The Court emphasized the importance of considering submissions and the correctness of the same before making a decision under Section 264 of the Income Tax Act, 1961.

JUDGMENT :

T.S. SIVAGNANAM, J.

In Re: I.A. No. CAN 1 of 2024

1. We have heard Mr. Pramit Bag, learned advocate appearing for the appellant and Mrs. Smita Das De, learned Standing counsel appearing for the respondents.

2. There is delay of 48 days in filing the appeal. We have perused the affidavit filed in support of the petition and we find that sufficient cause has been shown for not being able to prefer the appeal within the period of limitation.

3. I.A. No. CAN 1 of 2024 is allowed and the delay in filing the appeal is condoned.

In Re: M.A.T. 259 of 2024

4. The unsuccessful writ petitioner is the appellant before us. The writ petition was filed challenging an order passed by the Principal Commissioner of Income Tax, Asansol (for brevity “the PCIT”) dated 23rd March, 2021 rejecting the application filed by the appellant under Section 264 of the Income Tax Act, 1961 (for brevity “the Act”).

5. It is well-settled principle of law that the Court cannot examine the merits of the matter and the correctness of the order can be tested only with regard to the decision making process. There are certain set parameters, which would empower the Court to interfere in such orders in exercise of its powers under Article 226 of the Constitution of India for which the petitioner has to establish certain grounds, one of which is that there is a violation of principles of natural justice.

6. In the instant case, the appellant would contend that though an elaborate application was filed under Section 264 of the Act, the PCIT by the order dated 23rd March, 2021 has merely accepted the remand report submitted by the Assessing Officer dated 10th March, 2021 and rejected the petition. Though a copy of the remand report was furnished to the appellant along with a show-cause notice, the appellant did not avail the opportunity by submitting his objections or submitting clarifications to the issues pointed out by the assessing officer in the remand report.

7. Be that as it may, the PCIT while considering the application under Section 264 of the Act should first take note of the submissions made in the application, considered the remand report and then take a decision on merits and in accordance with law.

8. However, on a perusal of the order dated 23rd March, 2021, more particularly in paragraph 5, the PCIT has not dealt with the merits of the matter but has rejected the petition taking note of the conduct of the appellant in the assessment proceedings, which were completed under Section 144 of the Act by order dated 4th December, 2019.

9. In the application filed under Section 264 of the Act, the appellant pleads that he has not received any notice either through e-mail or through speed post and he was unaware that assessment proceedings were under progress and therefore, the assessee cannot be termed to have wilfully ignored the notices.

10. Further, the assessee contended that he had a bank credit limit in the form of cash credit for his trading activities in UCO Bank and other factual details have also been set out.

11. Further, it is pointed out that the assessment under Section 144 is a high-pitched assessment and the said amount is aggregated cash deposited during the financial year 2016-17 in the bank account maintained by the assessee. The details of the bank accounts were furnished by the assessee and the assessee takes a specific stand that no cash deposits were made in the savings account. There are other grounds, which have been raised by the assessee in the application filed under Section 264 of the Act.

12. Therefore, the PCIT while considering the application has to consider the correctness of the said submission and also take note of the remand report given by the assessing officer and also examined the assessment files. It is no doubt true that the assessee did not avail the opportunity granted pursuant to the show-cause notice dated 18th March, 2021.

13. However, in our considered view, since the assessee has lost his right of appeal and there is a