Daffodills Pharmaceuticals Ltd. Vs. PCIT, Ghaziabad: An Income Tax Appellate Tribunal Deliberation

Daffodills Pharmaceuticals Ltd. Vs. PCIT, Ghaziabad: An Income Tax Appellate Tribunal Deliberation

The Income Tax Appellate Tribunal’s deliberation of the appeal filed by Daffodills Pharmaceuticals Ltd. against the order of the Principal CIT, Ghaziabad, underlines the importance of adhering to procedural and factual accuracy in legal proceedings. This detailed examination sheds light on the intricacies involved in reassessment orders, jurisdictional overreach, and the principles of natural justice. The case, rooted in the assessment year 2012-13, not only emphasizes the procedural nuances of the Income Tax Act, 1961, but also serves as a precedent for similar cases involving questions of law under Sections 263, 147, and 148 of the Act.

ITA No. 1148/Del/2022, which germinated from an assessment order dated 29.3.2022 passed under section 263 of the Income Tax Act, 1961, saw Daffodills Pharmaceuticals Ltd., the appellant, contesting the order on several grounds. The primary allegations were directed towards the erroneous assumption of jurisdiction under section 263 by the Principal CIT (PCIT), which was claimed to be based on incorrect facts, violations of principles of natural justice, and without a comprehensive examination of the appellant’s provided details and evidence.

The case intricately discusses the appellant’s grievances, particularly highlighting issues related to the alleged involvement in the NRHM scam, discrepancies in turnover and bank credits, examination of section 40A(2)(b), and unwarranted disallowance of depreciation claims. It brings to the fore the critical analysis of jurisdictional invocation under section 263 of the Income Tax Act, examining the prerequisites for such an action by the PCIT and its impact on the principles of natural justice.

The tribunal meticulously delved into the procedural and factual matrix of the case, scrutinizing the assessment records, the show cause notice’s legitimacy, and the correctness of the reassessment order u/s 147/143(3) dated 29.12.201. The adjudicating members, Shri N.K. Billaiya (Accountant Member) and Shri Yogesh Kumar U.S. (Judicial Member), rendered a profound judgment, allowing the appeal in favor of Daffodills Pharmaceuticals Ltd., thereby setting aside the impugned order passed under section 263.

The judgment meticulously addresses the statutory interpretations, the extent of the PCIT’s jurisdiction, and the valid grounds for invoking a revision under section 263. It underscores the necessity of an ‘erroneous order’ being prejudicial to the revenue for the invocation of section 263, alongside a reiteration of the principles outlined in landmark judgments concerning ‘erroneous and prejudicial’ assessments.

In conclusion, this case amplifies the crucial judicial discourse on the interpretation and application of the Income Tax Act’s provisions, particularly section 263. It serves as a notable reference for stakeholders in the realm of tax law, providing substantive insights into the tribunal’s reasoning, the application of legal principles, and the upholding of natural justice in tax adjudication processes.

Daffodills Pharmaceuticals Ltd. Vs. PCIT, Ghaziabad: An Income Tax Appellate Tribunal Deliberation