2022 (4) TMI 1588 - AT - Income Tax

Revision u/s 263 - issue decided in favour of the assessee in preceding AY by the Tribunal, a superior Appellate Authority - as per CIT AO has erred in allowing assessee s claim of deduction u/s 80IB(10) in respect of sale of FSI generated from its project at Mayanagar, Worli, Mumbai - HELD THAT - No doubt while adjudicating appeal for AY 2013- 14, the Tribunal has referred to the Assessment Order for AY 2015-16 which is now subject of revision, nevertheless, the Co-ordinate Bench decided the issue in favour of assessee on merits and not solely by placing reliance on the assessment order for AY 2015-16. The reference to Assessment Order for AY 2015-16 is for giving impetus to the independent findings given in the order. Tribunal de-hors the assessment order for AY 2015-16 has come to the conclusion that the assessee is eligible to claim deduction u/s 80IA(10) on SRA project at Mayanagar, Worli approved under DC Regulation 33(10). Once, the issue has been decided in favour of the assessee in preceding AY by the Tribunal, it was incumbent upon the PCIT to follow the order of Tribunal, a superior Appellate Authority. PCIT in the impugned order does mention the fact about the order of Tribunal in assessee s own case for AY 2013-14, but, decline to follow the same on the premise that the sole reason for allowing claim of deduction u/s. 80IB(10) of the Act was the assessment order for AY 2015-16. The reason given by PCIT to disregard the order of Tribunal for AY 2013-14 is misconceived, hence, unsustainable. It is evident from records that the AO in AY 2015-16 has taken a view that is supported by the decision of Tribunal. The assessment order cannot be held to be erroneous merely for the reason that it has resulted in loss of revenue. If only one of the twin condition is satisfied, the order passed by the assessing officer cannot be revised u/s. 263 of the Act. In the instant case, we find that the view taken by the assessing officer in allowing assessee s claim of deduction under section 80IB(10) is one of the possible views backed by the order of Tribunal in assessee s own case in respect of the same very project in the AY 2013-14. Therefore, the assessment order cannot be said to be erroneous. The impugned order is unsustainable and is liable to be quashed. Revisional jurisdiction is transaction of sale of FSI to FourZone Realtors Pvt. Ltd. - In the instant case, no material is available on record to suggest that on the fresh issue raised while passing the order under section 263 of the Act, the PCIT had granted opportunity of hearing to the assessee. Thus, without affording opportunity of hearing to the assessee on the fresh issue, the PCIT could not have taken up the issue in exercise of his revisional powers. Adjudicating fresh issue without affording opportunity of hearing to the assessee makes the order unsustainable and hence, liable to be quashed. Revisional powers invoked by the PCIT consequent to proposal of revision received from Addl. CIT - Section 263 mandates two preconditions to be complied before coming to the conclusion that the assessment order is erroneous and prejudicial to the interest of revenue. These two primary conditions are, (i) examination of records by the PCIT/CIT, and (ii) consideration by the PCIT/CIT of the order passed by assessing officer. Thus, it is the action of PCIT/CIT to examine records and consideration of order that opens the gate for exercising revisional powers u/s. 263 of the Act. From reading of above provisions of the section it is explicitly clear that the section does not give leverage to PCIT/CIT to exercise revisional jurisdiction on proposal received from any other authority under the Act. The key to unlock passage for exercising revisional powers is examination of records and consideration of assessment order by the PCIT/CIT. In the entire impugned order the PCIT has nowhere mentioned that the revisional powers u/s. 263 have been exercised upon his examination of records and consideration of the order passed by the Assessing Officer. The PCIT has initiated revisional proceedings consequent to proposal received from Addl. CIT- Range Head, hence, the mandatory requirement of section 263 of the Act in the present case is not satisfied. In facts of the case, we are of considered view that the impugned order suffers from legal infirmity. Thus we hold the impugned order untenable, hence, the same is quashed.

Summary

Issues Involved:
1. Legality of the Principal Commissioner of Income Tax (PCIT) invoking revisional jurisdiction under section 263 of the Income Tax Act, 1961.
2. Validity of the PCIT's order disregarding the Tribunal's decision in the assessee's own case for a previous assessment year.
3. Procedural fairness in raising new issues without providing an opportunity of hearing to the assessee.
4. Legitimacy of the PCIT initiating revisional proceedings based on a proposal from the Additional Commissioner of Income Tax (Addl. CIT).

Issue-Wise Detailed Analysis:

1. Legality of the PCIT Invoking Revisional Jurisdiction Under Section 263:
The PCIT invoked revisional jurisdiction under section 263 of the Income Tax Act, 1961, on the grounds that the Assessing Officer (AO) erred in allowing the assessee’s claim of deduction under section 80IB(10) concerning the sale of Floor Space Index (FSI) generated from the Mayanagar project. The assessee argued that the AO had taken one of the possible views, which is supported by the Tribunal's order for AY 2013-14. The Tribunal had previously upheld the CIT(A)'s decision allowing the deduction under section 80IB(10) for the same project. The assessee contended that where two views are possible, the assessment order cannot be deemed erroneous merely because the PCIT favors another view. The Tribunal reiterated that the AO's acceptance of the deduction claim was a permissible view, supported by the Tribunal's earlier decision, and thus, the assessment order was not erroneous.

2. Validity of the PCIT's Order Disregarding the Tribunal's Decision:
The Tribunal emphasized that the issue of the assessee’s eligibility for the deduction under section 80IB(10) for the Mayanagar project was already decided in favor of the assessee for AY 2013-14. The Tribunal noted that the PCIT should have followed the Tribunal's earlier order as it was a superior appellate authority. The Tribunal criticized the PCIT for disregarding the Tribunal's decision on the premise that the sole reason for allowing the deduction was the assessment order for AY 2015-16. The Tribunal concluded that the PCIT’s reason for disregarding the Tribunal's decision was misconceived and unsustainable.

3. Procedural Fairness in Raising New Issues:
The Tribunal found that the PCIT raised a new issue regarding the assessee’s transaction with M/s Four Zone Realtors Pvt. Ltd. for the sale of FSI without issuing a show-cause notice or providing an opportunity of hearing to the assessee. The Tribunal cited the Supreme Court's decision in CIT vs. Amitabh Bachchan, which mandates that an opportunity of hearing must be afforded to the assessee under section 263. The Tribunal held that the PCIT's failure to provide such an opportunity rendered the revisional order legally fragile due to the violation of principles of natural justice.

4. Legitimacy of the PCIT Initiating Revisional Proceedings Based on a Proposal from Addl. CIT:
The Tribunal examined the provisions of section 263, which require the PCIT to examine records and consider the assessment order before invoking revisional jurisdiction. The Tribunal noted that the PCIT initiated proceedings based on a proposal from the Addl. CIT, without independently examining the records or considering the assessment order. The Tribunal concluded that the mandatory requirement of section 263 was not satisfied, rendering the PCIT's order legally infirm and unsustainable.

Conclusion:
The Tribunal quashed the PCIT's order, holding it unsustainable on multiple grounds, including the failure to follow judicial discipline, lack of procedural fairness, and improper initiation of revisional proceedings. The Tribunal emphasized that the AO's view was a permissible one, supported by the Tribunal's earlier decision, and thus, the assessment order was not erroneous.