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Facts
The assessee's original assessment was completed under Section 143(3). Subsequently, the PCIT passed an order under Section 263, cancelling the original assessment and directing a fresh assessment. Based on this, the AO passed a fresh assessment order under Section 144 r.w.s. 263 r.w.s. 144B, making a significant addition to the assessee's income.
Held
The Tribunal upheld the CIT(A)'s decision to treat the subsequent assessment as infructuous because the PCIT's order under Section 263, which was the foundation for the subsequent assessment, had been quashed by the ITAT. Therefore, the subsequent assessment could not survive.
Key Issues
The key legal issue was whether a subsequent assessment order, passed pursuant to a PCIT's revisional order under Section 263, remains valid after the ITAT quashes the underlying Section 263 order.
Sections Cited
Section 143(1), Section 143(2), Section 142(1), Section 143(3), Section 263, Section 144, Section 144B, Section 250
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Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI S. RIFAUR RAHMAN & SHRI SUNIL KUMAR SINGH
ORDER
PER SUNIL KUMAR SINGH, JUDICIAL MEMBER
This revenue appeal has been preferred against the impugned order dated 07.08.2025 passed in Appeal no. NFAC/2016-17/10248464 by the Ld. Commissioner of Income– tax(Appeals)/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2017-18, wherein learned CIT(A) has allowed assessee’s 1st appeal.
The brief facts under appeal state that the assessee e-filed his return of income for A.Y. 2017-18 on 12.07.2017, declaring total income of Rs. 61,47,020/-. The return was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny through mannual selection. Statutory notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. After considering assessee’s E- reply, learned assessing officer completed the assessment u/s 143(3) and added Rs. 4,33,100/- in the declared income of the assessee vide assessment order dated 14.11.2019. Thereafter, Ld. PCIT-1, Agra passed order u/s 263 of the Act, on 31.03.2022 by cancelling the original assessment order passed u/s 143(3) with ACIT C 2(1)(1), Agra v Jones Traders, Agra direction to passe fresh order denovo. Subsequently Ld. AO passed assessment order u/s 144 r.w.s. 263 r.w.s. 144B of the Act, on 27.03.2023 making an addition of Rs.6,40,61,862/- in the declared income of the assessee.
Aggrieved, assessee preferred 1st appeal on 28.04.2023 against the subsequent assessment order before learned CIT(A), who allowed assessee’s first appeal for statistical purpose by treating the impugned subsequent assessment as infructuous due to reversal of the PCIT’s directions issued u/s 263 of the Act, vide order dated 21.02.2025 passed by the Agra bench of this Tribunal.
Appellant Revenue has filed this second appeal on the ground that learned CIT(A) has erred in passing impugned order based on Tribunal’s order dated 21.02.2025 which was not conclusive, due to legal recourse available to the department.
We have perused the records and heard learned representatives for both the parties.
It is an undisputed fact that the Agra Bench of this Tribunal, vide consolidated order dated 21.02.2025, passed in along with other bunch cases, has allowed assessee’s appeal and reversed the revisional directions dated 31.03.2022 issued by the Ld. PCIT u/s 263 of the Act in assessee’s case. Since the subsequent assessment was based on the PCIT’s order passed u/s 263 of the Act, which was quashed by the tribunal, the subsequent assessment does not survive. Ld. CIT(A) has observed that the re-assessment order passed u/s 144 r.w.s. 263 r.w.s. 144B of the Act, dated 27.03.2023 does not stand and rightly held the same to be infructuous. We do not find any error or infirmity in the impugned order as the super structure could not stand on the collapse of its foundation.