ASST. COMMISSIONER OF INCOME TAX (IT) 2(1)(1), MUMBAI, MUMBAI vs. CREDIT SUISSE (SINGAPORE) LIMITED, MUMBAI

The ld. PCIT invoked the revisionary powers u/s. 263 of the Act for the reason that the assessment order is erroneous insofar as it is prejudicial to the interest of the Revenue for the reason that the income under the head ‘capital gains’ under IT Act would be inclusive of all capital gains and losses in accordance with the Act without taking selective recourse to the DTAA and further that the assessee if chooses to take the benefit of tax treaty between India and Singapore then the income and losses should be covered under the said treaty and no carry forward of losses shall be allowed under the Income Tax Act. In this case the assessee had carry forwarded the losses u/s. 74 of the Act. The impugned order u/s. 143(3) r.w.s. 263 of the Act dated 18.07.2022 was passed by the ld. assessee cannot carry forward losses as per the I. T Act and it was further appealed by the assessee before the first appellate authority.

During the pendency of the appeal before the ld. CIT(A), the Tribunal vide order dated 09.03.2023 had quashed the revisionary order passed u/s. 263 of the Act on the ground that as the assessment was a limited scrutiny on the issue of examining outward foreign remittance, the ld. CIT had no jurisdiction to invoke revisionary powers on issues which were not subject matter of limited scrutiny. Subsequently, the ld. CIT(A) in his order dated 19.01.2024 had dismissed the appeal filed by the assessee as infructuous for the reason that as the Tribunal had set aside the revisionary order, the consequential assessment order u/s. 143(3) r.w.s. 263 of the Act herein the impugned order, does not survive in the eyes of law.

The Revenue is in appeal before us, challenging the order of the ld. CIT(A) for dismissing the appeal as infructuous.

When the appeal came up for hearing today before us, the learned Departmental Representative ('ld.DR' for short) for the Revenue contended that the ld. CIT(A) does not have the power to allow withdrawal of appeal on the request of the assessee without deciding the issue on the merits. The ld. DR relied on the decision of the Hon'ble Jurisdictional High Court decision in the case of CIT vs. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bom). The ld. DR contended that the ld. CIT(A) cannot dismiss the appeal for non prosecution. vehemently opposed to the same and contended that the ld. CIT(A) has not dismissed the appeal of the assessee as being withdrawn but has given a clear finding that since section 263 order has been quashed, the consequential order would not survive. This does not amount to appeal being dismissed as withdrawn.

After duly considering both the rival submissions and on perusal of the materials available on record, though the assessee vide letter dated 06.07.2023 has stated the fact that since section 263 order has been set aside by the Tribunal, the consequential assessment order would not survive and further requested for withdrawing the captioned appeals and to dismiss the same accordingly, the Commissioner of Appeals has in his order discussed the power of ld. CIT(A) as per section 251 of the Act whereby he can confirm, reduce, enhance or annul the assessment while deciding the appeal u/s. 246A of the Act filed by the assessee which are within the purview of section 251(1)(a) of the Act.

As the facts are identical in these two appeals, the finding in applies mutatis mutandis to this appeal also.

In the result, both the appeals filed by the Revenue are dismissed.