IND-SPHINX PRECISION LIMITED,HIMACHAL PRADESH vs. PCIT, CHANDIGARH

The Ld. AR advanced arguments and made out a case of doctrine of merger. The Ld. AR also stated that revision has been proposed for the same very reasons for which the case was reopened. The Ld. CIT-DR also advanced arguments and submitted that Ld. AO failed to make requisite enquiries. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Revisionary Proceedings before lower authorities 3.1 From the facts, it emerges that the assessee’s return of income was scrutinized u/s 143(3) on 29-12-2016 which attained finality by way of first appellate order dated 27-07-2017. Subsequently, the case was reopened on 27-03-2021 on the ground that the assessee had two units ‘A’ and ‘B’ for which the assessee submitted unit-wise consolidated financial statements. The foreign exchange expenses relating to Unit ‘A’ for Rs.3.95 Lacs was excluded to be added to the taxable income of the assessee. The assessee claimed deduction u/s 80IC against Unit ‘B’ for export benefits and non-operating income which could not be said to be derived from manufacturing activities. Accordingly, 30% of the same i.e., Rs.2.36 Lacs was required to be disallowed and to be added to the income of the assessee. The two items aggregated to Rs.6.32 Lacs. The Ld. AO proceeded to disallow the same during the course of reassessment proceedings but it finalized the assessment at Rs.317.15 Lacs which was nothing but the returned income of the assessee.

3.2 Subsequently, upon perusal of case records, Ld. Pr. CIT alleged that the assessee did not file any details / information with respect to income of Rs.6.32 Lacs and accordingly, proposed revision of the order. The assessee opposed the same on the ground that it had preferred further appeal against assessment so framed on 30-03-2022 which is pending for adjudication before first appellate authority. The issue as flagged in the show-cause notice was already been dealt with by Ld. AO in the assessment order dated 30-03-2022. However, invoking Explanation 2(a) to Sec.263(1), the assessment order was held to be erroneous and prejudicial to the interest of the revenue and Ld. AO was directed to revise the order accordingly. Aggrieved as aforesaid, the assessee is in further appeal before us. Our findings and Adjudication 4. From the facts, it clearly emerges that post-scrutiny of return of income u/s 143(3), the case of the assessee was reopened specifically to disallow the two items as flagged in the impugned revisionary order. The assessee has preferred further appeal against the same which is pending for adjudication before first appellate authority. In this appeal, the assessee has challenged the legality of reassessment proceedings as well as quantum additions on merits. In our considered opinion, once the flagged matter is already pending for adjudication in subsequent appeal, no revision thereof could be done u/s 263 since the powers of Ld. CIT(A) is co-extensive with that of Ld. AO including the power of enhancement. If any error has been committed by Ld. AO, the same can very well be addressed by Ld. CIT(A). The parallel proceedings could not be allowed to be continued on the same issue. Therefore, we have no hesitation to quash the impugned revision of the assessment order. We order so. The assessment order dated 30-03- 2022 stand restored back. The appeal stand allowed.

Order pronounced on 24-03-2025.