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Facts
The assessee filed its return for AY 2018-19, and the original assessment under Section 143(3) was completed. Following a search operation under Section 132, the Assessing Officer reopened the case under Section 147, making additions for bogus purchases under Section 69C and delayed PF/ESI payments. Subsequently, the PCIT invoked Section 263 to set aside this reassessment order, directing a reframing of the assessment.
Held
The Tribunal found that the reassessment order, which formed the basis for the PCIT's revisionary proceedings under Section 263, had already been quashed by the Tribunal prior to the PCIT passing its order. It ruled that revisional jurisdiction under Section 263 cannot be exercised over a non-existent or quashed order, thereby rendering the PCIT's revisionary order without jurisdiction and unsustainable. Consequently, the Tribunal quashed the PCIT's order dated 29.03.2025.
Key Issues
Whether revisional jurisdiction under Section 263 of the Income Tax Act can be exercised by the PCIT when the underlying reassessment order, which was the subject of revision, has already been quashed by the Income Tax Appellate Tribunal.
Sections Cited
263, 143(3), 132, 147, 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
Assessment Year: 2018-19 M/s Diach Chemicals & Pigments Pvt. Ltd.………....Appellant NH-6, Jaladhulagori Dhulaghar Industrial Park, Howrah-711302. [PAN: AACCD1101A] vs. PCIT, Central-2, Kolkata…..……………..………………….…..... Respondent Appearances by: Shri Sunil Surana, FCA appeared on behalf of the appellant. Shri Raja Sengupta, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 22, 2025 Date of pronouncing the order : July 25, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal by the assessee is directed against the order dated 29.03.2025 Passed by the Ld. Principal Commissioner of Income Tax (PCIT), Kolkata, under Section 263 of the Income Tax Act, 1961 for the assessment year 2018-19.
Brief Facts of the Case the assessee fled its return of income for the assessment year 2018-19 declaring total income of Rs.3,24,05,910/-. The case was selected for scrutiny and assessment was completed under section 143(3) of the Act on 23.04.2021 determining assessed income at Rs.4,75,81,150/-. Subsequently, pursuant to a search and seizure operation under section 132 of the Act in the case of the Diach Group conducted on 07.12 2021 and subsequent dates, the Assessing Officer reopened the case under section 147 and passed a reassessment order dated 28.03 2023. In the reassessment order, the AO made an addition of Rs.96,84,5467/- on account of bogus purchases under M/s Diach Chemicals & Pigments Pvt. Ltd section 69C and Rs.7,34,624/- on account of delayed payment of PF/ESI, thereby determining total income at Rs.1451,61,241/- .
Later, the Ld. PCIT invoked jurisdiction under section 263 of the Act and passed a revisionary order dated 29.03.2025 setting aside the reassessment order dated 28.03.2023 with a direction to reframe the assessment.
Aggrieved by the above order assessee is appeal before this tribunal at the time of hearing the Ld. Counsel for the assessee submitted that the reassessment order dated 28.03.2023, which is the very basis for the revision proceedings under section 263, had already been quashed by this Tribunal vide order dated 20.12 2024 in ITA No. 1642/Kol/2024. It was contended that since the reassessment order no longer survives, the exercise of revisionary jurisdiction by the ld. PCIT over a non-existent order is void ab initio and not sustainable in law. The assessee also submitted that specific objections regarding the maintainability of the revision proceedings were raised before the Ld. PCIT during the proceedings, but the same were not considered.
The Ld. Departmental Representative supported the order passed by the Ld. PCIT. However, he fairly admitted that the reassessment order dated 28.03.2023, which was the subject matter of revision, had already been quashed by this Tribunal prior to the passing of the revisionary order.
We have heard the rival submissions and perused the materials available on record. It is an admitted position that the reassessment order dated 28.03.2023 passed under section 147 of the Act was quashed by this Tribunal vide order dated 20.12.2024 in 2024. Thus, as on the date of passing the revisionary order under section 263, i.e., 29.03.2025, there was no subsisting assessment order which could be revised. It is a settled principle of law M/s Diach Chemicals & Pigments Pvt. Ltd that no revisionary jurisdiction can be exercised under section 263 over a non-existent or quashed order. Once the foundation of the revision proceeding (i.e., the reassessment order) is removed, the superstructure built upon it (i.e., the 263 order) must fall. Therefore, the revision order dated 29.03.2025 passed by the Ld. PCIT is rendered infructuous and unsustainable in law. In view of the above discussion and settled legal position, we hold that the revision proceedings initiated and the order passed under section 263 of the Act are without jurisdiction and bad in law. Accordingly, we quash the order dated 29.03.2025 passed under section 263 of the Act.
In the result, the appeal of the assessee is allowed. Kolkata, the 25th July, 2025.