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2017 (5) TMI 1362 - AT - Income TaxRevision u/s 263 - disallowance of commission and addition on account of unexplained cash credit namely receipt of share capital - period of limitation - Held that - The scope of proceedings before the AO pursuant to the order of Tribunal dated 10.01.2012 is very limited namely considering the two additions one on account of disallowance of commission and the second one relating to receipt of share capital u/s 68 of the Act. In the impugned order, the CIT has sought to direct the AO to make enquiries in regard to disallowance of freight loading and unloading charges and clearing and forwarding charges. These items of expenditure was never the subject matter of disallowance in the original order of assessment and was therefore not the subject matter of the dispute before the Tribunal as well as in the proceedings before the AO pursuant to the order dated 10.01.2012. In the garb of revising the order of AO dated 14.03.2013 passed u/s 254 r.w.s.143(3) of the Act, the CT was virtually seeking to revise the order dated 31.12.2008 passed by the AO u/s 144 of the Act which is the original assessment order. The period of limitation for an action u/s 263 of the Act in so far as order dated 31.12.2008 would end on 31.03.2011. The impugned order has been passed by CIT on 25.03.2015 which is clearly barred by time in so far the issue sought to be revised in the impugned order is concerned. - Decided in favour of assessee.
Issues:
1. Validity of the order passed by the AO under section 144 of the Income Tax Act, 1961. 2. Correctness of the order passed by the AO giving effect to the directions of the Tribunal. 3. Jurisdiction of the CIT to revise the order passed by the AO under section 144. 4. Time limitation for invoking revisional powers under section 263 of the Act. Issue 1: Validity of the order passed by the AO under section 144 of the Income Tax Act, 1961: The Assessee, engaged in trading and exports of metals, filed a return for A.Y. 2006-07, declaring total income. The AO passed an order u/s 144 of the Act making additions to the total income, including disallowance of commission expenses and unexplained cash credit. The CIT(A) confirmed the order. The ITAT set aside the CIT(A)'s order, noting lack of opportunity for the Assessee to present evidence. The Tribunal directed the AO to re-adjudicate the issues, allowing the Assessee to provide documentary evidence. The AO, in compliance, made an addition for commission payment only. The CIT, under section 263, found the AO's order erroneous for not examining other expenses for non-deduction of tax at source. The Assessee argued that the CIT's revision was time-barred as it sought to revisit the original assessment order under section 144, passed beyond the statutory limitation period. The CIT held that the power under section 263 was wide and not time-barred, as the AO failed to consider all facts and details, making the order prejudicial to revenue. The Tribunal, considering the limited scope of the AO's proceedings post-Tribunal's directions, held the CIT's order under section 263 as time-barred and non-est in law, quashing it. Issue 2: Correctness of the order passed by the AO giving effect to the directions of the Tribunal: The AO, after the Tribunal's directions, made an addition for commission payment only, contrary to the CIT's view of not examining other expenses. The CIT invoked section 263, finding the AO's order prejudicial to revenue. The Assessee contended that the CIT's revision was time-barred as it sought to revisit the original assessment order under section 144, passed beyond the statutory limitation period. The Tribunal, considering the limited scope of the AO's post-Tribunal directions proceedings, held the CIT's order under section 263 as time-barred and non-est in law, ultimately allowing the Assessee's appeal. Issue 3: Jurisdiction of the CIT to revise the order passed by the AO under section 144: The CIT, under section 263, found the AO's order erroneous for not examining all expenses for non-deduction of tax at source. The Assessee argued that the CIT's revision was time-barred as it sought to revisit the original assessment order under section 144, passed beyond the statutory limitation period. The Tribunal, finding the CIT's order under section 263 as time-barred and non-est in law, quashed it, emphasizing the limited scope of the AO's post-Tribunal directions proceedings. Issue 4: Time limitation for invoking revisional powers under section 263 of the Act: The Assessee argued that the CIT's revision under section 263 was time-barred as it sought to revisit the original assessment order under section 144, passed beyond the statutory limitation period. The Tribunal, considering the limited scope of the AO's post-Tribunal directions proceedings, held the CIT's order under section 263 as time-barred and non-est in law, ultimately allowing the Assessee's appeal. This detailed analysis covers the validity of the AO's order, correctness of the order post-Tribunal directions, jurisdiction of the CIT to revise the AO's order under section 144, and the time limitation for invoking revisional powers under section 263 of the Act, providing a comprehensive understanding of the legal judgment.
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