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Facts
The assessee's assessment for AY 2013-14 was completed under Section 143(3), then revised by the PCIT under Section 263 for alleged lack of inquiry into unsecured loans, directing a fresh assessment. Subsequently, the Assessing Officer passed a fresh assessment order. The first appellate authority allowed the assessee's appeal, noting that the original Section 263 order had been quashed by the Tribunal.
Held
The Income Tax Appellate Tribunal affirmed that since the foundational revisional order passed under Section 263 was quashed by an earlier Tribunal order, the consequential assessment order, which derived its existence solely from the Section 263 order, could not independently survive. Thus, the Tribunal found no infirmity in the first appellate authority's decision to quash the assessment.
Key Issues
Validity of a consequential assessment order when the underlying revisional order under Section 263, which directed it, has been quashed by the Tribunal.
Sections Cited
143(3), 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI SAKTIJIT, VICE- & SHRI M. BALAGANESH
PER SAKTIJIT DEY, VICE-PRESIDENT
This is an appeal by the Revenue against order dated 10.01.2024 passed by National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2013-14.
2. When the matter was called out, none appeared on behalf of the assessee, despite notice. Therefore, we proceed to dispose of the appeal ex-parte qua the assessee, after considering the submission of learned Departmental Representative and perusing the materials on record.
Grounds raised by the Revenue are as under:
(i) Whether on facts and circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order u/s 263/143(3) of the Act without considering that the AO in his assessment order u/s 143(3) of the Act failed to make detailed verification and enquiry on the unsecured loan received during the year under consideration amounting to Rs.8,00,00,000/- (ii) The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of hearing.
We have heard learned Departmental Representative and perused the materials on record.
Briefly the facts are, the assessee is resident corporate entity. For the assessment year under dispute, the assessee filed its return of income on 25.09.2013 declaring loss of Rs.3,44,964/-. Assessment in case of the assessee was completed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) vide order dated 21.01.2016. Subsequently, while examining the assessment record, learned Principle Commissioner of Income Tax (PCIT) was of the view that in course of assessment proceedings, the Assessing Officer has not examined and inquired into unsecured loans received by the assessee. Thus, he held that the assessment order passed is erroneous and prejudicial to the interest of Revenue. After issuing a show-cause notice to the assessee and considering the submissions, learned PCIT, ultimately, held the assessment order to be erroneous and prejudicial to the interest of Revenue. Accordingly, he set aside the assessment order with a direction to pass a fresh assessment order, keeping in view the observations made in the revision order. Challenging the order passed under section 263 of the Act, the assessee preferred an appeal before Income Tax Appellate Tribunal (ITAT). During pendency of the appeal before the ITAT, the Assessing Officer completed fresh assessment in compliance with the directions of learned PCIT under section 263 of the Act.
Against the said assessment order, assessee preferred an appeal before the first appellate authority.
While deciding the appeal, learned first appellate authority was appraised of the fact that the order passed under section 263 of the Act, in the meanwhile, has been quashed by the Tribunal while deciding assessee’s appeal. Taking note of such fact, the first appellate authority held that the assessment order passed under section 143(3) read with section 263 of the Act does not survive. Accordingly, he allowed assessee’s appeal.
Having heard learned Departmental Representative, we find that the present proceeding arises out of the consequential assessment order passed by the Assessing Officer in pursuance to the order passed under section 263 of the Act by learned PCIT.
The fact that the order passed under section 263 of the Act has been quashed by the Tribunal vide order dated 12.10.2023 in assessee’s appeal, being remains uncontroverted. Thus, when the order passed under section 263 stands quashed, the assessment order passed in pursuance to such order cannot have any independent existence.
In view of the aforesaid, we do not find any infirmity in the decision of learned first appellate authority. Grounds are dismissed.
In the result, appeal is dismissed.
Order pronounced in the open court on 9th July, 2024