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Facts
The assessee's assessment order for AY 2014-15 was passed on 21.02.2017. The Pr. CIT initiated revisionary proceedings under Section 263, alleging the AO failed to refer international transactions to the TPO. The assessee challenged the Section 263 order, arguing that the original assessment order itself was invalid as it was passed beyond the limitation period prescribed under Section 153(1) of the Income Tax Act.
Held
The Tribunal found that the original assessment order for AY 2014-15, passed on 21.02.2017, was time-barred as the limitation period under Section 153(1) expired on 31.12.2016. Consequently, an invalid and time-barred assessment order cannot be subject to revisionary jurisdiction under Section 263, leading to the quashing of the Section 263 order.
Key Issues
Whether a revisionary order under Section 263 can be sustained if the underlying assessment order is time-barred by limitation under Section 153(1) of the Income Tax Act.
Sections Cited
263, 143(3), 144C(3)(a), 153(1), 143, 144, 92CA(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax (International Taxation & Transfer Pricing) Kolkata (Ld. CIT) dated 27.03.2019 for the AY 2014-15.
The assessee has challenged the revisionary order passed by ld. Pr. CIT on various grounds raised in the memorandum of appeal filed by the assessee. Besides, the assessee has also raised an additional ground vide letter dated 24.08.2021, challenging the validity of order passed u/s 263 of the Act on the ground of being invalid as it seeks to revise the assessment order dated 21.02.2017, passed u/s 143(3) read
with section 144C(3)(a) of the Act, which itself is barred by limitation. The ground raised by the assessee are extracted below:-
“1:0 Re.: Validity of Order u/s. 263: 1:1 The impugned Order dated 27 March 2019 passed by the Commissioner of Income- tax u/s. 263 of the Income-tax Act, 1961 ["the Act"] is bad in law since it seeks to revise the Order dated 21 February 2017 passed u/s. 143(3) r.w.s. 144C(3)(a) which Order being barred by limitation is therefore bad-in-law and void ab-initio. 1:2 The Appellant submits that considering the facts and circumstances of the case and the law prevailing on the subject, the Order dated 21 February 2017 passed by the Assessing Officer u/s. 143(3) r.พ.ร. 144C(3) (a) of the Act was barred by limitation and hence the same could not be revised u/s. 263 of the Act. 2:0 Re.: General: 2:1 The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal.”
03. The facts in brief are that the assessee filed the return of income on 28.11.2014, declaring total income at ₹18,92,40,510/-. The case was selected for scrutiny and assessment was accordingly framed u/s 143(3) of the Act vide order dated 21.02.2017, assessing the income at ₹22,29,26,790/-. The ld. Pr.CIT thereafter noted on the perusal of the assessment order that the ld. AO had not referred the issue to the Transfer Pricing Officer (TPO) for determining the Arms Length Price about the international transactions. The ld. Pr.CIT stated in the order that though the ld. AO had issued the letter to the assessee as to why the matter should not be referred to ld. Transfer Pricing Officer for benchmarking the international transactions which was also replied by the ld. Assessing Officer. AO however thereafter had not mentioned as to why the issue was not referred to the ld. Transfer Pricing Officer. Accordingly, the assessee was issued show cause notice u/s 263 of the Act qua the assessment order passed u/s 143(3) dated 21.02.2017
6. After hearing the rival contentions and perusing the materials available on record, we are of the view that the assessee has raised this legal issue before us that the assessment order passed u/s 143(3) dated 21.02.2017, was itself barred by limitation in terms of provisions of Section 153(1) of the Act and was invalid and nullity and therefore, the revisionary jurisdiction u/s 263 of the Act by the ld. Pr. CIT is also invalid on the ground that the assessment which was sought to be revised is itself barred by limitation. We have perused the provisions of Section 153(1) of the Act which provides that no assessment shall be framed u/s 143(3) or 144 of the Act, after expiry of 21 months from the end of the relevant assessment year in which the income was first assessable. Accordingly, we note that the assessment got time barred on 31.12.2016, whereas the order of assessment was passed on 21.02.2017. In our opinion the assessment is hopelessly barred by limitation. Now the issue before us whether the ld. Pr. CIT has a power to revise the same on the ground of being erroneous and prejudicial to the interest of the Revenue. In our opinion, the assessee has raised this issue in the collateral proceeding before us challenging the validity order framed, passed u/s 143(3) of the Act which is in our opinion is within the legitimate rights of the assessee. Considering the facts of the case in the light of the aforesaid decision, we are of the view that the
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 06.05.2025.