INCOME TAX OFFICER, WARD-2(1), GUNTUR vs. VEERA REDDY GOGULA, MANGALAGIRI

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ITA 680/VIZ/2025Status: DisposedITAT Visakhapatnam10 July 2026AY 2016-176 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the revisionary order under Section 263, which formed the basis for the reassessment, was quashed by the ITAT, the reassessment order could not survive independently. Therefore, the CIT(A)'s decision to annul the assessment was upheld.

What were the facts?

The Assessing Officer initiated reassessment proceedings under Section 147 based on a Joint Development Agreement. The Principal Commissioner revised the assessment order under Section 263. The ITAT had previously set aside the Section 263 order, but the Revenue appealed this to the High Court. The CIT(A) annulled the reassessment order, relying on the ITAT's decision.

What were the issues?

Whether a reassessment order based on a revisionary order that has been set aside by the ITAT can be sustained when the Revenue's appeal against the ITAT's order is pending before the High Court.

Which sections of the Income-tax Act were involved?

Section 147,Section 263,Section 144B,Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH,

Before: SHRI RAVISH SOOD, HON’BLE & SHRI OMKARESHWAR CHIDARA, HON’BLE

For Appellant: Shri C Subrahmanyam, CA
For Respondent: Shri Nilanjan Dey, CIT(DR)

Heard together (2 matters)

ITA 680/VIZ/2025
CO. No.49/Viz/2025

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / ORDER

PER RAVISH SOOD, JM:

The captioned appeal filed by the Revenue is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 08/09/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 144 r.w.s 263 r.w.s. 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 12/03/2025 for the Assessment Year (AY) 2016-17. The Revenue has assailed the impugned order of the CIT(A) on the following grounds of appeal: “1. Order of the Ld. Commissioner of Income Tax(Appeals), NFAC is erroneous on facts and law. 2. On the facts and in the circumstances of the case, whether the CIT(A) failed to appreciate that although the Hon'ble ITAT had earlier set aside the revision order passed u/s 263, the department has filed an appeal before the Hon'ble High Court against the said ITAT order within the prescribed limitation period and is presently pending for disposal before the Hon'ble High Court. Hence, the revision order u/s 263 cannot be treated as having attained finality at this stage. 3. On the facts and in the circumstances of the case, whether The CIT(A) erred in annulling the reassessment made u/s 147 r.w.s. 263 solely on the basis of the ITAT's order, without considering that the department's appeal against that ITAT order is sub judice before the Hon'ble High Court. Therefore, to keep the matter alive and to safeguard the legitimate interests of the Revenue pending final adjudication by the Hon'ble High Court, the Department is constrained to prefer this appeal before the Hon'ble ITAT against the CIT(A)'s order. 4. Any other ground that may be urged at the time of hearing.” Also, the assessee is before us as a cross objector on the following grounds: 1. “That, on the facts and in law, the Ld.CIT(A) rightly held, vide order dt 08.09.2025 passed under section 250, that the reassessment order dt 12.03.2025 passed under section 147 r.w.s. 263 and 144B is infructuous, void ab initio, and liable to be dismissed in limine, and accordingly dismissed the same. 2. That the learned Assessing Officer erred in questioning the said order of the Ld.CIT(A), ignoring the fact that the very revisionary order passed under section 263, which formed the basis for the reassessment, has been held to be invalid and not maintainable in law by the Hon'ble ITAT.

3.

That the Hon'ble ITAT, vide order dt 13.05.2025 in ITA No. 216/Viz/2024, having quashed the order under section 263, the consequential reassessment proceedings under section 147, being founded on a non-est order, cannot survive and are liable to be quashed.” 2. Succinctly stated, the AO based on information that the assessee had during the subject year entered into a Joint Development Agreement (JDA) with M/s. Aparna Constructions and Estates Pvt. Ltd. (ACEPL), but not filed his return of income for the year under consideration, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act, dated 22/03/2021, was issued and duly served upon the assessee. In response, the assessee filed his return of income on 25/08/2021, declaring an income of Rs. NIL. Thereafter, the AO vide his order passed under section 147 r.w.s. 144B of the Act, dated 29/03/2022, assessed the returned income as such. Thereafter, the Principal Commissioner of Income Tax (for short, “Ld. PCIT”) vide his order under section 263 of the Act, dated 31/03/2024 set aside the assessment order with a direction to the AO to re-do the assessment in accordance with law in respect of thespecific issues culled out by him in his order.

3.

Aggrieved, the assessee assailed the order passed by the Ld. PCIT under section 263 of the Act, dated 31/03/2024 before the Tribunal, which vide its order passed in ITA No. 216/Viz/2024, dated 13/05/2025 held the order passed by the PCIT as unsustainable in law and set aside the same.

4.

In the meantime, the AO vide his order passed under section 147 r.w.s. 263 r.w.s 144B of the Act, dated 12/03/2025 gave effect to the directions of the Ld. PCIT and determined the income of the assessee at Rs.19,72,32,379/-.

5.

The assessee, aggrieved with the order passed by the AO under section 147 r.w.s. 263 r.w.s 144B of the Act, dated 12/03/2025, carried the matter in appeal before the CIT(A), NFAC, who, vide his order dated 08/09/2025, taking cognizance of the fact that the order passed by the Ld. PCIT under section 263 of the Act, dated 31/03/2024, has been quashed by the Tribunal vide its order dated 13/05/2025 in ITA No.216/Viz/2024, annulled the assessment and allowed the appeal.

6.

The Revenue, aggrieved with the order passed by the CIT(A), has carried the matter in appeal before us. Also, the assessee is before us as a cross objector, supporting the order passed by the CIT(A).

7.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record.

8.

Shri Nilanjan Dey, Learned CIT-DR, at the threshold of hearing of the appeal, took us through the grounds of appeal raised by the Revenue. It was submitted that the Revenue has assailed the order passed by the Ld. PCIT under section 263 of the Act, dated 31/03/2024, before the Hon’ble High Court, which, as on date, is pending disposal and has not attained finality. Elaborating on his contention, the Ld. CIT-DR submitted that, considering that the order passed by the Tribunal has been assailed before the Hon’ble High Court and is pending adjudication as on date, the CIT(A) erred in relying upon the same and quashing the assessment order passed by the AO under section 147 r.w.s. 263 r.w.s. 144B of the Act, dated 12/03/2025.

9.

We have given thoughtful consideration and are unable to persuade ourselves to concur with the Ld. CIT-DR’s contention. In our view, as the order passed by the Ld. PCIT under section 263 of the Act, dated 31/03/2024 had been quashed by the Tribunal vide its order passed in ITA No.216/Viz/2024, dated 13/05/2025, therefore, as held by the CIT(A) and rightly so, now when the very foundation for framing of the impugned assessment by the AO under section 147 r.w.s. 263 r.w.s. 144B of the Act, dated 12/03/2025 did no more survive, the said impugned order of assessment has to meet the same fate and could not exist on a standalone basis.

10.

We thus, in terms of our aforesaid deliberations, finding no infirmity in the view taken by the CIT(A), who had rightly annulled the assessment framed by the AO under section 147 r.w.s. 263 r.w.s. 144B of the Act, dated 12/03/2025, uphold the same.

11.

In the result, appeal filed by the Revenue in ITA No. 680/Viz/2025 is dismissed while for the Cross Objection No.49/Viz/2025 filed by the assessee is allowed.

Order pronounced in the open court on 10th July, 2026. Sd/- Sd/- OMKARESHWAR CHIDARA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad. Dated: 10th July, 2026. OKK/SPS *Copy to: INCOME TAX OFFICER, WARD-2(1), WARD2(1), STANDARD HOUSE, 1 THIRD FLOOR, NAGARAMPALEM, GUNTUR-522004, ANDHRA PRADESH VEERA REDDY GOGULA, H NO 4-69, NEAR ADITYA SCHOOL, 2 MANGALAGIRI, GUNTUR-522303, ANDHRA PRADESH 3 THE PCIT, GUNTUR. (II) THE PCIT, VISAKHAPATNAM. 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE

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