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Facts
The assessee's original assessment was reopened under Section 147, and reassessments were completed on 15.10.2018 and 15.03.2022. The Pr.CIT initiated revisional proceedings under Section 263 to revise the assessment dated 15.03.2022, alleging excessive deduction under Section 80IE and excess interest allowed under Section 244A, claiming the assessment was erroneous and prejudicial to the revenue.
Held
The Tribunal held that the revisional order under Section 263 was invalid because the issues raised by the Pr.CIT were not the subject matter of the reassessment proceedings that culminated on 15.03.2022. Furthermore, the time limit for revising the original assessment dated 15.10.2018 under Section 263 had already expired, making the Pr.CIT's action time-barred.
Key Issues
Whether the Pr.CIT validly exercised revisional jurisdiction under Section 263 when the grounds for revision were not part of the reassessment proceedings, and if the time limit for revising the earlier assessment had expired.
Sections Cited
263, 147, 143(3), 80IE, 244A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY
O R D E R
Per Rajesh Kumar, AM :
This is an appeal filed by the assessee against the order dated 30.03.2024, passed by the ld. Pr.CIT, Kolkata-2, u/s.263 of the Act for the assessment year 2015-2016 on the following grounds :-
1. On the facts and in circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in passing the order u/s 263 by invoking of Section 263 of the Act, although the assessment order passed u/s. 147 r.w.s. 143(3) of the I. T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue.
2. For that on the facts and in the circumstances of the case and in law, the reassessment order for A.Y. 2015-16 which is sought to be revised by the Ld. PCIT u/s 263 had neither considered the issue of eligibility for deduction u/s 801E of the 1.T. Act in the reassessment proceedings nor the reopening of the assessment made on that ground. Therefore, the issue does not arise out of the order passed u/s 147 of the 1.T. Act, 1961.
3. For that on the facts of the case and law, the issue of notice u/s 263 of the Act on the ground that the assessee company 2 was ineligible for deduction u/s 80IE of the Income-tax Act is bad in law because the eligibility for deduction is examined in the initial year of assessment and the impugned year is the sixth year of deduction since AY 2009-10.
4. For that on the facts and in the circumstances of the case and law, even otherwise, no order u/s 263(1) of the Act can be made after the expiry of 2 years from the end of the Financial Year in which the order sought to be revised was passed. In the instant case, the time limit for passing assessment order u/s 143(3) expired on 31.03.2018 and the limitation period for revising the same u/s 263(1) of the Act expired on 31.03.2020. Hence the proceedings initiated u/s 263 of the Act by the issue of impugned notice on 05.02.2024 is bad in law.
5. It is therefore prayed that above order passed by Pr.CIT u/s.263 may please be quashed or modified as your honours deem it proper.
The only issue raised in this appeal is against the invalid exercise of revisionary jurisdiction u/s.263 of the Act by Pr.CIT revising the assessment framed u/s.143(3)/147 of the Act dated 15.03.2022.
Facts in brief are that the assessee filed its return of income on 30.09.2015 declaring total income of Rs.11,07,86,018/-. Thereafter the case of the assessee was reopened u/s.147 of the Act and the assessment was completed vide order dated 15.10.2018 accepting the returned of income. Again the case of the assesee was reopened u/s.147 of the Act and reassessment was framed vide order dated 15.03.2022. Subsequently to that the ld PCIT observed from the assessment records that the assessee was wrongly allowed the deduction u/s.80IE of the Act of Rs.25,24,40,906/-. According to the ld. Pr.CIT the deduction u/s.80IE of the Act was available only in respect of the profits from business and not in respect of other incomes. According to the Pr.CIT Rs.3,75,99,739/- represented the income from other sources and therefore, allowance of 3 deduction u/s.80IE of the Act to the tune of Rs.3,75,99,739/- from income from other sources was wrong and thus resulted in an under-assessment of income of Rs.3,75,99,739/- with consequential undercharge of tax of Rs.1,27,80,151/-. The ld. Pr.CIT also noticed that while passing the order u/s.147/143(3) of the Act dated 15.10.2018, refund amounting to Rs.15,56,85,510/- was issued to the assessee on which interest u/s.244A of Rs.2,75,49,283/- was allowed. The case was again re-opened and the reassessment was completed u/s.147/143(3) of the Act dated 15.03.2022 raising the refund of Rs.2,30,64,512/- by calculating total refundable of Rs.17,87,50,022/- in which interest u/s.244A of the Act was allowed to the tune of Rs.5,06,13,799/-. It was also observed by the ld. Pr.CIT that the interest u/s.244A should be payable to the assessee upto the date of issue of refund i.e. 15.10.2018. Thus, the ld. Pr.CIT held that there is a mistake in calculating the excess payment of Rs.2,30,64,417/-, which rendered the the assessment framed as erroneous and prejudicial to the interest of revenue. Accordingly, the ld. Pr.CIT revised the assessment framed by the ld. AO u/s.147/143(3) of the Act by directing the AO to pass the fresh assessment order withdrawing the excess interest paid to the assessee by allowing excess amount besides withdrawing the excess deduction u/s 80IE.
Ld. AR vehemently submitted before us that the ld. Pr.CIT has revised the assessment order passed u/s.143(3)/147 of the Act dated 15.03.2022 on the above issue whereas as a matter of fact the reopening of the assessment order made on different issue and the issues which 4 were raised by the Pr.CIT in the revisional proceedings vide show cause notice issued u/s.263 of the Act did not find any place in the reasons recorded by the AO nor came to the notice of the AO during re- assessment proceedings. The ld AR argued that considering the conclusion drawn by the ld. Pr.CIT that the assessment framed u/s.147/143(3) of the Act was erroneous and prejudicial to the interest of revenue was patently wrong and against the law. The ld. Pr.CIT could have revised the original assessment framed u/s.143(3)/147 of the Act dated 15.10.2018, however, the time limit for issuing notice u/s.263 of the Act was already expired as contemplated by the provisions of sub-section 2 of Section 263 of the Act. Thus, the ld. counsel for the assessee submitted that the order passed by the ld. Pr.CIT is invalid and therefereo may be quashed.
Ld. counsel in pursuance to his argument relied on the decision of the Hon’ble Apex Court in the case of CIT Vs. Alagendran Finance Ltd., reported in [2007] 293 ITR 1 (SC) and the decision of Hon’ble Bombay High Court in the case of ICICI Bank Ltd., reported in [2012] 343 ITR 74 (Bom.). The ld. AR also relied on the decision of the coordinate bench of the Tribunal in the case of Mcleod Russel India Ltd., passed in order dated 12.09.2024, wherein a similar issue has been decided in favour of the assessee. Ld. AR, therefore, prayed that the revisionary jurisdiction exercised by the Pr.CIT may kindly be quashed.
5 7. On the other hand, ld. CIT-DR submitted that no prejudice is caused to the assessee by the revisional order as the sufficient opportunity would be granted in the set aside proceedings.
After hearing the rival contentions of the parties and perusing the relevant material on record, we find in this case that the reopening of assessment was made two times and accordingly reassessments were also framed u/s.147/143(3) of the Act two times i.e. dated 15.10.2018 and 15.03.2022. We note that in the show cause notice issued u/s.263 of the Act, the Pr.CIT proposed to revise the assessment dated 15.03.2022 on two grounds one on the basis of deduction u/s.80IA of the Act has been allowed excess to the tune of Rs.3,75,99,739/- and secondly the interest u/s.244A of the Act should have been allowed upto the date of issue of refund and, therefore, the excess interest was allowed to the tune of Rs.2,30,64,516/-. We find that the time period provided under sub- section 2 to Section 263 of the Act is two years from the end of financial year in which order sought to revised is passed and since the issues raised by the ld. Pr.CIT on which the revisonary order u/s.263 of the Act was passed were not the subject matter of reopening of the assessment which culminated u/s.143(3)/147 of the Act vide order dated 15.03.2022 nor such issues ever came to the notice of the AO during the reassessment proceedings. Therefore, the Pr.CIT has wrongly revised the order passed u/s.143(3)/147 of the Act dated 15.03.2022 as the said order is neither erroneous nor prejudicial to the interest of revenue. The ld. Pr.CIT could have at the most revised the original assessment framed 6 by the AO dated 15.10.2018, however, such action u/s.263 of the Act had become barred by limitation in accordance with provisions under sub- section 2 to Section 263 of the Act. Therefore, we are of the view that the revisionary proceedings has been exercised invalidly by the Pr.CIT and so is the order passed u/s.263(2) of the Act. Our view is also supported by the decision of the coordinate bench of the Tribunal in the case of Mcleod Russel India Ltd. (supra) wherein the decision of the Hon’ble Apex Court and Hon’ble Bombay High Court have been considered. Considering the facts and circumstances of the case and in the light of aforesaid decisions, we are inclined to quash the revisionary proceedings as well as the revisionary order passed u/s.263 of the Act.
So far as the withdrawal of interest which has been granted excess u/s.244A of the Act, the ld. counsel fairly conceded that the same could be withdrawn by way of rectification proceedings. In view of the above, appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 24/04/2025. (RAJESH KUMAR) (PRADIP KUMAR CHOUBEY) न्यानयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 24/04/2025 Prakash Kumar Mishra, Sr.P.S.