ACIT 14(1)(1), MUMBAI vs. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED, MUMBAI

The present appeal has been preferred by the Revenue challenging the order dated 05/06/2025 passed by the learned Commissioner of Income Tax (Appeals) for the Assessment Year 2015–16, which in turn arises from the assessment framed under section 143(3) read with section 263 of the Income-tax Act, 1961. The impugned assessment order has been framed pursuant to the directions issued by the learned Principal Commissioner of Income Tax under Maharashtra State Electricity Distribution Company Limited section 263. The Revenue, being aggrieved by the relief granted by the ld. CIT(A), has assailed the said order before us.

At the outset of the hearing, the learned counsel for the assessee brought to our notice a material and determinative development that goes to the root of the survival of the present appeal. It was submitted that the very revision order under section 263 dated 30/03/2021, on the basis of which the subsequent assessment under section 143(3) r.w.s. 263 was framed, has already been quashed by the Tribunal vide its order dated 07/01/2025 in ITA No. 2277/Mum/2021. A certified copy of the said order was placed before us and the learned Departmental Representative also fairly admitted the factual position. Once the foundation of the assessment - namely the order passed under section 263 itself stands set aside by the Tribunal, the consequential assessment passed in pursuance thereto cannot be said to possess any independent legal existence. Any further appellate proceedings merely challenging the relief granted by the CIT(A), therefore, become rendered academic and devoid of legal substratum.

We also find that the ld. CIT(A), while adjudicating the first appeal, had recorded an identical conclusion and dismissed the Department’s challenge on the ground that the assessment order passed pursuant to the now-quashed revision order cannot survive in law. Thus, the ld.CIT(A)’s dismissal of the Revenue’s appeal does not suffer from any Maharashtra State Electricity Distribution Company Limited infirmity, inasmuch as the finding is a logical corollary of the Tribunal’s decision invalidating the section 263 action itself. When the very edifice of the assessment order has been demolished by judicial authority, nothing further remains for adjudication in the present proceedings.