Cargo Service Centre India Pvt. Ltd. v. DCIT

Case snapshot

Sections / provisions: 263

Questions before the Court / Tribunal

• S. 263 : Commissioner-Revision of orders prejudicial to revenue- eligibility of loss being carried forward-Issue which is beyond the scope of rectification-Commissioner cannot revise under section 263 of the Act. [S. 154] Where, the Assessing Officer allowed the rectification application of the assessee claiming losses to be carried forward. The PCIT held that the AO had not examined this claim in sufficient detail, the loss cannot be allowed to be carried forward. The Tribunal held that the quantification of loss, which is well beyond the limited scope of “mistake apparent on record” under section 154 of the Act could not have been disturbed in the proceedings under section 154 of the Act, and what cannot be done under section 154 of the Act, cannot be done under section 263 read with section 154 of the Act either. The impugned revision order is vitiated in law. [ITA No. 3612/Mum/2019…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

Cargo Service Centre India Pvt Ltd ……………….………Appellant # 301/303, Rangoli Complex, Sahar Road Opp Air Cargo Complex, Mumbai 400 099 [PAN No. AAACC4945M]

1. By way of this appeal, the assessee -appellant has challenged the correctness of the order dated 29th March 2019, in the matter of revision order under section 263 r.w.s. 154 and 143(3) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟ , for the assessment year 2012-13.

1. The order passed by Learned Principal Commissioner of Income Tax (‘Ld. Pr. CIT) u/s. 263 of the Income Tax Act, 1961 (‘Act’) is bad in law, and in facts as she grossly erred in invoking provisions of section 263 of the Act t o set aside an order passed u/s. 154 of the Act by the Assessing Officer (‘AO’) rectifying her own order passed u/s. 143(3) without satisfying conditions of section 263 of the Act.

2. Without prejudice, to above, order passed u/s. 263 by Ld. Pr. CIT is bad i n law and is void ab inito as while passing order u/s. 263 of the Act Ld. CIT issued show cause notice on the appellant’s eligibility to claim the deduct ion u/s. 35AD of the Act and having satisfied that the appellant is eligible to claim deduction u/s. 35AD(8)(c) – Ld. Pr. CIT proceeded to set aside over u/s. 154 of the Act on the basis that AO failed to make adequate inquiry without providing any show cause notice in respect of the same to the appellant.

3. Ld. Pr. CIT grossly erred in holding that AO ha s not made sufficient inquiry in respect of the claim of the appellant while passing an order ignoring the fact that all necessary information or documents were submitted by the appellant in the course of assessment and AO had allowed the claim of expendit ure while passing order u/s. 143(3) of the Act.

Appellant / petitioner / assessee submissions

5. Having heard the parties on the above propositions, we are of the considered view that the assessee deserves to succeed for these short reasons alone. In the first place, as learned counsel for the assessee vehem ently submits, the issue regarding eligibility for set -off is wholly academic so far as the year of incurring loss in question is concerned. As observed by Hon‟ble Supreme Court in the case of Manmohan Das (supra), “Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and gains of the same business, profession or vocation …….. has to be determined by the Income -tax Officer who deals with the assessment of the subsequent year.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

The quantif ication of loss, which is well beyond the limited scope of „mistake apparent on record‟ under section 154 and in the light of Hon‟ble Supreme Court‟;s judgment in the case of ITO Vs Volkart Brothers [(1971) 82 ITR 50 (SC)], could not have been disturbed in the proceedings under section 154, and what cannot be done under section 154, cannot be done under section 263 r.w.s. 154 either. Whichever way one looks at it, the impugned revision order is vitiated in law. As regards learned Departmental Representativ e‟s plea that the quantification of loss in question was never examined at any stage in the scrutiny assessment proceedings, and, therefore, it cannot be allowed to be carried forward, all we can say is that the Assessing Officer could surely have done so in the scrutiny assessment proceedings under section 143(3), but just because he has missed the bus, we cannot bend th e law to allow that examination now.

Operative decision and relief

6. In view of the above discussions, as also bearing in mind the entirety of the matter, we quash the impugned revision proceedings. The assessee gets the relief accordingly.

7. In the result, the appeal is allowed in the terms indicated above. Pronounced in the open court today on the 02nd day of November, 2021.

Ratio and legal principle

The narrow proposition associated with Cargo Service Centre India Pvt. Ltd. v. DCIT concerns s. 263 : commissioner-revision of orders prejudicial to revenue- eligibility of loss being carried forward-issue which is beyond the scope of rectification-commissioner cannot revise under section 263 of the act. [s. 154] where, the assessing officer allowed the rectification application of the assessee claiming losses to be carried forward. the pcit held that the ao had not examined this claim in sufficient detail, the loss cannot be allowed to be carried forward. the tribunal held that the quantification of loss, which is well beyond the limited scope of “mistake apparent on record” under section 154 of the act could not have been disturbed in the proceedings under section 154 of the act, and what cannot be done under section 154 of the act, cannot be done under section 263 read with section 154 of the act either. the impugned revision order is vitiated in law. [ita no. 3612/mum/2019… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in ITA No. 3612/Mum/2019.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Quashed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: S. 263 : Commissioner-Revision of orders prejudicial to revenue- eligibility of loss being carried forward-Issue which is beyond the scope of rectification-Commissioner cannot revise under section 263 of the Act. [S. 154] Where, the Assessing Officer allowed the rectification application of the assessee claiming losses to be carried forward. The PCIT held that the AO had not examined this claim in sufficient detail, the loss cannot be allowed to be carried forward. The Tribunal held that the quantification of loss, which is well beyond the limited scope of “mistake apparent on record” under section 154 of the Act could not have been disturbed in the proceedings under section 154 of the Act, and what cannot be done under section 154 of the Act, cannot be done under section 263 read with section 154 of the Act either. The impugned revision order is vitiated in law. [ITA No. 3612/Mum/2019… Its practical value lies in the way the ITAT Mumbai connected the governing provisions—263—to the procedural posture and evidence before it.

The authority level is ITAT / Tribunal. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of 263 and the decision date 2021-11-02; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Cargo Service Centre India Pvt. Ltd. v. DCIT, the proceeding is ITA No. 3612/Mum/2019, and the decision is dated 2021-11-02. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as Pramod Kumar (Vice President), and Ravish Sood (Judicial Member). A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with 263. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Quashed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is RECTIFICATION_HIGH_COURT_APPEAL_SLP_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• 263 — apply the exact version considered in the judgment.

Case network

• ITO CIR 6(1)-4 VS ASAHI INFRA & PROJECTS LIMITED — ITAT Mumbai · Quashed / set aside
• OERLIKON BALZERS COATING INDIA PRIVATE LIMITED VS. UNION OF INDIA & ANR — Court / Tribunal to be verified · Quashed / set aside
• UCB India Pvt. Ltd. vs. ACIT — Supreme Court of India · Quashed / set aside
• Amrita Jhaveri (Ms.) v. Dy. CIT — ITAT Mumbai · Quashed / set aside

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