INCOME TAX OFFICER - 3(4), BHOPAL vs. SAHITA CONSTRUCTION CO., BHOPAL

आदेश / O R D E R

Per B.M. Biyani, A.M.:

“On the facts and circumstances of the case, the Ld. CIT(A) erred in allowing the appeal of the assessee without going into the merits of the case and merely relying upon the order of the Hon'ble ITAT quashing the order u/s 263 Page 1 of 4

ITO, 3(4), Bhopal vs. Sahita Construction Co., Bhopal – AY 2015-16 of the Income-tax Act, 1961, which is arbitrary and unreasonable and, therefore, not acceptable to the Department.” 2. The background facts leading to present appeal are such that the return filed by assessee for relevant AY 2015-16 was subjected to scrutiny assessment and the AO completed assessment vide order dated 11.09.2017 u/s 143(3). Thereafter, the PCIT-1, Bhopal [“PCIT”] passed revision-order dated 25.03.2021 u/s 263 whereby the said assessment-order dated 11.09.2017 passed by AO was set aside and the AO was directed to make a de novo assessment. The assessee contested revision-order passed by PCIT before ITAT, Indore in whereupon the ITAT, vide order dated 07.02.2022, quashed the revision-order. However, pursuant to the direction given by PCIT in revision-order, the AO passed a consequential assessment-order dated 30.03.2022. The assessee challenged this consequential assessment-order in first-appeal whereupon the CIT(A) quashed the consequential assessment-order and allowed assessee’s appeal by holding thus:

“5. In the present case, appellant has filed appeal against the assessment order passed by the AO u/s 143(3) r.w.s. 263 of the Income-tax Act, 1961, on 30.03.2022. Said assessment was completed as per the direction of Pr. CIT-1, Bhopal, contained in order passed u/s 263 of the act dated 25.03.2021. Vide his reply dated 01.11.2023, appellant informed that order was of PCIT was challenged before the ITAT Indore Bench. The ITAT Indore Bench in its order dated 07.02.2022 in appeal no. ITA No.-119/IND/2021 had quashed the order of Pr. CIT passed U/S 263, holding that the order of AO was neither erroneous nor prejudicial to the interests of revenue. Thus, the entire proceeding initiated in compliance to the order passed u/s 263 became null and void. Appellant enclosed copy of ITAT’s order passed in the case. 5.1 The ITAT vide its order No.119/Ind/2021 for assessment year 2015-16 dated 7.02.2022 has held as under :-

ITO, 3(4), Bhopal vs. Sahita Construction Co., Bhopal – AY 2015-16

“11. We, therefore, respectfully following the judicial precedents and the finding of Coordinate Bench Delhi in the case of Rakesh Kumar (supra) hold that Ld. Pr. CIT is quashed. Thus, in our considered view assessment order dated. 11.09.2017 u/s 143(3) of the Act is neither erroneous nor prejudicial to the interests of revenue and the same is restored. All the grounds raised by the assessee are allowed.” 5.2 Appellant has raised various grounds in the present appeal, however, substantive ground raised by the appellant is that whether AO was justified in making the assessment when the order u/s 263 being the basis on which present proceeding was initiated was quashed by the ITAT. Since the order of PCIT-1 Bhopal dated 25.03.2021 passed u/s 263 of the Income-tax Act, 1961, was quashed by the Tribunal vide its order dated. 07.02.2022 consequential order passed by the AO u/s 143(3) r.w.s. 263 of Income-tax Act, 1961, does not survive and thus appellant succeed on this ground. Since substantive ground raised by the appellant has been allowed in preceding para remaining ground raised by the appellant becomes academic in nature and need no adjudication.

6. In the result, the appeal is treated as ‘allowed’.”

3. Now, the revenue has filed present appeal assailing the order passed by CIT(A).