DEPUTY COMMISSIONER OF INCOME TAX, MUMBAI vs. THE N M PETIT CHARITY FUND, MUMBAI

The grounds of appeal raised by the Revenue are reproduced hereunder:-

"On the facts and circumstances of the case and in law, the Ld. CIT(A), NFAC erred in holding that the reassessment order passed u/s. 143(3) r.w.s. 263 r.w.s 1448 of the Income tax Act, 1961 dated 27.09.2021 became infructuous and unsustainable solely on the ground that the revisionary order u/s. 263 of the Act was quashed by the Hon'ble ITAT, and further erred in not adjudicating the issues on merits, including the substantive addition of Rs. 6,00,00,000/- made by the Assessing Officer on account of transfer of immovable property." 2. "On the facts and circumstances of the case and in law, the Ld. CIT(A), NFAC erred in treating the reassessment order as non est without appreciating that the Assessing Officer had conducted detailed enquiries and independently established that a transfer within the meaning of section 2(47) of the Act had taken place during the relevant previous year, and further erred in not examining whether the receipt of Rs. 6,00,00,000/- pursuant to consent terms and handing over of possession constituted transfer under section 2(47)(v) of the Act r.w.s 53A of the Transfer of Property Act, 1882." 3. "On the facts and circumstances of the case and in law, the Ld. CIT(A), NFAC erred in not appreciating that the department had not accepted the decision of the Hon'ble ITAT, Mumbai in ITA No. 1918/Mum/2020 dated 30.08.2021 quashing the revisionary order u/s. 263 of the Act and had preferred an appeal u/s. 260A before the Hon'ble High Court in ITXA (L) No. 31768 of 2022, which was erroneously withdrawn on account of low tax effect in view of CBDT Circular dated 17.09.2024 and steps are being taken for reviving the appeal of the Revenue in terms of para 2 of the Hon'ble High Court's order dated 11.10.2024 in ITXA (L) No. 31768 of 2022 (as the case falls under the exceptions provided in para 3. 1(1) of

Briefly stated, the facts borne out from the record are that the impugned assessment order had been passed by the Assessing Officer pursuant to and in consequence of the revisionary order passed under section 263 by the learned CIT(E), whereby the original assessment was set aside for fresh adjudication. However, the said revisionary order passed under section 263 itself came to be quashed by the Coordinate Bench of the Tribunal vide order dated 30/08/2021 passed in ITA No.1918/Mum/2020. Thus, the very foundation and jurisdictional basis upon which the consequential assessment order stood erected had already ceased to survive in the eyes of law.

It is an admitted and undisputed position before us that against the aforesaid order of the Tribunal quashing the revisionary proceedings under section 263, the Revenue had initially preferred appeal before the Hon’ble Jurisdictional High Court. However, the said appeal admittedly came to be withdrawn by the department itself on the ground of low tax effect. Thus, insofar as the order of the Tribunal quashing the proceedings under section 263 is concerned, the same had attained finality and there remained no subsisting challenge before any higher judicial forum. Once the very order passed

The learned CIT(A), while following the binding order of the Tribunal quashing the revisionary proceedings under section 263, has rightly held that the consequential assessment order could not survive independently. Before us also, no material has been brought on record by the Revenue to demonstrate as to how a consequential order passed purely in pursuance of a revisionary order under section 263 can continue to survive once the parent order itself no longer exists in law. Neither any statutory provision nor any binding judicial precedent of the Hon’ble Supreme Court or Hon’ble Jurisdictional High Court has been cited before us to support such a proposition.

The entire edifice of the grounds raised by the Revenue proceeds on wholly misconceived assumptions and is completely dehors settled legal principles. The plea raised in the grounds that steps are allegedly being taken for revival of appeal before the Hon’ble High Court does not improve the case of the Revenue in any manner whatsoever. As on date, admittedly there exists no pending challenge to the Tribunal’s order quashing proceedings under section 263, and therefore, the consequential proceedings automatically perish with the

We are constrained to observe that filing of such appeals reflects complete non-application of mind at various administrative levels where approval for further litigation has been granted mechanically without even examining whether any legally sustainable issue survives for adjudication. Judicial forums are already burdened with enormous pendency involving substantial and genuine disputes requiring adjudication, and therefore precious judicial time cannot be squandered on appeals which are ex facie infructuous and devoid of any legal substratum. Such wholly unnecessary litigation not only burdens the institutional functioning of the Tribunal but also compels the opposite party to unnecessarily incur time, effort and expenditure in defending proceedings which ought never to have been instituted in the first place. The conduct of the department in pursuing such frivolous and misconceived litigation deserves to be deprecated in strongest terms, particularly when the issue had already attained finality and no effective proceedings were pending against the order quashing the revisionary jurisdiction under section 263. Such an approach also runs contrary to the very spirit and policy

Accordingly, in view of the aforesaid facts and circumstances and in absence of any legally sustainable ground raised by the Revenue, we do not find any merit whatsoever in the present appeal and the same deserves to be dismissed in limine.

In the result, appeal of the Revenue stands dismissed. Order pronounced on 20th May, 2026.