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Facts
Two appeals were filed by the assessee against orders concerning AY 2012-13. One appeal challenged an order under Section 263 by the PCIT, and the other was against an order by the CIT(A) which was in response to a Section 143(3) r.w.s. 263 order. Both appeals arose from a common controversy regarding the PCIT's revisionary power.
Held
The Tribunal held that an assessment order passed under Section 153A after obtaining prior approval under Section 153D cannot be subjected to revision under Section 263 unless the approval itself is found to be vitiated. Since the PCIT did not examine the validity of the prior approval, his Section 263 order was deemed unsustainable.
Key Issues
Whether a revisionary order under Section 263 is sustainable when the original assessment order was passed under Section 153A with prior approval under Section 153D, without vitiating the approval itself.
Sections Cited
263, 250, 143(3), 153C, 153A, 40A(3), 153D
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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’: NEW DELHI
Before: SHRI ANUBHAV SHARMA
Appellant by : Shri Salil Kapoor, Sh.Vikash Jain, Sh.Sumit Lal Chandani, Shivam Yadav, Hardik Jayal, Advocates. Department by: Ms.Rajinder Kaur, CIT(DR) Date of Hearing : 30.07.2025 Date of Pronouncement : 19.09.2025 ORDER PER AMITABH SHUKLA, A.M : These two appeals filed by the assessee, comprising 263 dated 28.03.2017 of PCIT, Page 1 of 10 Central-1, New Delhi for AY-2012-13 and vide / Del / 2019 is directed against the order u/s 250 dated 23.01.2019 of CIT(A), 9, New Delhi for AY-2012-13. The latter appeal is in response to order of the Ld.First Appellate Authority arising from order u/s 143(3) r.w.s. 263 dated 29.09.2017 for AY-2012-13. Both the appeals are of the same assessee and arising out of a common controversy and hence for the purposes of convenience were heard together and are being adjudicated by this common order. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.
The only issue challenged through the above appeal is regarding the exercise of revisionary authority u/s 263 by PCIT, Central-1, New Delhi for AY-2012-13 through his order dated 28.03.2017. Through its grounds of appeal the assessee has contested the revisionary order. Through the aforesaid order u/s 263, PCIT, Central-1, New Delhi has exercised his revisionary authority in respect of order u/s 153C r.w.s. 143(3) passed by the Ld.AO dated 30.03.2015. Thus, it has been concluded that share capital / application money of Rs.37.75 Crores received by the assessee was not adequately examined by the Ld.AO nor any additions made to the returned income. Accordingly, he held that the impugned order u/s 153C r.w.s. 143(3) dated 30.03.2015 was erroneous in so far as prejudicial to the interest of Page 2 of 10 revenue and therefore while setting aside the impugned order, directed the Ld AO to make fresh assessment after holding necessary enquiries. It is the case of the assessee that order u/s 263 is unwarranted and non-maintainable and hence deserves to be set aside. The Ld.Counsel of the assessee has argued that the impugned exercise of revisionary authority suffers from an incurable infirmity and which is fatal to the order u/s 263. It has been submitted that order u/s 153C r.w.s. 143(3) was passed by the Ld.AO post approval of his supervisory addl.CIT u/s 153D. Reference in this regard was invited to page 41 of the impugned assessment order wherein AO had referred to the grant of aforesaid approval available to him vide F No.Joint CIT / CR-1 / 153D / 2014-15 / 1833 dated 30.03.2015. It is the case of the assessee that an order which has been subject of approval u/s 153D cannot be subjected to revision u/s 263. In support of its contentions, the Ld.Counsel placed reliance upon decision of a coordinate bench of this tribunal in the case of Devender Kumar Gupta as it / Del / 2024 dated 30.08.2024. It was accordingly pleaded that the order u/s 263 be set aside.
Per contra the Ld.DR relied upon the order of lower authorities.
We have heard rival submissions in the light of material available on records. It is an undisputed fact on records that the order u/s 153C r.w.s 143(3) dated 30.03.2015 which is subject matter of revision u/s 263 by PCIT,
Page 3 of 10 Central-1, New Delhi, was passed with the approval of Joint CIT, Central Range-1, Delhi u/s 153D. We have noted the decision of a coordinate bench of this tribunal in the case of Devender Kumar Gupta supra. Thus, in the impugned decision it was held as under:-
”…. The facts of the case, in brief, are that consequent to search and seizure operations, the case of the assessee, who is in the business of stone crusher, the assessments were completed u/s 153A of the Act on the returned income. However, the ld.PCIT was not satisfied and, accordingly, invoked the revisional jurisdiction u/s 263 of the Act for examining the bank statements and bank book of the assessee’s proprietary concern, M/s Sanjeev Stone Crushing Company and found that certain payments were made otherwise than account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system and the amounts exceeding Rs.10,000/- or Rs.20,000/- were accordingly found to be paid in contravention of the provisions of section 40A(3) of the Act and ld. PCIT was of the opinion that the same should be disallowed and, accordingly, after show-causing the assessee and considering the reply, had directed the AO to pass an order afresh which has been challenged before us by the assessee. The grounds in the four appeals are similar except for the amounts mentioned and, therefore, were together heard and are decided together for the convenience and to avoid the cost repetition or contradiction. ITAs No.1890 to 1893//Del/2024 3. Heard and perused the record.
4. At the time of arguments, the ld. counsel for the assessee has submitted that & 1891/Del/2024 for assessment years 2015-16 & 2016- 17 pertain to unabated assessments, while & 1893/Del/2024 for AYs 2017-18 & 2018-19 are abated assessments. It was submitted that there was no incriminating material found during the search. Therefore, the AO could not have examined the issue of making addition by reference to section 40A(3) of the Act in assessment proceedings u/s 153A of the Act.
Page 4 of 10 4.1 This aspect could not be rebutted by the ld. DR and, thus, we are of the considered view that on this ground alone in regard to AYs 2015-16 and 2016-17, the impugned order of PCIT u/s 263 of the Act is not sustainable as what could not have been done by the AO u/s 153A cannot be made to be done by AO by invoking the provisions of section 263A of the Act.
Further, the ld. AR has submitted that in regard to the assessment orders under consideration for the four years, the assessment orders were passed u/s 153A of the Act after approval of Addl. CIT u/s 153D dated 24.09.2021. It was submitted by the ld. AR that an order which has been subject of approval u/s 153D of the Act cannot be subject to revision u/s 263 of the Act and for that the ld. AR has relied the following judicial pronouncements:- i) PCIT vs. Prakhar Developers Pvt. Ltd. (2024) 162 taxmann.com 48 (MP); ITAs No.1890 to 1893//Del/2024 ii) Smt. Abha Bansal vs. PCIT (2021) 132 taxmann.com 231 (Del- Trib); iii) Gyan Infrabuild (P) Ltd. vs. PCIT (2024) 162 taxmann.com 664 (Patna); iv) BU Bhandari Schemes v. Pr. CIT [IT Appeal Nos. 637 to 641/Pune/2018 dated 14-11-2018]; v) Vishwa Infraways (P.) Ltd. v. CIT (Central) [IT Appeal Nos. 596,597 & 599/Pune/2015]; vi) Rasi Kalal M. Dhariwal (HUF) v. CIT [IT Appeal Nos. 1102 to 1107/ Pune / 2014]; vii) Ramamoorthy Vasudevan v. PCIT [IT Appeal Nos. 967 & 968/Pune/2016]; viii) Dhariwal Industries Ltd. v. CIT [IT Appeal Nos. 1108 to 1113 (Pune) of 2014, dated 23-12-2016]; ix) Smt. Nama Chinnamma v. Dy. CIT [IT Appeal Nos. 1150-1157 Page 5 of 10 (Hyd.) of 2015, dated 9-8-2017]; x) Trinity Infraventures Ltd. v. Dy. CIT [IT Appeal Nos. 584-589 (Hyd.) of 2015, dated 4-12-2015]; xi) S. Satyanarayana v. Syed Rasiuddin [IT Appeal No. 901 (Hyd.) of 2014]; xii) Mehtab Alam v. Dy. CIT [IT Appeal No. 288/Luck/2014, dated 18-11- 2014]; xiii) Dharmendra Kumar Bansal v. CIT [20141 48 taxmann.com 53/[2015] 152 ITD 406 (Ip. - Trib.); & xiv) CIT vs. Dr. Ashok Kumar, Proprietor, S.S. Nursing Home, ITA 192/2000, order dated 06.08.2012 6. This is countered by the ld. DR by relying the order of Nagpur Bench of this Tribunal in order dated 01.04.2022 in M/s Shrigopal Rameshkumar Sales Pvt. Ltd. vs. ACIT.
We have given thoughtful consideration to this aspect of the controversy and we find that a specific ground No.2 is raised by the assessee as follows:- “2. That the asstt. Order passed u/s 153A r.w.s. 143(3) after getting an approval of Addl. Commissioner U/s 153D could not be revised u/s 263, hence Ld. PCIT exceeded his jurisdiction in invoking Sec.263 in respect of impugned asstt. Order framed u/s 153A r.w.s. 153D.”
8. The assessment orders make it categorical that the same are passed with statutory approval of Addl. Commissioner of Income-tax, Central Range, Gurgaon communicated vide his office letter F. No. Addl.CIT(CR)/GGM/2021-22/664 dated 24.09.2021 in accordance with section 153D of the Income Tax Act.
We find that in the impugned order the ld. PCIT has not taken account of the fact that the assessments were completed after prior approval of the competent authority. Thus, we are of the considered view that at the Page 6 of 10 time of examining the issue as to if the assessment order is erroneous so far as prejudicial to the interest of the Revenue, the ld. revisional authority is not only supposed to see the assessment record of AO, but also the record of the approval which as far as the revisional authority is concerned becomes “record” of the quasi judicial authority whose order is being examined by invoking the revisional jurisdiction. Therefore, without giving a finding that the prior approval u/s 153D was vitiated and was also erroneous so far as prejudicial to the interest of the Revenue, the assessment order independently cannot be held to be erroneous so far as prejudicial to the interest of the Revenue. 9.1 The catena of judicial pronouncements relied by the ld. AR have also laid down the same proposition of law and we will like to refer specifically to the judgement of the Hon’ble Madras High Court in the case of PCIT vs. Prakhar Developers (P) Ltd. (supra) where the Hon’ble Madras High Court has taken into consideration the fact that the Pune Bench order in the case of Ramamoorthy Vasudevan v. PCIT [IT Appeal Nos. 967 & 968/Pune/2016] wherein it was held that the order passed by the PCIT is unsustainable due to lack of jurisdiction in invoking section 263 of the Act for the reason that the same was passed upon taking prior approval u/s 153A of the Act, was not challenged by the Department before the Hon’ble High Court or the Hon’ble Supreme Court and, thus, the Hon’ble Madras High Court in its judgement dated 01.04.2024 has held as follows:- “8. Even otherwise, as per Section 263 of the Act, the Principal Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Assessing Officer, is erroneous in so far as it is prejudicial to the interests of the Revenue, he may make enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. For passing any order under Sections 143(3) & 153A of the Act, prior approval of Joint Commissioner is required under Section 153A of the Act, or Principal Commissioner or Commissioner as the case may be. Therefore, once prior approval had already been taken by the Assessing Officer and accepted the return submitted by the assessee, then the same authority cannot exercise the power under Section 263 of the Act to reverse the order of Assessing Officer.”
The judgement which the ld. DR has relied is not applicable as in that judgement, this aspect was not actually examined at all and only for the reason that there also the impugned assessment order was passed u/s 153A of the Act, does not lay down a view contrary to the one we are relying above.
In the light of the aforesaid discussion, we are inclined to allow grounds No.2 and 3 for AYs 2015-16 and 2016-17; and ground No.3 in AYs 2017- 18 and 2018-19. Consequently, the appeals are allowed and the impugned orders in respective years are quashed….” 5. A perusal of the above shows that the Hon’ble Bench has held that no exercise of revisionary authority u/s 263 is permissible in cases where approval u/s 153D is available on records, unless the impugned approvals is also examined and vitiated. Nothing has been brought on record by the Revenue, to distinguish any change of facts of the present case from those in the case of Shri Devendra Kumar Gupta supra. In respectful compliance to the aforesaid decision and for the principles of consistency, we are therefore of the considered view that the order u/s 263 dated 28.03.2017 cannot survive and hence quashed. All the grounds of appeal raised by the assessee are therefore allowed.
In the result, the appeal of the assessee is allowed.
7. Through the above appeal the assessee has challenged order u/s 143(3) passed by the Ld.AO in consequence to the directions issued vide order u/s 263 dated 28.03.2017, which was confirmed by the Ld.First Appellate
Page 8 of 10 Authority through its order dated 23.01.2019. Apropos to the discussion supra we have concluded that the impugned order u/s 263 dated 28.03.2017 suffers from incurable defects and hence has been quashed. It is trite law that when the foundation goes, the superstructure cannot survive. Thus in this case as the order u/s 263 has been quashed the corresponding order u/s 143(3) would also not survive. Accordingly, we set aside the order of lower authorities passed as a sequel to order u/s 263 dated 28.03.2017. All the grounds of appeal raised by the assessee are therefore allowed.
In the result, the appeal of the assessee is allowed.