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Facts
The assessee filed a return declaring a loss. The AO made additions under Section 143(3). The CIT(A) allowed relief. The PCIT set aside the assessment order under Section 263, directing a fresh assessment. The AO made further additions, which the CIT(A) deleted. The Revenue appealed this deletion.
Held
The ITAT noted that the order under Section 263, which was the basis for the subsequent assessment order that the CIT(A) had deleted, had itself been quashed by the ITAT in a prior order. Consequently, the assessment order derived from the quashed Section 263 order became infructuous.
Key Issues
Whether the ITAT's previous order quashing the Section 263 order renders the subsequent assessment order infructuous, leading to the dismissal of the Revenue's appeal against the deletion of additions in that assessment.
Sections Cited
143(3), 263, 43B, 69C
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Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI YOGESH KUMAR US, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the Revenue is preferred against the order of the ld. CIT(A)-27, Delhi dated 27.01.2025 pertaining to A.Y 2016-17. 2. The grievances of the Revenue read as under:
“1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in allowing relief to the assessee without deciding the case on merits? 2. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in allowing relief to the assessee on order u/s 143(3) r.w.s. 263 of the Act by relying on the decision of Hon'ble ITAT, giving relief to the assessee against order u/s 263 of the Act passed in case of the assessee, without appreciating that the department is processing the filing appeal against the 263 order and if decision of the said appeal comes in favour of revenue then the revenue will be left with no remedy to pass a fresh order in pursuance to upheld order u/s 263 of the Act?
The Revenue has filed an application for condonation of delay on the ground that the authorization to file appeal before the ITAT was received late. Having perused the application for condonation of delay, we find that there is sufficient cause for filing the appeal belatedly by 35 days. We, therefore, condone the delay.
Briefly stated, the facts of the case are that the assessee is a limited company which filed its return of Income for A.Y 2016-17 on 29.09.2016 declaring loss of Rs 32,48,76,393. The assessee’s case was selected for scrutiny and an order under section 143(3) of the Act was passed wherein addition amounting to Rs 19,07,225/- was made and Page 2 of 5
Aggrieved, the assessee went in appeal before the ld. CIT(A) who, allowed relief to the assessee computing the assessed income as loss of Rs 32,47,83,990/-.
Subsequently the PCIT set aside the said assessment order u/s 263 of the Act and directed the AO to pass a fresh order of assessment. The Assessing Officer passed the impugned order making additions amounting to Rs 6,48,41,747/- and raising the demand of Rs 13,07,31,628/-.
The additions made by the assessee pertains to the following:
a) Disallowance of Rs 5,30,00,000/- on account of suppression of sales of liquor; b) Disallowance of deduction under section 43B of the Act amounting to Rs 99,72,168/-; c) Disallowance under section 69C of the Act on account of unexplained expenditure amounting to Rs 18,69,579/-; d) Added short term capital gain of Rs 54,93,70,062/- .
In appeal, the CIT(A) deleted the said additions. Being aggrieved the Revenue has preferred this appeal before us.
Before us, both the rival representatives reiterated what has been stated before the lower authorities.
Page 3 of 5 [A.Y 2016-17] Dy CIT Vs. Asian Hotels 11. At the very outset, we find from the order of the CIT(A) that the order u/s 263 of the Income-tax Act, 1961 [the Act, for short] has been quashed by the ITAT vide its order dated 26.11.2024. Therefore, the order made u/s 143 r.w.s 263 in pursuance of the said order u/s 263 of the Act becomes infructuous and no longer survives. Accordingly, the grounds of appeal raised by the Revenue stand dismissed.
The order is pronounced in the open court on 16.01.2026.