2019 (5) TMI 736 - AT - Income Tax

Revision u/s 263 - exercise of revisionary jurisdiction by CIT u/s 263 against the order passed u/s 143(3) r.w.s. 147 wherein the assessment proceedings were re-opened on specific reasons recorded for re-opening - revision on issues which did not form subject of re-opening of the assessment or order of reassessment - HELD THAT - Once, the re-assessment proceedings are initiated on a specific issue and the addition is made in the hands of the assessee then the CIT is precluded from exercise of jurisdiction u/s 263 on a ground which is not covered by the reasons during the reopening of the assessment since the time for completing the assessment u/s 143(3) had expired. Hence, we find no merit in the exercise of revisionary power by the CIT u/s 263 in the present facts and circumstances. We find support from the ratio laid down in the case of M/s. Ashoka Buildcon Limited Vs. ACIT 2010 (4) TMI 152 - BOMBAY HIGH COURT wherein also the question was of revisionary proceedings initiated u/s 263 against the assessment made which was re-opened u/s 147. The Hon ble Bombay High Court noted that the re-assessment proceedings were in relation to a particular grounds and subsequent thereto of passing of the re-assessment and exercise of jurisdiction u/s 263 with reference to the issues, which did not form subject of re-opening of assessment cannot be exercised. The order of revision passed in the present case, on issues which did not form subject of re-opening of the assessment or order of reassessment, cannot be upheld. Therefore the revisionary proceedings exercised by the CIT is not correct. Hence, the said order of CIT is set aside. A.Y. 2011-12 - exercise of revisionary jurisdiction u/s 263 by CIT - document found from the residential premises of Shri Anant Keshav Rajegaonkar wherein the transaction totaling to ₹ 2.98 crore is mentioned - HELD THAT - It may be pointed out that the transaction relates to number of years and we have already referred to the details in the paras above. The first year was A.Y. 2006-07 wherein the amount mentioned on the document was ₹ 19 lakh. We have already held the exercise of jurisdiction by the CIT u/s 263 to be not in accordance with the law in the paras above. Now coming to appeal in A.Y. 2007-08, wherein the transaction noted is ₹ 127 lakh, the assessment for this year was completed under section 143(3) of the Act but no proceedings u/s 263 of the Act have been initiated against the assessee. Similarly, for A.Ys. 2008-09 and 2009-10 wherein the transactions noted were ₹ 45 lakh and ₹ 40 lakh, respectively, though the assessment has been completed in the hands of the assessee but no proceedings u/s 263 of the Act have been completed. In the captioned assessment year i.e., A.Y. 2011-12, the amount noted in the seized document is ₹ 67 lakh and is the basis for exercise of revisionary power by the Commissioner of Income Tax against the assessee. Once the transaction has been accepted in the earlier years and the transaction emanate from the same seized document, then the Revenue authorities cannot take different stand in different years. - Decided in favour of assessee - no merit in the exercise of jurisdiction u/s 263 against the assessee by the CIT - Decided in favour of assessee.

Summary

Issues Involved:
Appeals arising from orders of Commissioner of Income Tax under section 263 for assessment years 2006-07 & 2011-12; Exercise of revisionary powers by the Commissioner of Income Tax; Validity of orders under section 263; Reopening of assessment proceedings; Jurisdiction under section 263 based on specific grounds; Limitation period for revisionary jurisdiction; Compliance with legal procedures in reassessment proceedings.

Analysis:
For the assessment years 2006-07 & 2011-12, the appeals challenged the orders passed under section 263 of the Act by the Commissioner of Income Tax. The key contention was the jurisdiction of the Commissioner to exercise revisionary powers based on specific grounds. In the case of A.Y. 2006-07, the assessment was reopened for specific reasons, and additions were made accordingly. The Tribunal held that once additions were made in the reassessment proceedings, the Commissioner could not exercise jurisdiction under section 263 on grounds not covered during the reopening of assessment, especially after the time for completing assessment had expired. The Tribunal cited the decision in M/s. Ashoka Buildcon Limited Vs. ACIT, emphasizing that revisionary powers cannot be used on issues not part of reassessment.

The Tribunal noted that the Commissioner initiated revisionary proceedings based on a document found during a search, detailing transactions totaling ?2.98 crore over multiple years. However, the Tribunal found inconsistency in the treatment of transactions across different assessment years. For A.Y. 2007-08, where a transaction of ?127 crore was noted, no action under section 263 was taken. Similarly, for A.Ys. 2008-09 and 2009-10, where transactions of ?45 lakh and ?40 lakh were observed, no revisionary proceedings were initiated. The Tribunal concluded that the Commissioner's exercise of jurisdiction under section 263 for A.Y. 2011-12, based on the same document, was unjustified due to the acceptance of transactions in earlier years.

In the final analysis, the Tribunal set aside the orders passed under section 263 for both A.Y. 2006-07 and A.Y. 2011-12, ruling in favor of the assessee. The Tribunal highlighted discrepancies in the Commissioner's findings and emphasized the need for adherence to legal procedures and limitations in exercising revisionary powers. The judgment underscored the importance of consistency in treatment across assessment years and the necessity for proper grounds for initiating revisionary proceedings. Ultimately, both appeals of the assessee were allowed, and the orders under section 263 were overturned.

This detailed analysis of the legal judgment highlights the intricacies of the issues involved, the Tribunal's reasoning, and the application of relevant legal principles in determining the validity of the Commissioner's orders under section 263 for the respective assessment years.