PCIT v. Universal Music India Pvt. Ltd.

Case snapshot

Sections / provisions: 263

Questions before the Court / Tribunal

• S. 263 : Commissioner-Revision of orders prejudicial to revenue- Payment to specified persons-Revision proceedings cannot travel beyond the reasons given in show cause notice- 0rder of Tribunal is affirmed. [S. 40A(2)(b)] Dismissing the appeal of the revenue, the Court held that, where the show cause notice under section 263 of the Act suggested only 2 issues but the order under section 263 of the Act directed the ld. AO to make enquiry and examine the two issues and a third issue, the Tribunal held that the third issue cannot form the basis for revision of assessment order under Section 263 of the Act. Order of the Tribunal upheld. (AY. 2009-2010) (ITA No. 238 of 2018 dated April 19, 2022) PCIT v. Universal Music India Pvt. Ltd. (Bom.)(HC) www.itatonline .org Editorial : CIT v. Amitabh Bacchan (2016) 384 ITR 200 / (69) taxmann.com 170 (SC) distinguished. CORAM : Hon’ble Shri Justice…
• 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

933-ITXA-238-2018.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 238 OF 2018 Pr. Commissioner of Income Tax - 16 ] Aayakar Bhawan, M.K. Road, ] Mumbai – 400 020. ] … Appellant Versus M/s. Universal Music India Pvt. Ltd. ] Samir Complex, St. Andrews Road, ] Bandra (W), Mumbai – 400 050. ] … Respondent …...... Mr. Suresh Kumar for the Appellant. Mr. Mihir C. Naniwadekar alongwith Mr. Ruturaj H. Gurjar for the Respondent. …...... CORAM : K.R. SHRIRAM AND N.R. BORKAR, JJ. DATED : APRIL 19, 2022 ORAL JUDGMENT (PER K.R. SHRIRAM, J.) : 1. Heard counsel and considered the appeal memo. Following two substantial questions of law have been proposed in the Appeal : “(a) Whether on the facts, in the circumstances of the case and as per law, the Hon’ble ITAT has erred in holding that in the revision proceedings the CIT cannot travel beyond the reasons given by him for revision in the show-cause notice without appreciating that the power of revision under Section 263 of the I.T . Act is not contingent on the giving of a notice to show cause ? (b) Whether on the facts, in the circumstances of the case and as per law, the Hon’ble ITAT has erred in holding that in

933-ITXA-238-2018.odt the revision proceedings the CIT cannot travel beyond the reasons given by him for revision in the show-cause notice without appreciating the ratio laid down by Hon’ble Supreme Court in the case of CIT vs. Amitabh Bachchan (384 ITR 200) (2016) wherein it was clearly held by the Apex Court that there is nothing in Section 263 to make the CIT confine himself to the terms of show cause notice ?” 2. Respondent had filed return of income on 27th October, 2010 declaring income of ‘Nil’ for A.Y. 2009-2010. Subsequently , assessment was completed by an Order dated 20th December, 2011 under Section 143(3) of the Income Tax, 1961 (the Act). 3. Thereafter, notice under Section 263 was issued by CIT on two issues, namely , (a) disallowance of Fringe Benefit Tax (FBT) paid of Rs.10,72,532/- included in miscellaneous expenses and not allowed by the Assessing Officer and (b) provision of Rs.1,40,98,685/- in respect of slow moving and absolete inventories. The CIT direct ed Assessing Officer by an Order dated 20 th March, 2013 to make enquiry and examine the two issues and a third issue being particulars of payments made to persons specified under Section 40A(2)(b) of the Act of Rs.7,00,22,680/- allowed in the assessment order. The assessment order was set aside on this issue and to be examined afresh. 4. Aggrieved by the order dated 20 th March, 2013 passed by CIT ,

933-ITXA-238-2018.odt Respondent filed an Appeal before ITAT . ITAT by an order dated 27 th April, 2016 allowed the Appeal. 5. On the issue of payments made to persons specified under Section 40A(2)(b) of the Act, the ITAT gave a finding of fact that no such issue was ever raised by CIT in the notice served upon the assessee and the assessee was not even confronted by the CIT before passing the Order dated 20 th March, 2013. ITAT concluded that the said ground therefore cannot form the basis for revision of assessment order under Section 263 of the Act. It is only this finding of ITAT which is impugned in this Appeal. On the other two points, revenue has accepted the findings of ITAT that the Order under Section 263 was not warranted. 6. Mr. Suresh Kumar submitted that Apex Court in its Judgment dated 11th May , 2016 (after the impugned order was pronounced by ITAT) in Commissioner of Income-Tax, Mumbai v. Amitabh Bachchan1, has held that the provisions of Section 263 does not warrant any notice to be issued and what is required is only to give the assessee an opportunity of being heard before reaching his decision and not before commencing the enquiry . Mr. Suresh Kumar submitted that therefore, the ITAT has erred in setting aside the Order of CIT on this issue. 7. It is true that the Apex Court in Amitabh Bacchan (supra) has 1 2016(69) taxmann.com 170 (SC)

933-ITXA-238-2018.odt held, all that CIT is required to do before reaching his decision and not before commencing the enquiry , CIT must give the assessee an opportunity of being heard. It is true that the Judgment also says no notice is required to be issued. But in the case at hand, there is a finding of fact by the ITAT that no show cause notice was issued and no issue was ever raised by the CIT regarding payments made to persons specified under Section 40A(2)(b) of the Act before reaching his decision in the Order dated 20 th March, 2013. If that was not correct certainly the order of the CIT would have mentioned that an opportunity was given and in any case, if there were any minutes or notings in the file, revenue would have produced those details before the ITAT .

8. In Amitabh Bachchan (supra) , the Apex Court came to a finding that ITAT had not even recorded any findings that in the course of the suo motu revisional proceedings opportunity of hearing was not offered to the assessee and that the assessee was denied an opportunity to contest the facts on the basis of which the CIT had come to its conclusions as recorded in his order under Section 263 of the Act. It will be useful to reproduce paragraphs 10, 11 and 13 of Amitabh Bachchan (supra) and the same read as under : “10. Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic precondition for exercise of jurisdiction under Section 263 of the

Appellant / petitioner / assessee submissions

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

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

At present we are not called upon to consider whether the order made by the Commissioner is vitiated because of the contravention of any of the principles of natural justice. The scope of these appeals is very narrow. All that we have to see is whether before assuming jurisdiction the Commissioner was required to issue a notice and if he was so required what that notice should have contained? Our answer to that question has already been made clear. In our judgment no notice was required to be issued by the Commissioner before assuming jurisdiction to proceed under Section 33-B. Therefore the question what that notice should contain does not arise for consideration.

It is not necessary nor proper for us in this case to consider as to the nature of the enquiry to be held under Section 33-B. Therefore, we refrain from spelling out what principles of natural justice should be observed in an enquiry under Section 33B. This Court in Gita Devi v. CIT , West Bengal ruled that Section 33-B does not in express terms require a notice to be served on the assessee as in the case of Section 34. Section 33-B merely requires that an opportunity of being heard should be given to the

933-ITXA-238-2018.odt assessee and the stringent requirement of service of notice under Section 34 cannot, therefore, be applied to a proceeding under Section 33-B.” (Page 827828). [Note: Section 33-B and Section 34 of the Income Tax Act, 1922 corresponds to Section 263 and Section 147 of the Income Tax Act, 1961] 11. It may be that in a given case and in most cases it is so done a notice proposing the revisional exercise is given to the assessee indicating therein broadly or even specifically the grounds on which the exercise is felt necessary . But there is nothing in the section (Section 263) to raise the said notice to the status of a mandatory show cause notice affecting the initiation of the exercise in the absence thereof or to require the C.I.T . to confine himself to the terms of the notice and foreclosing consideration of any other issue or question of fact.

933-ITXA-238-2018.odt Despite the absence of any such finding in the order of the learned Tribunal, before holding the same to be legally unsustainable the Court will have to be satisfied that in the course of the revisional proceeding the assessee, actually and really , did not have the opportunity to contest the facts on the basis of which the learned C.I.T . had concluded that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. The above is the question to which the Court, therefore, will have to turn to.” 9. In the case at hand, there is a finding by the Tribunal, as noted earlier, that no issue was raised by the CIT in respect of particulars of payment made to persons specified under Section 40A(2)(b) of the Act and even the show cause notice is silent about that. 10. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 11. The appeal is devoid of merits and it is dismissed with no order as to costs. ( N.R. BORKAR, J. ) ( K.R. SHRIRAM, J. )

Operative decision and relief

The operative relief must be read from the final paragraphs of the complete packaged judgment.

Ratio and legal principle

The narrow proposition associated with PCIT v. Universal Music India Pvt. Ltd. concerns s. 263 : commissioner-revision of orders prejudicial to revenue- payment to specified persons-revision proceedings cannot travel beyond the reasons given in show cause notice- 0rder of tribunal is affirmed. [s. 40a(2)(b)] dismissing the appeal of the revenue, the court held that, where the show cause notice under section 263 of the act suggested only 2 issues but the order under section 263 of the act directed the ld. ao to make enquiry and examine the two issues and a third issue, the tribunal held that the third issue cannot form the basis for revision of assessment order under section 263 of the act. order of the tribunal upheld. (ay. 2009-2010) (ita no. 238 of 2018 dated april 19, 2022) pcit v. universal music india pvt. ltd. (bom.)(hc) www.itatonline .org editorial : cit v. amitabh bacchan (2016) 384 itr 200 / (69) taxmann.com 170 (sc) distinguished. coram : hon’ble shri justice… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in INCOME TAX APPEAL NO. 238 OF 2018.

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 “Dismissed” 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- Payment to specified persons-Revision proceedings cannot travel beyond the reasons given in show cause notice- 0rder of Tribunal is affirmed. [S. 40A(2)(b)] Dismissing the appeal of the revenue, the Court held that, where the show cause notice under section 263 of the Act suggested only 2 issues but the order under section 263 of the Act directed the ld. AO to make enquiry and examine the two issues and a third issue, the Tribunal held that the third issue cannot form the basis for revision of assessment order under Section 263 of the Act. Order of the Tribunal upheld. (AY. 2009-2010) (ITA No. 238 of 2018 dated April 19, 2022) PCIT v. Universal Music India Pvt. Ltd. (Bom.)(HC) www.itatonline .org Editorial : CIT v. Amitabh Bacchan (2016) 384 ITR 200 / (69) taxmann.com 170 (SC) distinguished. CORAM : Hon’ble Shri Justice… Its practical value lies in the way the Bombay High Court connected the governing provisions—263—to the procedural posture and evidence before it.

The authority level is High Court. 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 2022-04-19; 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 PCIT v. Universal Music India Pvt. Ltd., the proceeding is INCOME TAX APPEAL NO. 238 OF 2018, and the decision is dated 2022-04-19. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as K.R. SHRIRAM AND N.R. BORKAR, JJ.. 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 Dismissed. 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 REVIEW_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

• Pr. CIT (Central)-1 v. Surendra L. Hiranandani — Bombay High Court · Dismissed
• Pr. CIT v. Persistent Systems Pvt. Ltd. — Bombay High Court · Dismissed
• Anil Ramchandran Pillai v. NFAC — Bombay High Court · Dismissed
• Sanjay Patel v. ACIT — Bombay High Court · Dismissed

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