PATNA HIGH COURT ISSUES JUDGMENT ON PRINCIPAL COMMISSIONER OF INCOME TAX V/S ALKEM LABORATORIES

PATNA, India, May 21 -- Patna High Court issued the following judgment on April 20:

1. This is a Miscellaneous Appeal, assailing an order, dated 20th of June, 2022, passed by the Income Tax Appellate Tribunal, Patna Bench, Patna (hereinafter referred to as the "Tribunal" for short) in ITA No. 24/PAT/2021 for Assessment Year 2015-2016 on the following substantial questions of law: -

(i) Whether the honourable ITAT is correct in law that the claim of assessee regarding deduction under section 35(2AB) with reference to the certificate in 3CL issued by DSIR, dated 14.8.2017 is accepted only on the ground that the same has been dropped by the Principal Commissioner of Income Tax Mumbai.

(ii) Whether the honourable ITAT was not justified in law as it restricts/infringes upon the power conferred on the PCIT under section 263 of the Income Tax Act to direct the AO to reframe order on the issues where no proper enquiry/investigation has been made as such assessment order is erroneous and prejudicial to the interest of the revenue.

(iiii) Whether on the facts and circumstances of the case the honourable ITAT was justified in holding that Principal Commissioner of Income Tax was not authorised to explore as to why the entire amount of Rs. 20,17,86,432 / was not offered to tax even in view of the fact that no proper enquiry has been made by the AO before finalizing the assessment on this particular issue.

(iv) Whether on the facts and circumstances of the case the honourable ITAT was justified in quashing order under section 263 of the Income Tax Act on the issue of commission payments to M/S Reynold Petrochem Ltd., amounting to Rs. 1,61,83,762/-, when the PCIT has observed that such commission has been allowed without proper verification and enquiry made by the AO.

(v) At any other ground that may be urged at the time of hearing.

2. Factual matrix, leading to filing of the instant Appeal is that the assessee filed its return of income on 28th of November, 2015, declaring total income at Rs. 5,13,71,110/-. The assessee has also shown income of Rs. 381,18,39,146/- under Section 115JB of the Act. The Assessment Officer took up the case for scrutiny on service of notice under Section 143(2) of the Income Tax Act (hereinafter referred to as "I.T. Act" for short). Subsequently the return was scrutinized according to law and the Assessing Officer passed scrutiny assessment order on 31st of May, 2017 under Section 143(3) of the I.T. Act. The assessment order was reviewed by the Commissioner of Income Tax and the same was found to be erroneous as well as prejudicial to the interest of the revenue.

*Rest of the document can be viewed at: (https://patnahighcourt.gov.in/viewjudgment/MiM2MzkjMjAyMiMxI04=-7upfZF3xPuU=)

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