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Facts
The Revenue filed an appeal against an order of the CIT(A) which allowed the assessee's appeal. The CIT(A) had allowed the assessee's appeal because a prior revision order under Section 263 of the Income-tax Act, 1961, which led to a fresh assessment order, was quashed by the ITAT.
Held
The Tribunal held that since the revision order under Section 263 was quashed by the ITAT, there was no basis for the additions made in the consequential assessment order. Therefore, the CIT(A) rightly allowed the assessee's appeal.
Key Issues
Whether the consequential assessment order and the CIT(A)'s order survive when the underlying revision order under Section 263 has been quashed by the ITAT.
Sections Cited
250, 143(3), 263, 144B, 68, 41(1)
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Before: SHRI PAWAN SINGH & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the Revenue emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 22.10.2024 by the CIT(Appeals)/National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] for the assessment year (AY) 2017-18, which in turn arises out of assessment order passed by Assessing Officer (in short ‘AO’) u/s 143(3) r.w.s. 263 r.w.s 144B of the Act dated 27.03.2024.
At the outset, the Ld. AR of the assessee submitted that the AO had passed assessment order u/s 144 of the Act for AY 2017-18 on 23.12.2019 determining total income at Rs.4,71,75,090/- as against returned income of 7 Star Dreams Rs.23,07,670/-. Subsequently, the Ld.PCIT invoked jurisdiction u/s 263 of the Act and passed order on 17.03.2022 setting aside the assessment order of AO with a direction to pass fresh assessment order on the issue of unexplained creditors of Rs.4,52,05,666/-. The AO, thereafter, passed order u/s 143(3) r.w.s. 263 r.w.s. 144B of the Act on 27.03.2023 by making additions of Rs.3,15,14,374/- and Rs.5,47,831/- on account of unexplained cash credit u/s 68 and u/s 41(1) of the Act being difference in the confirmation of parties and amount in the books of account of assessee respectively. The total income was determined at Rs.7,92,37,290/- as against the total income of Rs.4,71,75,090/- u/s 144 of the Act. Aggrieved by the order of AO assessee filed appeal before CIT(A) who allowed the appeal because the order u/s 263 dated 17.03.2022 was quashed by the ITAT in dated 30.03.2023. The Ld. AR submitted that the since the order of Ld.PCIT u/s 263 has been quashed by the Tribunal, the consequential orders passed by the AO and CIT(A) do not survive.
On the other hand, Ld.CIT-DR for the Revenue supported the order of lower authorities.
We have heard rival submissions of both the parties and perused the orders of the lower authorities. The original order passed by the AO dated u/s 144 dated 23.12.2019 was set aside by the Ld.PCIT u/s 263 of the Act dated 17.03.2022. The AO passed consequential order u/s 143(3) r.w.s. 263 r.w.s. 144B of the Act on 27.03.2023 by making additions of Rs.5,47,831/- and Rs.3,15,14,374/-. Against the order of AO, assessee filed appeal before CIT(A). .17-18 7 Star Dreams The appellant also filed appeal against order of Ld.PCIT u/s 263 of the Act. The ITAT in its order dated 30.03.2023 quashed the order of Ld.PCIT. Relying on the above order of ITAT, the CIT(A) has allowed appeal of assessee because order u/s 263 was quashed by the Tribunal. We do not find any infirmity in the order of CIT(A) because there was no basis at all to make the addition in the consequential assessment order u/s 143(3) r.w.s. 263 r.w.s. 144B of the Act once the revision order u/s 263 of the Act itself has been quashed by the Tribunal. Therefore, the CIT(A) has rightly allowed the appeal of assessee. This ground of Revenue’s appeal is dismissed.