Patna High Court
Principal Commissioner Of Income Tax … vs Alkem Laboratories Limited on 20 April, 2026
Author: Chandra Shekhar Jha
Bench: Chandra Shekhar Jha
IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.639 of 2022
======================================================
Principal Commissioner of Income Tax (PCIT) I, Patna, 2nd Floor, Central
Revenue Building, Beer Chand Patel Path Marg, Patna- 800001, Bihar.
... ... Appellant/s
Versus
Alkem Laboratories Limited Exhibition Road, Patna- 800001.
... ... Respondent/s
======================================================
Appearance :
For the Appellant/s : Mr. Archana Sinha @ Archana Shahi
Senior Standing Counsel, Income Tax
Ms. Shilpi Keshri, Advocate
Mr. Alok Kumar, Advocate
Ms. Swarna Roy, Advocate
Ms. Komal, Advocate
Ms. Nisha Kumari, Advocate
Ms. Richa Rajiv Singh, Advocate
For the Respondent/s : Mr. Ajay Rastogi, Sr. Advocate
Ms. Smriti Singh, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE BIBEK CHAUDHURI
and
HONOURABLE MR. JUSTICE CHANDRA SHEKHAR JHA
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE BIBEK CHAUDHURI)
Date : 20-04-2026
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
Patna High Court MA No.639 of 2022 dt.20-04-2026
2/10
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
Patna High Court MA No.639 of 2022 dt.20-04-2026
3/10
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 28 th 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.
Therefore, the Commissioner issued a notice to show cause
under Section 263 of the Income Tax Act. The Principal
Commissioner of Income Tax-I, Patna, by an order, dated 27th
of March, 2021 cancelled and set aside the assessment order
Patna High Court MA No.639 of 2022 dt.20-04-2026
4/10
under Section 143(3) of the I.T. Act, dated 31 st of May, 2017,
for assessment year 2015-2016, passed by the Assessment
Officer on the ground that proper enquiry and verification
were not made by the Assessing Officer on:- (i) Taxability of
payment of Rs. 20,17,86,432/- made by the assessee to
Avenue Venture Real Estate Fund (AVREF); (ii) Claim of
deduction under Section 35(2AB) of the I.T. Act, 1961 with
reference to the certificate of 3CL issued by DSIR, dated 14 th
of August, 2017; and (iii) Genuineness of services rendered by
M/s Reynolds Petro Chems Limited, corresponding to the
claim of commission expenditure amounting to Rs.
1,61,83,762/- during Financial Year 2014-2015, relevant to
Annual Year 2015-2016.
3. The Assessment Officer was directed to make
fresh enquiry, investigation and verification on the above-
mentioned points and finalize the assessment in accordance
with law.
4. The respondent Company challenged the said
order in appeal, bearing ITA No. 24/PAT/2021 before the
ITAT, Patna Bench, Patna. The said appeal was disposed of on
20th of June, 2022, setting aside and quashing the order passed
under Section 263 of the I.T. Act, by the PCIT, Patna.
Patna High Court MA No.639 of 2022 dt.20-04-2026
5/10
Accordingly the Tribunal allowed the appeal, reversing the
judgement passed by the PCIT, Patna.
5. The judgement of the ITAT, Patna Bench, Patna is
assailed in the instant appeal by the Principal Commissioner
of Income Tax-I, Patna.
6. The learned Advocate appearing on behalf of the
appellant submits taking together the above-mentioned
questions of law involved in the instant appeal. At the outset,
it is submitted by the learned Advocate appearing on behalf of
the appellant that Section 263 of the I.T. Act empowers the
CIT to revise the assessment orders, deemed erroneous and
prejudicial to the revenue’s interest. Such order can only be
made when an Assessing Officer’s order lacks enquiry, fails to
apply the law or misappreciates evidence to the resulting in
loss of revenue. The order of Assessing Officer was
overturned by the Principal CIT on his finding that an 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
Assessing Officer before finalizing the assessment. Similarly,
the Principal CIT was well within its authority to held that a
sum of Rs. 1,61,83,762/- was not paid to Ms. Reymonds Petro
Chem Limited as commission. If the aforesaid amount was
Patna High Court MA No.639 of 2022 dt.20-04-2026
6/10
added, the tax liability of the assessee would have been
enhanced to many fold. Non-consideration of the aforesaid
issues caused loss of revenue and this Court is well within its
jurisdiction to reconsider the question of law being substantial
in nature in the instant appeal.
7. The learned Senior Advocate appearing on behalf
of the respondent submits that the purported questions of law
that have been agitated by the appellant to set aside are
actually question of fact and in the absence of any substantial
question of law, this appeal cannot be entertained.
8. In order to substantiate his contention, learned Sr.
Advocate on behalf of the Respondent submits that
declaration of income by the assess was included in return. So
return is a document which necessitates factual consideration,
and enquiry on such return is a question of fact which has
already been decided up to ITAT. Secondly, it is submitted by
the learned Sr. Counsel on behalf of the respondent that a
proceeding under Section 263 of the I.T. Act was initiated
earlier and the same was dropped. In view of such
circumstances, second proceeding under the same provision of
law is not permissible. It is also submitted by him that when
the assessment order was passed on 31st of Mary, 2017, the
Patna High Court MA No.639 of 2022 dt.20-04-2026
7/10
appellant cannot rely upon an order, dated 11th of April, 2016.
9. In support of his contention, he refers to
paragraph 23 of the impugned judgement. Paragraph 23 of the
impugned judgement runs as hereunder: –
“23. Apart from the above
reply, the assessee has filed copies of the
invoices issued by Reynolds Petro Chems
Ltd., details of TDS etc. After going
through these replies, the Assessing
Officer has accepted the stand of the
assessee. On the strength of these details,
it was submitted by the ld. Counsel for the
assessee that even though there is no
discussion made by the Assessing Officer
in the assessment order but, it does not
mean that enquiry was not conducted. He
submitted that passing of an assessment
order is the prerogative of the Assessing
Officer and the assessee has no control
over the language or the manner in which
the assessment order is to be drafted. But
on account of non-discussion of an issue,
the assessee should not suffer a second
round of proceedings. It has to be
examined whether the details were filed
by the assessee before the Assessing
Officer and the Assessing Officer has
applied his mind on all these details and
Patna High Court MA No.639 of 2022 dt.20-04-2026
8/10after being satisfied with the contention,
he had taken a plausible view accepting
the stand of the assessee, without making
any finding. For buttressing this
contention, he relied on the judgment of
the Hon’ble Patna High Court in the case
of CIT vs. Mukul Kumar reported in
(2009)
4 PLJR 417. He placed on
record a copy of this decision. He also
placed reliance on the following case-
laws:-
➤ Banco Products (India) Ltd.
v. DCIT (2018) 405 ITR 318/258 Taxman
244 (Guj) (HC)
➤ CIT v. Claris Lifesciences
Ltd. [2010] 326 ITR 251/[2008] 174
Taxman 113
➤ Commissioner of Income Tax
v. Sandan Vikas (India) Ltd., [2011] 335
ITR 117 (Del)
➤ CIT D. TVS Electronics Ltd.
(2019) 419 ITR 187/263 Taxman 164
(Mad.) (HC)
➤ ACIT v. Eastern Silk
Industries Ltd. (2019) 179 ITD 22/184
DTR 406 (Kol) (Trib.)
➤ DCIT. STP Ltd. (2021) 187
ITD 538/86 ITR 14 (Kol.) (Trib)”
10. It is submitted by the learned Senior Advocate
Patna High Court MA No.639 of 2022 dt.20-04-2026
9/10
appearing on behalf of the respondent, relying on a Division
Bench Judgment of this Court in Commissioner of Income
Tax, Patna v. Mr. Mukul Kumar, reported in (2009) 4 PLJR
417 that the ITAT set aside the order of the PCIT under
Section 263 of the I.T. Act on appreciation of pure question of
fact that the Assessing Officer had undertaken and held
reasonable enquiry by calling for explanations from the
assessee and in view of such finding it interfered with the
order of Commission, who had erroneously came to a finding
that proper enquiry was not held by the Assessing Officer.
Thus, there being materials on record to show that enquiry
was made regarding the expenditure claimed, the Division
Bench of this was pleased to hold that the ITAT was justified
in quashing the order of the Commissioner.
11. Last but not the least, we are inclined to record
that the question as to whether the Assessing Officer made
enquiry and passed the order or passed the order without
enquiry, is a question of fact, which has been finally decided
by the ITAT.
12. For the reasons stated above, we are of the view
that the issues which have been raised as substantial question
of law are really question of fact and there being no
Patna High Court MA No.639 of 2022 dt.20-04-2026
10/10
substantial question of law, the instant appeal is set aside.
(Bibek Chaudhuri, J)
(Chandra Shekhar Jha, J)
skm/-
AFR/NAFR N.A.F.R. CAV DATE 10.04.2026 Uploading Date 21.04.2026 Transmission Date N/A
[ad_1]
Source link
