2018 (5) TMI 1258 - AT - Income Tax

Revision u/s 263 - reopening of assessment initiated - Commissioner wanted to revise the order passed by the A.O. u/s 143(3) r.w.s. 147 on the ground that there are certain omissions and commissions in the order passed u/s 143(3) - Held that - In this case the A.O. has reopened the assessment for the escapement of income and the same is offered for taxation and assessment is completed. We find that the order passed by the A.O. u/s 143(3) r.w.s. 147 of the Act dated 31.12.2010 is neither erroneous nor prejudicial to the interest of the revenue. Therefore on this count the order passed by the Ld. Commissioner u/s 263 of the Act dated 22.3.2013 is quashed. Period of limitation - Held that - In this case the assessing officer passed an order u/s 143(3) of the Act on 31.12.2009. If at all the Ld.Commissioner wanted to exercise power u/s 263 of the Act he has to issue a notice on or before 31.12.2011. In this case he has issued notice on 04.03.2013 and the order was passed on 22.3.2013 which is time barred. Therefore on this count the order passed by the Ld. Commissioner cannot survive - Decided in favour of assessee.

Summary

Issues:
1. Revision of assessment order under section 263 of the Income Tax Act, 1961.
2. Jurisdiction of the Commissioner to revise the assessment order.
3. Time limitation for exercising power under section 263 of the Act.

Analysis:
1. The case involved appeals filed by the assessee against the orders of the Commissioner of Income Tax and the Commissioner of Income Tax (Appeals) for the assessment year 2007-08. The primary issue was the revision of the assessment order under section 263 of the Income Tax Act, 1961.

2. The assessee, a Co-Operative bank, had initially filed a return of income for the assessment year 2007-08 admitting total income at Rs. Nil. Subsequently, the assessment was completed under section 143(3) of the Act, and later, a notice under section 148 was issued regarding gratuity amount paid. The assessee offered the amount for taxation, and the assessment was completed. The Commissioner issued a show cause notice under section 263, alleging errors in the assessment order.

3. The Tribunal considered the arguments of both parties. The assessee contended that the assessment was reopened based on the gratuity contribution not being offered for taxation, which was subsequently rectified. The Tribunal held that the order passed by the Assessing Officer (A.O.) under section 143(3) r.w.s. 147 of the Act was not erroneous or prejudicial to the interest of revenue, thus quashing the Commissioner's order under section 263 dated 22.3.2013.

4. Regarding the jurisdiction of the Commissioner to revise the order, the Tribunal noted that if the A.O.'s order is erroneous and prejudicial to revenue, the Commissioner has the power to review it. However, in this case, the notice issued by the Commissioner was time-barred as it was issued after the prescribed period. Citing the judgment of the Hon'ble Supreme Court, the Tribunal held the Commissioner's order dated 22.3.2013 as time-barred and quashed it, allowing the assessee's appeal.

5. The Tribunal further dismissed an appeal arising out of section 143(3) r.w.s. 263 of the Act dated 27.3.2014, as the basis for the assessment order had already been quashed in the previous appeal. Ultimately, the Tribunal allowed the appeal filed by the assessee in ITA No.260/Vizag/2013 and dismissed the appeal in ITA No. 172/Vizag/2015.

This judgment highlights the importance of adherence to procedural timelines and the jurisdictional limits of the Commissioner while revising assessment orders under the Income Tax Act, 1961.