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Facts
The assessee's case was reopened under Section 147 and an assessment was completed, which was later set aside by the PCIT under Section 263. A subsequent assessment under Section 147 read with Section 144B was also challenged.
Held
The Tribunal held that the reopening of the assessment under Section 147 was invalid and unsustainable due to the absence of suppression of material facts by the assessee. Consequently, the revisionary order passed under Section 263 was without jurisdiction and liable to be quashed.
Key Issues
Whether the reassessment proceedings initiated under Section 147 were valid, and if the subsequent revisionary order under Section 263 was legally tenable.
Sections Cited
250, 144, 147, 263, 144B, 143(3), 148, 142(1), 139
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Income Tax Appellate Tribunal, “D” BENCH MUMBAI
ACIT Vs. Railroad Logistics India Room No. 607, Aayakar Pvt Ltd Bhavan, MK Road, Mumbai C/o, Metal trim, Gala – 400020. No.1, Tankiwala Indl Estate, Steel Made Compound, marol, Maroshi Road, Mumbai PAN/GIR No. AACCR3484J (Applicant) (Respondent) Assessee by Shri Satish R. Mody, Adv. Revenue by Shri Annavaran Kasuri, Sr. AR Date of Hearing 12.08.2025 Date of Pronouncement 09.09.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 07.03.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre / CIT(A), Mumbai for the assessment year 2012- 13.
Both the grounds raised by the revenue are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in terming the order passed by AO as infructuous.
Therefore we have decided to adjudicate these grounds through the present consolidated order.
We have heard the counsels for both the parties, perused the material placed on record, judments cited before us and also the orders passed by the revenue authorities. From the records we noticed that, the case of the assessee was reopened and assessment was completed u/s 144 r.w.s 147 on 12.12.2019 determining the total income at Rs.5,04,23.261/-. The said assessment order was subsequently set aside by the PCIT-3, Mumbai vide order u/s 263 dated 09.03.2022. Accordingly, the assessment u/s 147 r.w.s 263 read with section 144B of the Income Tax Act, 1961 was completed on 25.03.2023 determining the total income at Rs. 9,72,32,058/- and disallowing business expenditure made in cash of Rs.5,85,10,996/-.
Consequently, aggrieved assessee preferred appeal and Ld. CIT(A) keeping in view, the order of the Coordinate Bench of ITAT in wherein the Bench had quashed the order passed by Ld. PCIT u/s 263 of the Act. Thus held the assessment order passed u/s 147 r.w.s 263 r.w.s 144B of the Act as ‘infructuous’. The operative portion of the order of the CIT(A) is contained in para 5 to 5.2 and the same is reproduced herein below:
5.1 ING Perusal of the case case records shows that the appellant had filed TAY DEPAR appeal before the Hon'ble ITAT against order u/s 263 passed by Ld. PCIT on 09.03.2022. The Hon'ble ITAT, vide order dated 13/01/2025 has quashed the order passed by the Ld. Pr. CIT u/s 263. The relevant extract of the order is reproduced as under:-
"10. We have heard the rival submissions and perused the materials available on record. Though the Id. AR has argued extensively on various grounds, we would proceed to decide the first issue which is whether or not the assessee is entitled to raise the grounds challenging the reassessment proceeding at the appellate stage in a revisionary proceeding. For this, the Id. AR has relied on the decision of the coordinate bench in the case of and relied on the decisions of the Tribunal in the case of Maruti Clean Coal and Power Limited Vs. The Pr. Commissioner of Income Tax - 1, Raipur (C.G.), order dated 31.10.2022. which on identical facts has held that the revisionary proceeding to be a collateral proceeding in which the assessee could challenge the validity of the reassessment order which is nothing but the very basis of the revisionary proceeding. The said decision has relied on the coordinate bench's decision in the case of West Life Development Ltd. Vs. Principle (Α.Υ. 2012-13) 5, Mumbai, ITA No. 688/M/2016 [2017] 88 taxmann.com 439, order dated 24.06.2016 which has held that the assessee can challenge the validity of the reassessment proceeding that the same is non-est in the eyes of law and that the subsequent revisionary order passed u/s. 263 of the Act would be liable to be quashed on the basis that if the assessment order passed u/s. 147 is itself held to be illegal and void then the Id. PCIT will have no jurisdiction to invoke the revisionary powers u/s. 263 of the Act. In the present case, the assessee has challenged the reassessment proceedings on the ground that the same is barred by limitation which is beyond 4 years from the end of relevant assessment year unless if any income chargeable to tax as escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment while filing the returns u/s. 139 or in response to notice u/s. 142(1) or Section 148 of the Act. Here in the present case, the assessee filed its return of income dated 29.09.2012 and was assessed u/s. 143(3) of the Act and subsequently the assessee's case was reopened vide notice u/s. 148 dated 27.03.2019 where the addition was made on the 20% of the total withdrawal of Rs. 5,85, 10,996/-.
It is evident that there has been no new tangible material available for the Id. AO for reopening assessee's case as even during the original assessment proceedings, the Id. AO was well within the knowledge of the financials of the assessee. It is not a case where the assessee has suppressed material facts or has not furnished the complete details during the original assessment proceeding. Therefore, in a unabated assessment or a concluded assessment, the Id. AO does not have locus standi to reopen the assessee's case after the expiry of 4 years unless it is proved that there was failure on the part of the assessee to file its return of income or to respond to notice u/s. 142(1) or 148 or to disclose fully and truly all material facts. The relevant extract of Section 147 is cited hereinunder for ease of reference:
"147. Income escaping assessment-If the Assessing Officer has reason to believe" that any income chargeable to tax has escaped assessment" for any assessment year, he may", subject to the provisions of sections 148 to 153, assess or reassess" such" income "and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings" under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) where an assessment under sub section (3) of Provided that Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year), unless any income chargeable to tax by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year."
From the assessment order, it is apparent that the assessee has made compliance to all the notices issued by the Id. AO during the assessment as well as to notice u/s. 148 during the reassessment proceedings. The Id. AR also relied on the decision of the Hon'ble Jurisdictional High Court in the case of Bombay Stock Exchange Ltd. Vs. Deputy Director of Income Tax, (Exemption)-1)(2), Mumbai, Writ Petition No. 2468 of 2011, order dated 12.06.2014, wherein it was held that in order to initiate reassessment proceeding, the Id. AO should specifically state in the reasons for reopening as to which fact or material was not disclosed by the assessee which was required for the assessment in order to protect assessee against arbitrary reopening of a concluded assessment. Going by the proposition laid down by the Hon'ble Jurisdictional High Court, we deem it fit to hold that, ex- facie, there is no suppression of relevant facts by the assessee in the present case which warrants the reassessment and therefore the reopening of assessment is invalid and unsustainable. As we have held the validity of reassessment proceeding to be non-est, the subsequent revisionary order passed u/s. 263 is without jurisdiction and is liable to be quashed and the arguments raised by the Id. AR on the other issues require no further adjudication. In the result, the appeal filed by the assessee is allowed. 5.2 Hence in view of the Order passed u/s 263 being quashed the impugned order u/s 147 r.w.s. 263 r.w.s. 144B which is the matter of the current appeal has become infructuous.
Considering the overall facts and circumstances of the present case and findings of the CIT(A), we are of the view that Ld. CIT(A) has rightly held the assessment order passed u/s 147 147 r.w.s 263 r.w.s 144B of the Act as infructuous, as the main order passed u/s 263 were quashed by the Hon’ble ITAT by passing a detailed and well reasoned order.
No new facts or circumstances have been brought before us during the course of arguments in order to controvert or rebut the findings so recorded by Ld.CIT(A). Therefore we have no reasons to deviate from the lawful findings so recorded by Ld. CIT(A). Hence, we uphold the decision of the Ld. CIT(A) and dismiss the grounds raised by the revenue.
In the result, the appeal filed by the revenue stands dismissed.
Order pronounced in the open court on 09.09.2025.