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Facts
The Revenue appealed against the CIT(A)'s order which allowed the assessee's appeal. The CIT(A) had found that the assessment order passed under Section 143(3) r.w.s. 263 of the Act was non-est because the revisional order under Section 263 was quashed by the ITAT. The ITAT had quashed the Section 263 order because the amendment to Section 37(1) was prospective and not applicable to the assessment year in question.
Held
The Tribunal held that since the revisional order passed by the PCIT u/s 263 of the Act was quashed by the ITAT, the consequential assessment order passed by the AO u/s 143(3) r.w.s. 263 of the Act cannot survive. Therefore, the appeal filed by the Revenue against the CIT(A)'s order was dismissed.
Key Issues
Whether the assessment order consequential to a quashed revisional order is valid? Whether the Revenue's appeal is maintainable when the basis of the assessment order has been set aside?
Sections Cited
143(3), 263, 37(1), 260A
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN,
आदेश / O R D E R PER OM PRAKASH KANT, AM:
This appeal by the Revenue is directed against order dated 28.07.2023, passed by the ld. Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), Delhi (in short ‘the ld. CIT(A)) for AY 2013-14, raising following grounds:
I Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the appeal of the assessee holding that the order passed u/s. 143(3) r.w.s. 263 of the Act rendered non-est due to quashing of the order passed u/s. 263 of the Act by the Hon’ble Tribunal ignoring the fact AYs 2013-14 2 Dy CIT v. Nuclear Power Corporation of India Ltd. that department has not accepted the decision of the Hon’ble ITAT and has filed appeal u/s. 260A before the Hon’ble Jurisdictional High Court against the order of the Hon’ble ITAT? II. Whether there is any delay in filing of appeal (if yes, please attach application seeking condonation of delay).
We have heard rival submission of the parties and perused the relevant material on record. In the case the original assessment order passed by the Assessing Officer (AO) was held as erroneous in so far prejudicial to the interest of Revenue by the ld. Principal Commissioner of Income-tax (in short the PCIT) in his order dated 19.03.2018, passed u/s 263 of the Income Tax Act, 1961 (in short ‘the Act’) and directed the AO to pass a fresh assessment order. The impugned assessment order has been passed by the Assessing Officer in compliance to the order of ld. PCIT passed u/s 263 of Act dated 19.03.2018. However, the assessee challenged the order of the PCIT before the Income-tax Appellate Tribunal (ITAT), whereas the ITAT has quashed the order of the PCIT passed u/s 26e of the Act. The ld. CIT(A) has allowed the appeal of the assessee because the impugned assessment order being consequent to the order u/s. 263 of the Act , which has already been quashed by the ITAT and therefore the consequential order of the AO cannot survive. The relevant finding of the ld. CIT(A) is reproduced as under:
“6.1 The ITAT vide its order No. 2902/Mum/2018 for AY r. 2013-14 dated 31.12.2018 has held as under: “6. Respectful following the principle laid down by the Hon’ble Supreme Court in the case of Vatika Township (P) Ltd. (supra), we hold tht the amendment brought out in section 37(1) by inserting explanation 2 by Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 is prospective and assessee’s assessment yer being 2013-14 will not apply and hence, revision proceedings of CIT is without any basis and quashed. The appeal of assessee is allowed.
AYs 2013-14 3 Dy CIT v. Nuclear Power Corporation of India Ltd. 6.2 Since the order of CIT(LTU) dated 19.03.2018 passed u/s 263 of the Act has been se aside by the Tribunal, the consequential order of the AO passed u/s 143(3) 4.w.s. 263 of the Act on 30.07.2018 does not survive. Accordingly, the present appeal filed against the order passed under section 143(3) rws 263 of the Act dated 30th July, 2018 become infructuous. Hence the present appeal is dismissed.”
The impugned assessment order was passed consequent to the direction of the ld. PCIT vide order u/s. 263 dated 19.03.2018. 19.03.2018. Since the ITAT vide its order dated 31.12.2018 passed in has already quashed the proceedings u/s. 263 of the Act, thus, the consequent assessment proceedings u/s. 143(3) r.w.s. 263 of the Act cannot survive. The Revenue preferred this appeal merely for keeping the matter alive as the Revenue has preferred appeal against the order of ITAT ITA No. 2902/Mum/2018 where in the order u/s 263 of the Act has been quashed. Accordingly, we do not find any infirmity in the order of the ld. CIT(A) and we uphold the same. Grounds of appeal of the Revenue are accordingly dismissed.
In the result, appeal of the Revenue is dismissed.