2)(b)oftheActofRs.7,00,22,680/-alowed inthe
asesmentorder.Theasesmentorderwassetasideonthisisueandtobe examinedafresh.
4. Aggrievedbytheorderdated20 March,2013pasedbyCIT,
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933-ITXA-238-2018.odt
RespondentfiledanAppealbeforeITAT.ITATbyanorderdated27 April, 2016alowedtheAppeal.
5. OntheisueofpaymentsmadetopersonsspecifiedunderSection
40A(2)(b)oftheAct,theIATgaveafindingoffactthatnosuchisuewas
everraisedbyCITinthenoticeservedupontheassseeandtheassesewas
notevenconfrontedbytheCITbeforepasingtheOrderdated20 March,
2013.ITATconcludedthatthesaidgroundtherforecannotfrm thebasifor
revisionofasessmentorderunderSection263 oftheAct.Itisonlythis
findingofIATwhichisimpugnedinthisAppeal.Ontheothertwopoints,
revenuehasaceptedthefindingsofITATthattheOrderunderSection263 wasnotwaranted.
6. Mr.SureshKumarsubmitedthatApexCourtin itsJudgment
dated11 May,2016(afertheimpugnedorerwaspronouncedbyIAT)in CommisionerofIncome–Tax,Mumbaiv.AmitabhBachchan,hasheldthatthe
provisionsofSection263doesnotwarantanynoticetobeisuedandwhatis
requiredisonlyto givetheasese anopportunityofbeingheardbefore
reachinghisdecisionandnotbeforecommencingtheenquiry.Mr.Suresh
Kumarsubmitedthattherefore,theITAThaseredinsetingasidetheOrder ofCITonthisisue.
7. ItistruethattheApexCourtin AmitabhBachan(supra)has 1 2016(69) taxmann.com 170 (SC)
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933-ITXA-238-2018.odt
held,althatCITisrequiredtodobeforereachinghisdecisionandnotbefore
commencingtheenquiry,CITmustgivetheasese anopportunityofbeing
heard.ItistruethattheJudgmentalsosaysnonoticeisrequiredtobeisued.
Butinthecaseathand,thereisafindingoffactbytheITATthatnoshow
causenoticewasisuedandnoisuewaseverraisedbytheCITregarding
paymentsmadetopersonsspecifiedunderSection40A(2)(b)oftheActbefore
reachinghisdecisionintheOrderdated20 March,2013.Ifthatwasnot
corectcertainlytheorderoftheCITwouldhavementionedthatan
opportunitywasgivenandinanycase,iftherewereanyminutesornotingsin thefile,revenuewouldhaveproducedthosedetailsbeforetheITAT.
8. InAmitabhBachchan(supra),theApexCourtcametoafndig
thatITAThadnotevenrecordedanyfndigsthatinthecourseofthesuo
moturevisionalproceedingsopportunityofhearingwasnotoferedtothe
asese andthattheasese wasdeniedanopportunitytocontestthefacts
onthebasisofwhichtheCIThadcometoitsconclusionsasrecordedinhis
orderunderSection263oftheAct.Itwilbeusefultoreproduceparagraphs 10,11and13ofAmitabhBachchan(supra)andthesamereadasunder:
“10.RevertingtothespecificprovisionsofSection263of
theActwhathastobesenisthatasatisfactionthatanorder
pased bytheAuthorityundertheActiserroneousand
prejudicialtotheinterestoftheRevenueisthebasicpre–
conditionforexerciseofjurisdictionunderSection263ofthe
KanchanPDhuri 4 /8
Act.Botharetwinconditionsthathave tobe conjointly
present.Once such satisfactionisrached,jurisdictionto
exercisethepowerwouldbeavaiablesubjecttoobservance
oftheprinciplesofnaturaljusticewhichisimplicitin the
requirmentcastby theSectiontogivetheasese an
opportunityofbeingheard.Itisinthecontextoftheabove
positionthatthisCourthasrpeatedlyheldthatunlikethe
powerofreopeniganassesmentunderSection147ofthe
Act,thepowerof revisionunder Section 263isnot
contingentonthegivingofanoticetoshowcause.Infact,
Section263hasbenunderstoodnottorequireanyspecific
showcausenoticetobeservedontheasese.Rather,what
isrequiredunderthesaidprovisionisanopportunityof
hearingtotheasssee.Thetworequiementsaredifrent;
thefirstwouldcomprhendapriornoticedetailingthe
specificgroundsonwhichrevisionoftheasesmentorderis
tentativelybeingproposed.Such anotceisnotrequired.
WhatiscontemplatedbySection263,isanopportunityof
hearingtobeaforde totheasessee.Failuretogivesuchan
opportunitywouldrendertherevisionalorderlegalyfragile
notonthegroundoflackofjursdictionbutonthegroundof
violationofprinciplesofnaturaljustice.Refrenceinthis
regard maybeilustrativelymadetothedecisionsofthis
CourtinGitaDeviAggarwalvs.CIT[1970]76ITR496and
inCITv.ElectroHouse[1971]82ITR824(SC).Paragraph4
ofthedecisioninElectroHouse(supra)beingiluminationof
theisueindicatedabovemaybeusefuly reproduced
hereunder:
“ThissectionunlikeSection34doesnotprescribe
any noticeto begiven.Itonlyrequires the
Commisionertogiveanopportunitytotheasesse
ofbeingheard.Thesectiondoesnotspeakofany
notice.ItisunfortunatethattheHighCourtfailedto
noticethedifrencei languagebetween Sections
33–Band 34.Fortheasumption ofjursdictionto
procedunderSection34,thenotceasprescribedin
thatsection isaconditionprecedent.Butno such
KanchanPDhuri 5 /8
notice iscontemplated by Section 33-B.The
jurisdictionoftheCommisionertoproceed under
Section33–Bisnotdependenton thefulfilmentof
anyconditionprcedent.Althatheisrequiredtodo
before reaching hisdecision and not before
commencingtheenquiry,hemustgivetheassessee
anopportunityofbeingheadandmakeorcauset
make suchenquiryashe deemsnecessary.Those
requiementshavenotingtodowihtejurisdiction
oftheCommisioner.Theypertaintothergionof
naturaljustice.Breach oftheprinciplesofnatural
justicemayafectthelgalityoftheordermadebut
that does notafectthe jurisdiction of the
Commisioner.Atpresentwearenotcaledupont
consider wheter the order made by the
Commisioner is vitiated because of the
contravention ofanyoftheprnciplesofnatural
justice.Thescopeoftheseappealsisveynarow.Al
thatwe havetose iswhetherbeforeasuming
jurisdictiontheCommisionerwasrequiredtoisuea
noticeandifhewasso requiredwhatthatnotice
shouldhavecontained?Ouranswertothatquestion
hasalreadyben madeclear.In ourjudgmentno
notice was required to be isued by the
Commisioner before asuming jurisdiction to
procedunderSection33–B.Thereforethequestion
whatthatnoticeshouldcontaindoesnotarisefor
consideration.Itisnotnecesarynorproperforusin
thiscasetoconsiderastothenatureoftheenquiry
tobeheldunderSection33–B.Therefore,werefain
from spelingoutwhatprinciplesofnaturaljustice
shouldbeobservdinanenquiryunderSection33–
B.ThisCourtinGitaDeviv.CIT,WestBengalruled
thatSection33-Bdoesnotinexprestemsrequirea
noticetobeservedontheasese asinthecaseof
Section34.Section33–Bmerelyrequiresthatan
opportunityofbeingheard shouldbegiven tothe
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933-ITXA-238-2018.odt
asese andthestringentrequirmentofserviceof
noticeunderSection34cannot,therefore,beapplied
toaprocedingunderSection 33-B.”(Page827–
828).
[Note:Section33–BandSection34oftheIncomeTaxAct,
1922corespondstoSection263andSection147ofthe
IncomeTaxAct,1961]
11. Itmaybethatinagivencaseandinmostcasesitisso
doneanoticeproposingtherevisionalxerciseisgiventothe
aseseeindicatingthreinbroadlyorevenspecificalythe
groundsonwhichtheexerciseisfeltnecssary.Butthereis
nothinginthesection(Section263)toraisethesaidnotice
tothestatusofamandatoryshowcausenoticeafectingthe
initiationoftheexerciseintheabsncethereofortorequire
theC.I.T.toconfinehimselftothetermsofthenoticeand
foreclosingconsiderationofanyotherisueorquestionof
fact.ThisisnotthepurportofSection263.Ofcourse,there
canbenodisputethatwhiletheC.I.T.isfreetoexercisehis
jurisdiction on consideration ofalrelevantfacts,a ful
opportunitytocontrovert thesame and toexplainthe
circumstancessuroundingsuchfacts,asmaybeconsidered
relvantbytheasese,mustbeafordedtohim bythe
C.I.T.priortothefinalizationofthedecision.
13. TheabovegroundwhichhadledthelearnedTribunal
tointerferewiththeorderofthelearnedC.I.T.semstobe
contarytothesetledpositioninlaw,asindicatedaboveand
thetwodecisionsofthisCourtinGitaDeviAggrwal(supra)
andM/sElectroHouse(supra).ThelarnedTribunalinits
orderdatd28thAugust,2007hadnotrecordedanyfinding
thatin courseofthesuomoturevisionalprocedings,
hearingofwhichwasspreadovermanydaysandatendedto
bytheauthorizedrepresentativeoftheassessee,opportunity
ofhearingwasnotaforded totheassesseeand thatthe
assseewasdenidanopportuniytocontestthefactson
thebasi ofwhichthelarned C.I.T.had come tohis
conclusionsasrcordedintheorderdatd20 March,2006.
KanchanPDhur i 7 /8
Despitetheabsenceofanysuchfindingintheorderofthe
learned Tribunal,beforeholdingthesame tobe legaly
unsustainabletheCourtwilhavetobesatisfiedthatinthe
courseoftherevisionalprocedingtheasessee,actualyand
realy,di nothavetheopportuniytocontestthefactson
thebasiofwhichtelearnedC.I.T.hadoncludedthatthe
orderoftheAssessingOficeriserroneousandprejdicialto
theintrest oftheRevenue.Theaboveisthequestion to
whichteCourt,therefore,wilhavetoturnto.”
9. Inthecaseathand,therisafndigbytheTribunal,asnoted
earlier,thatnoisuewasraisedbytheCITinrspectofparicularsofpayment
madetoperonsspecifidunderSection40A(2)(b)oftheActandeventhe showcausenoticeissilentaboutthat.
10. Inourview,theTrbunalhasnotcommitedanyperversityor
applied incorectprnciplestothegiven factsandwhenthefactsand
circumstances are properlyanalysed and corecttestis applied to
decidetheisueathand,then,wedonotthinkthatquestionasprssed raisesanysubsantialquestionoflaw.
11. Theappealisdevoidofmeritsanditisdismisedwithnoorder astocosts.
(N.R.BORKAR,J.) (K.R.SHRIRAM,J.)
KanchanPDhuri 8 /8
