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Facts
The assessee's appeal against a reassessment order under section 143(3)/147 for AY 2013-14 was dismissed by the CIT(A) as infructuous. This dismissal was based on a revisional order passed by the PCIT under section 263, which the CIT(A) believed superseded the reassessment order. However, the ITAT had previously quashed the PCIT's revisional order on the ground that the issue was already sub judice before the CIT(A).
Held
The ITAT held that the CIT(A) erred in dismissing the appeal as infructuous, as the revisional order on which the dismissal was based had already been quashed by the ITAT. Consequently, the CIT(A) was obligated to adjudicate the appeal on its merits. The ITAT set aside the CIT(A)'s order and restored the matter for fresh adjudication.
Key Issues
Whether the CIT(A) can dismiss an appeal as infructuous based on a revisional order under section 263 when that revisional order has been quashed by the ITAT. Whether the PCIT had valid jurisdiction to invoke section 263 when the matter was already pending before the CIT(A).
Sections Cited
Section 143(3), Section 147, Section 148, Section 263, Section 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER (Assessment Year : 2013-14) H. B. Exports Vs. ACIT BN-96, West Shalimar Bagh, Circle – 34(1) New Delhi-110 008 New Delhi PAN No. AAAFH 4938 A (APPELLANT) (RESPONDENT) Assessee by Shri Salil Aggarwal, Sr. Adv., Shri Madhur Aggarwal, Adv. And Shri Mahir Aggarwal, Adv. Revenue by Shri Vivek Kumar Upadhyay, Sr. D.R. Date of hearing: 17.01.2024 Date of Pronouncement: 17.01.2024 ORDER PER PRADIP KUMAR KEDIA, AM :
The captioned appeal has been filed by the assessee against the first appellate order of the Ld. Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), Delhi dated 02.08.2023 arising from the assessment order dated 18.12.2018 passed by the Assessing Officer (AO) under Section 143(3)/147 of the Income Tax Act, 1961 (the Act) concerning Assessment Year 2013-14.
The grounds of appeal raised by the assessee reads as under:
1. That the learned Commissioner of Income (Appeals) has grossly erred both in law and on facts, by holding the appeal as infructuous and not deciding the appeal on merits, whereas, it is mandatory in law for CIT (A) to decide the appeal on merits of the case.
1.1 That the learned CIT (A) has overlooked the fact that the issue with regards to taxability of capital gains of a sum of Rs. 2,11,76,360/- was though revised by an order passed by PCIT under section 263 of the Act, however, the same was also quashed by Hon'ble ITAT Delhi and as such, it was incumbent upon the learned CIT (A) to have examined and decided the appeal of assessee on merits of the case.
2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act, as the instant reassessment proceedings were without satisfying the statutory pre-conditions for initiation of the proceedings and completion of assessment under the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate the fact that assessment in the instant case were duly framed under section 143(3) of the Act, wherein, the assessee appellant had duly furnished all the documentary evidences with regards to the issue of sale of property and capital gain and the same was duly examined by the than assessing officer and as such, there is no failure on the part of the assesseę to disclose the facts fully and truly and nor there is any such allegation on the part of learned ACIT and as such, the instant reassessment proceedings were without jurisdiction and deserved to be quashed, as such.
That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in sustaining an addition of Rs. 2,11,76,360/- on account of capital gains taxed under section 50C of the Act in doing so, learned CIT(A) has failed to appreciate the fact that the said addition was against the statutory provisions as such, was liable to be deleted, as such. 3.1 That the learned CIT(A) has also failed to appreciate the fact that adverse findings recorded by the ACIT while making the impugned addition has been recorded with preconceived notions and by arbitrarily brushing aside all the details/evidences furnished in order to support the fact that the property sold by assessee was at fair market value and the addition made by AO by invoking provisions of section 50C of the Act was unjustified and untenable in law.
That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining additions in the hands of assessee, without giving any fair and proper opportunity of being heard to the appellant. Thereby, violating the principles of natural justice.”
3. When the matter was called for hearing, the learned Counsel for the assessee submitted at the outset that the CIT(A) has proceeded on misconception of facts and misdirected himself in law in dismissing the appeal of the assessee in limine as infructuous. In the context, the learned Counsel submitted that the assessee filed his original return on 30.09.2013 declaring total income at Rs.1,45,04,688/- for the A.Y. 2013-14 in question and assessment order dated 10.03.2016 was framed under section 143(3) of the Act. The case was, thereafter, reopened by the issuance of notice dated 30.03.2018 under section 148 of the Act. The reassessment order was passed under section 143(3)/147 of the Act dated 18.12.2018. The assessee challenged the additions/disallowances made before the CIT(A) in consequence of such reassessment order vide appeal memo dated 16.12.2018. Pending adjudication of appeal by CIT(A), the PCIT-Delhi invoked the revisional jurisdiction conferred upon it under section 263 of the Act by issuing show-cause notice dated 24.03.2021. The revisionary order was eventually passed under section 263 of the Act vide order dated 30.03.2021. The assessee challenged the impugned revisionary order under section 263 of the Act before the ITAT. The ITAT vide its order dated 25.11.2022 in quashed the revisional action of the PCIT on the ground that the issue on which the jurisdiction under section 263 of the Act was invoked, was already sub judice and pending for adjudication before the CIT(A). Consequently, the PCIT could not have invoked the provision of section 263 of the Act where the matter was already pending for adjudication before the CIT(A). The subsequent order passed by AO under section 143(3) r.w.s 263 of the Act dated 30.03.2022 thus also stood quashed in tandem.
4. In this backdrop, the learned Counsel submits that the CIT(A) has dismissed the appeal of the assessee arising from reassessment order dated 18.12.2018 framed under section 143(3) r.w.s 147 of the Act in limine and treated the same as infructuous on the ground that order passed under section 263 of the Act supersedes the reassessment order appealed against. The learned Counsel submits that such view is prima facie erroneous in as much as firstly; the PCIT had assumed wrongfully jurisdiction under section 263 of the Act during the pendency of appeal before the CIT(A) and secondly; such revisional order has ceased to survive in the wake of order of the Tribunal. Hence, it was incumbent upon the CIT(A) to adjudicate the grievance arising from the reassessment order on merits in accordance with law. The CIT(A) has summarily dismissed the appeal of the assessee on wholly unsustainable ground without any discussion on merits. Learned Counsel thus submits that the appropriate relief is required in the present case in the background of facts as narrated.
5 The learned DR for the Revenue did not offer any comment to controvert the submissions of the assessee.
On examination of factual matrix narrated on behalf of the assessee, we find palpable merit in the plea of the assessee. We observe that the CIT(A) has dismissed the appeal of the assessee arising from the assessment order in limine as infructuous on the ground that a revisional order has been passed under section 263 of the Act on the point in issue and an assessment order has been passed under section 143(3) of the Act to give effect to the directions in the revisional order. At this juncture, we take note of the assertion made on behalf of assessee that assessment of jurisdiction by PCIT under section 263 of the Act was without sanction of law during currency of appeal pending before CIT(A) and rightly cancelled by the ITAT. Hence, the CIT(A) was well with its jurisdiction to adjudicate the grounds raised by the assessee in accordance with law.
The reference to order passed under section 263 and consequential assessment order is thus wholly misplaced.
Hence, we set aside the order of CIT(A) and restore the matter back to the file of CIT(A) for adjudication of various grounds raised before such authority in accordance with law after giving reasonable opportunity to the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order was pronounced in the open court on 17.01.2024