RAJMOTI ROAD MOVERS,KODINAR vs. THE PRINCIPAL COMMISSIONER OF INCOME TAC, RAJKOT -1, RAJKOT, RAJKOT

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ITA 207/RJT/2024Status: DisposedITAT Rajkot21 October 2026AY 2016-173 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the appeal of the assessee is allowed. The reasoning was that it is an undisputed fact that the first order passed under section 263 of the Act dated 30.03.2021 had already been quashed by the Tribunal. Once the original revisionary order itself has been set aside, every consequential proceeding flowing therefrom automatically loses its legal foundation. The assessment order dated 28.03.2022 was merely a consequence of the first order under section 263 of the Act and could not survive independently after the parent order had been quashed. The Tribunal noted that the second 263 order passed by the Ld. PCIT was on a different issue, and not connected with the first 263 order, therefore, the second 263 order is unsustainable in the eye of law. The operative direction is that the appeal of the assessee is allowed.

What were the facts?

The assessee, Rajmoti Road Movers, is in appeal against an order passed by the Principal Commissioner of Income-tax (PCIT), Rajkot, under section 263 of the Income-tax Act, 1961. The assessment year in question is 2016-17. The original assessment for AY 2016-17 was completed under section 143(3) on 21.12.2018. The PCIT first invoked section 263, directing a fresh assessment, leading to an order under section 144 read with sections 263 and 144B on 28.03.2022. The assessee challenged this first section 263 order before the ITAT. While that challenge was pending, the PCIT issued a second section 263 order dated 29.03.2024, revising the consequential assessment order dated 28.03.2022. The ITAT had previously quashed the first section 263 order on 10.04.2024.

What were the issues?

1. Whether the second revisionary proceedings initiated by the PCIT under section 263 of the Income-tax Act, 1961, against the assessment order dated 28.03.2022 are legally sustainable, given that the foundational first section 263 order dated 30.03.2021, pursuant to which the assessment order was passed, has been quashed by the Tribunal. Assessee's contentions: The assessee argued that once the initial section 263 order, which formed the basis for the assessment order dated 28.03.2022, was quashed by the Tribunal, the consequential assessment order lost its independent existence. Therefore, any subsequent revisionary proceedings against this assessment order are unsustainable as their very foundation has been removed. Revenue's contentions: The Ld. DR supported the PCIT's order but could not controvert the factual position that the first section 263 order had already been quashed by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 263,Section 144,Section 144B,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri D. M. Rindani, Ld. AR
For Respondent: Shri Ravinder Sindhu, Ld. CIT(DR)
Hearing: 21/10/2026Pronounced: 21/10/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 207/RJT/2024 [ �नधा�रण वष�/Assessment Year: 2016-17 ] Rajmoti Road Movers The Principal Commissioner Of Ambuja Nagar, Kodinar Income Tax, Rajkot -1, Vs. Veraval Highway Kodinar Aayakar Bhawan Race Course Ring Gujarat- 362720 Road Rajkot-360001, Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAHFR2912D (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri D. M. Rindani, Ld. AR Respondent by : Shri Ravinder Sindhu, Ld. CIT(DR) Date of Hearing : 21/10/2026 Date of Pronouncement : 21/10/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: The present appeal has been filed by the assessee against the order passed by the Ld. Principal Commissioner of Income-tax (PCIT) Rajkot under section 263 of the Income-tax Act, 1961, dated 29.03.2024, whereby the Assessing Officer was directed to revise the assessment order passed under section 144 read with sections 263 and 144B of the Act dated 28.03.2022. 02. At the time of hearing, the Ld. AR submitted that the original assessment for Assessment Year 2016-17 was completed under section 143(3) of the Act on 21.12.2018. Subsequently, the Ld. PCIT invoked the revisionary jurisdiction under section 263 and passed an order dated 30.03.2021, directing the Assessing Officer

ITA No. 207/RJT/2024 Rajmoti Road Movers to frame a fresh assessment. In pursuant to the directions contained in the said order under section 263 of the Act the Assessing Officer passed a fresh assessment order on 28.03.2022 under section 144 read with sections 263 and 144B of the Act. It was further submitted that the assessee had challenged the first order passed under section 263 of the Act dated 30.03.2021 before the Tribunal. The Tribunal, vide its order dated 10.04.2024, set aside/quashed the said order under section 263 of the Act. However, before the Tribunal’s decision was rendered, the Ld. PCIT, Rajkot had once again invoked the provisions of section 263 of the Act and passed the impugned order dated 29.03.2024, revising the consequential assessment order dated 28.03.2022. 03. The Ld. AR contended that once the very foundation, namely the first order under section 263 of the Act dated 30.03.2021, stood quashed by the Tribunal, the consequential assessment order dated 28.03.2022, having been passed solely in pursuance of that revision order, ceased to have any independent existence. Consequently, the second revisionary proceedings initiated against the consequential assessment order also become unsustainable in law, as the very basis for such proceedings no longer survives. 04. On the other hand, the Ld. DR, though supporting the order of the Ld. PCIT, Rajkot could not controvert the factual position that the first order under section 263 dated 30.03.2021 had already been quashed by the Tribunal. 05. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the original assessment was completed under section 143(3) of the Act on 21.12.2018. The Ld. PCIT, Rajkot thereafter exercised revisionary jurisdiction under section 263 by order dated 30.03.2021, pursuant to which the Assessing Officer passed a fresh assessment order dated 28.03.2022 under section 144 read with sections 263 and 144B of the Act. It is equally undisputed fact

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ITA No. 207/RJT/2024 Rajmoti Road Movers that the Tribunal, vide its order dated 10.04.2024, has already quashed the first order passed under section 263 dated 30.03.2021. Once the original revisionary order itself has been set aside, every consequential proceeding flowing therefrom automatically loses its legal foundation. The assessment order dated 28.03.2022 was merely a consequence of the first order under section 263 of the Act and cannot survive independently after the parent order has been quashed. The second 263 order passed by the Ld.PCIT was on different issue, and not connected with first 263 order passed by Ld.PCIT, therefore, second 263 order is unstainable in the eye of law. To clarify these facts, this appeal is filed for hearing on 27.08.2026. Both the parties be informed.

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on this 21st day of October, 2026.

Sd/- Sd/- [ Dr. Arjun Lal Saini ] [ Shri Sonjoy Sarma ] लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member राजकोट/Rajkot िदनांक/ Date: 21/10/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order //True Copy// Sr. Private Secretary ITAT, Rajkot

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