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Facts
The assessee, Reliance Projects, acquired M/s Reliance Infratel Ltd (RITL). The PCIT initiated revisional proceedings under Section 263 for AY 2018-19 and 2019-20, alleging that the assessment orders were erroneous and prejudicial due to excess depreciation claims. However, the assessee had challenged the validity of the original assessment orders before the Bombay High Court, arguing that under an NCLT-approved resolution plan, demands for periods prior to the effective date were extinguished.
Held
The Bombay High Court quashed the original assessment orders for AY 2018-19 and 2019-20 because they were passed after the NCLT resolution plan approval and related to periods prior to its effective date. Since the underlying assessment orders, which were the subject of revision, no longer survived, the Tribunal held that the PCIT's revisional orders under Section 263 also became a nullity and were accordingly quashed.
Key Issues
Whether an order passed under Section 263 of the Income Tax Act can be sustained if the original assessment order it sought to revise has been quashed by a High Court due to a resolution plan under the Insolvency and Bankruptcy Code.
Sections Cited
263, 143(3), 69, 115BBE
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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Ms. Suchitra Kamble & Shri Narendra Prasad Sinha
आदेश/ORDER PER : NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER
These two appeals are filed by the assessee against the separate orders of Principal Commissioner of Income tax, Ahmedabad-3, (hereinafter referred as “PCIT”) dated 28/03/2024 and dated 29/03/2024 for the Assessment Years (A.Y.) 2018-19 & 2019-20 respectively passed under his revisional jurisdiction u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
-16/Ahd/2024 A.Y. 2018-19 & 2019-20 Reliance projects & Property Management Services Ltd vs. ACIT 2. As the facts involved in the two appeals were identical, both the matters were heard together and are being disposed of vide this common order for the sake of convenience. We will first take the appeal in for the AY 2019-20.
The brief facts of the case are that the assessee M/s Reliance Infratel Ltd. (since acquired by the assessee) had filed its return of income for A.Y. 2019-20 on 31.10.2019 at loss of Rs.900,42,58,732/-. The case was selected for scrutiny and the assessment was completed under section 143(3) of the Act on 28.09.2021 determining loss of Rs.898,81,38,088/- under normal provisions and positive income of Rs.6,44,82,576/- under section 69 r.w.s. 115BBE of the Act. Subsequently the case record was called and examined by the Ld. PCIT. She found that in the course of assessment depreciation was allowed on certain passive infrastructure assets received by the assessee under the scheme of arrangement with RCOM and RTL vide Bombay High Court order dated 16.03.2007 effective from 10.04.2007. However, the depreciation was allowed on these assets at their fair value appearing in the books of accounts and not at the written down value (WDV) of the transferred assets of the transferor company immediately before the demerger. An addition of Rs.86.90 crores was made on account excess depreciation in the A.Y. 2017-18. However, no such addition was made in the year under consideration. Therefore, the Ld. PCIT held that the order of the AO was erroneous and prejudicial to the interest of revenue and accordingly she had set aside the assessment order with a direction to reframe the assessment after making disallowance of excess depreciation claimed by the assessee. Aggrieved with the order of the Ld. PCIT, the assessee is an appeal before us.
-16/Ahd/2024 A.Y. 2018-19 & 2019-20 Reliance projects & Property Management Services Ltd vs. ACIT 4. Shri Nimesh Vora, the ld. counsel for the assessee submitted, at the outset, that the present appeal was preferred by the assessee against order u/s 263 of the in the Act passed in case of erstwhile entity viz. M/s Reliance Infratel Ltd. (RITL), revising the assessment order dated 28/09/2021 passed u/s 143(3) of the Act. He explained that RITL was acquired by the assessee vide order of the NCLT, Mumbai Bench dated 3rd December 2020 and the resolution plan was implemented from effective date of 22.12.2020. The financial year corresponding to the assessment year in the present appeal, pertained to a period prior to the effective date but the assessment order was passed subsequent to the order of the NCLT. Therefore, the assessee had challenged the validity of the assessment order before the Hon’ble Bombay High Court in a Writ Petition. The Ld. AR submitted the Hon’ble Bombay High Court vide order dated 14th October 2025 had allowed the assessee’s writ petition and quashed the assessment order. According to Ld. AR, since the assessment order now stands quashed, the impugned order passed u/s 263 of the Act, revising the assessment order, results in nullity. He, therefore, requested to quash the order passed u/s 263 of the Act by the Ld. PCIT.
Per Contra Shri Praveen Verma, Ld. CIT. DR supported the order of the Ld. PCIT. On the additional material brought on record in the form of order of the Hon’ble Mumbai High Court, he submitted that the decision may be taken as per law.
We have carefully considered the submissions of the assessee. The assessee had challenged the validity of the assessment order dated 28th September 2021 passed u/s 143(3) of the Act for the AY 2019-20 in a writ petition filed before the Hon’ble Bombay High Court on the ground the assessment order was contrary to the law and the provisions Insolvency and Bankruptcy Code, 2016. It was contended before the Hon’ble Court that as per resolution plan approved by 3 -16/Ahd/2024 A.Y. 2018-19 & 2019-20 Reliance projects & Property Management Services Ltd vs. ACIT NCLT vide order 3rd December 2020, the amount payable to the Respondents (Income Tax Department) for a period prior to the effective date was treated as Nil. The plea of the assessee was that the assessment order for AY 2019-20 was for a period prior to effective date which was 22nd December 2020. The assessee had contended before the Hon’ble Court that in view the resolution plan approved by NCLT, the assessment order for AY 2019-20 should be quashed as all the demand prior to the effective date stood extinguished. The Hon’ble Bombay High Court vide order dated 14th October 2025, a copy of which has been brought on record, has accordingly quashed the assessment order dated 28th September 2021 by observing that: the assessment order was passed on 28th September 2021, after approval of (i) Resolution Plan by the NCLT on 3rd December 2020; and (ii) the concerned financial year was falling in period prior to the effective date of resolution plan i.e. 22nd December 2020.
Since the assessment order dated 28th September, 2021 for AY 2019-20 7. stands quashed by the Hon’ble Bombay High Court, the order of the Ld. PCIT passed u/s 263 of the Act, reviving the assessment order, does not survive. We, therefore, quash the order u/s 263 of the Act dated 29.03.2024 passed by the Ld. PCIT.
In the result, the appeal of the assessee is allowed.
The facts involved in the present appeal for AY 2018-19 are identical to ITA No. 1116/Ahd/2024. The assessment order dated 22nd April 2021, passed u/s 143(3) of the Act for AY 2018-19 stands quashed by the order dated 6th October 2025, of Hon’ble Bombay High Court. As a result, the order of the Ld. 4 -16/Ahd/2024 A.Y. 2018-19 & 2019-20 Reliance projects & Property Management Services Ltd vs. ACIT PCIT passed u/s 263 of the Act dated 28.03.2024 for AY 2018-19 is also quashed and the appeal of the assessee is allowed.
In the final result, both the appeals of the assessee are allowed.