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Facts
The Revenue appealed the CIT(A)'s order which allowed the assessee's appeal. The CIT(A) quashed the assessment order passed under section 143(3) r.w.s. 263 of the Income Tax Act, 1961, on the grounds that the revisional order under section 263 was already quashed by the ITAT. The assessee is engaged in property development.
Held
The Tribunal held that the CIT(A) was justified in allowing the assessee's appeal. The Tribunal agreed that if the revisional order under section 263 is quashed, the consequential assessment order based on it cannot stand. The pendency of the section 263 order before the High Court does not justify keeping the consequential order alive.
Key Issues
Whether the CIT(A) was justified in quashing the assessment order when the revisional order u/s 263 was challenged before the High Court.
Sections Cited
143(3), 263, 260A, 250
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the Revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2013-14.
As there was no representation on behalf of the assessee, we hereby dispose of this appeal by hearing the learned Departmental Representative ('ld.DR' for short) and on perusal of the materials available on record.
The Revenue has raised the following grounds of appeal: (i) On the facts and the circumstances of the case and in law, whether the ld. CIT(A) is justified in quashing the assessment order passed u/s. 143(3) r.w.s. 263 of the Income Tax Act, 1961 (Act) pending the appeal filed u/s. 260A of the Act before Hon’ble Bombay High Court against the decision of the Hon’ble ITAT quashing proceedings u/s. 263 of the Act vide order having ITA No. 3637/Mum/2018
(A.Y. 2013-14) ITO vs. Sandeep Estate Development Private Limited (ii) On the facts and the circumstances and in law, pending the appeal filed u/s. 260A of the Act before Hon’ble Bombay High Court against the decision of the Hon’ble ITAT quashing proceedings u/s. 263 of the Act vide order having ld. CIT(A) ought to have deferred the decision in appel of the assessee.
The Revenue has challenged this appeal on the ground that the ld. CIT(A) has quashed the assessment order pursuant to the decision of the Tribunal holding the section 263 proceeding invalid. Briefly stated the assessee company is engaged in the business of property development and has commenced a SRA project at Dharavi in the name “Kamaraj Nagar SRA CHS Ltd.” during the year under consideration. The assessee has filed its return of income dated 30.09.2013, declaring total income at Rs.52,200/-. The case was selected for scrutiny and assessment was completed u/s. 143(3) of the Act dated 28.03.2016, declaring total income at Rs.2,11,35,700/-. The learned Pr. Commissioner of Income Tax (‘ld. PCIT’ in short), Mumbai had invoked the revisionary powers u/s. 263 of the Act for the reason that the assessment order passed by the A.O. is erroneous and prejudicial to the interest of the Revenue vide order dated 23.03.2018, thereby setting aside the assessment order.
The assessee was in appeal before the Tribunal, challenging the order of the ld.PCIT passed u/s. 263 of the Act and the Tribunal vide order dated 25.02.2019 in had set aside the order of the ld. PCIT and had restored the assessment order passed u/s. 143(3) of the Act.
Parallely, the assessee was in appeal before the ld. CIT(A), challenging the consequential assessment order passed u/s. 143(3) r.w.s. 263 of the Act dated 14.12.2018.
The ld. CIT(A) vide order dated 02.11.2023 had allowed the appeal filed by the assessee on the ground that since the Tribunal has quashed the order passed u/s. 263 of the Act,
(A.Y. 2013-14) ITO vs. Sandeep Estate Development Private Limited the consequential order passed u/s. 143(3) r.w.s. 263 of the Act would not stand on its own, thereby holding the same to be infructuous.
The Revenue is in appeal before us, challenging the order of the ld. CIT(A) on the ground that as the Revenue has challenged the order of the Tribunal quashing the section 263 proceeding, before the Hon'ble Jurisdictional High Court, there has been no finality in the said proceeding and that the ld. CIT(A) has erred in allowing the appeal on the basis of the Tribunal’s order in the revisionary proceeding.
We have heard the ld. DR and perused the materials available on record. It is observed that the impugned order before us is the basis of the consequential order passed in section 263 proceedings. The ld. CIT(A) has held that since the revisionary order u/s. 263 of the Act has been quashed, the consequential order which is the very edifice of the impugned order u/s. 143(3) r.w.s. 263 of the Act would not survive in the eyes of law, is according to us has rightly been held so by the ld. CIT(A). We do not find any justification in the Revenue’s objection, merely on the ground that the order u/s. 263 of the Act is pending before the Hon'ble Jurisdictional High Court for adjudication. We, therefore, find no infirmity in the order of the ld. CIT(A) and hence dismiss the grounds raised by the Revenue.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 01.08.2024.