9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 984 - AT - Income TaxRevision u/s 263 - period of limitation - case of the assessee was selected for limited scrutiny under CASS for specific issues viz. (i) contract receipts/fees mismatch; (ii) sundry creditors; and (iii) sales turnover mismatch - as submitted by assesee Pr. CIT had blatantly traversed beyond the limited scope of jurisdiction vested with him u/s 263 - HELD THAT - As in the case before us the Pr. CIT had directed the A.O to frame a de novo assessment, therefore, the first proviso to sub-section (5) of Sec. 153 and the extension therein contemplated would not be applicable. As such, in the case before us the de novo assessment as directed by the Pr. CIT vide his order passed u/s 263, dated 31.03.2021, without any choice, has to be framed by the A.O within a period of twelve months from the end of the financial year in which the order u/s 263 was passed by the Pr. CIT. We find, that the legislature in all its wisdom had expressly vide Explanation 1 to Sec. 153 of the Act carved out certain circumstances wherein the period involved is to be excluded for computing the period of limitation. Although, we find, that as per clause (ii) of ―Explanation 1 to Sec. 153 of the Act, the period during which the assessment proceedings are stayed by an order or injunction of any court, the period therein involved is to be excluded for the purpose of computing the limitation for framing the assessment, reassessment and re-computation as envisaged in the said statutory provision, however, no such exclusion has been carved out by the legislature in all its wisdom in a case where the assessment proceedings are stayed by an order passed by the Tribunal. Accordingly, it is in the backdrop of the aforesaid mandate of law that we shall herein deal with the request of the assessee for restraining the A.O from framing the de novo assessment in pursuance to the order passed by the Pr. CIT u/s 263, dated 31.03.2021. Adverting to the claim of the assessee that it has a good case on merits, without expressing any opinion, we prima facie find substantial force in the same, for the reason, that the contention of the assesee is supported by the judgment of India Advantage Fund VII 2017 (2) TMI 722 - KARNATAKA HIGH COURT wherein it was observed that once the trust deed provided that benefits amongst the beneficiaries were to be shared proportionate to their investments, then, the shares of the beneficiaries were to be held as determinate. We remain conscious of the fact that circumscribed by the prescribed time limitation for framing of an assessment pursuant to an order passed by the Pr. CIT u/s 263 of the Act, there is an innate limitation on staying of the assessment proceedings, but then, at the same time we cannot also remain oblivious of the fact that in case the aforesaid request of the assessee is rejected at the threshold, then, the same may result to multiplicity of litigation which could have been otherwise avoided. We, thus, adopting a cautious but not a pedantic approach, though, refrain from restraining the A.O from proceeding with the assessment proceedings, however, at the same time, in all fairness herein direct him not to pass the assessment order giving effect to the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021 for a period of three months from the date of this order or till the disposal of the appeal filed by the assessee before us i.e against the order passed by the Pr. CIT u/s 263, dated 31.03.2021, whichever is earlier. Application filed by the assessee is allowed
Issues Involved:
1. Validity of jurisdiction assumed by the Pr. CIT under Section 263 of the Income Tax Act, 1961. 2. Restraint on the Assessing Officer (A.O) from passing a consequential assessment order pursuant to the Pr. CIT's order under Section 263. Detailed Analysis: 1. Validity of Jurisdiction Assumed by the Pr. CIT under Section 263 of the Income Tax Act, 1961: The genesis of the issue lies in the order passed by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263 of the Income Tax Act, 1961, dated 12.03.2020. The original assessment was framed by the A.O under Section 143(3) on 30.12.2017 for the Assessment Year 2015-16, wherein the returned income of Rs. nil was accepted. The Pr. CIT, upon reviewing the assessment records, observed that the A.O had failed to examine the reasons for which the case was selected for limited scrutiny under CASS, specifically: - Higher turnover reported in Service Tax return compared to ITR and large cash deposits in savings bank account. - Receipts under Sections 194C and 194J were more than those shown in ITR, with large cash deposits in savings bank account. - Large increase in sundry creditors compared to turnover in the preceding year. The Pr. CIT, considering the order passed by the A.O as erroneous and prejudicial to the interest of the revenue, called upon the assessee to explain why the order should not be revised under Section 263. The assessee contested the jurisdiction assumed by the Pr. CIT under Section 263 and argued that no infirmity emerged from the A.O's order. However, the Pr. CIT did not accept the assessee's contentions and set aside the assessment order, directing a de novo assessment. The assessee, aggrieved by the Pr. CIT's order, filed an appeal before the Tribunal, arguing that the Pr. CIT had traversed beyond the limited scope of jurisdiction vested under Section 263. The assessee contended that the balance of convenience lay in its favor and that the A.O had accepted the revised return of income after due application of mind, supported by the judgment of the Hon'ble High Court of Karnataka in the case of CIT vs. India Advantage Fund – VII (2017) 392 ITR 209 (Kar). 2. Restraint on the Assessing Officer (A.O) from Passing a Consequential Assessment Order Pursuant to the Pr. CIT's Order under Section 263: The assessee sought restraint on the A.O from passing a consequential assessment order until the disposal of the appeal against the Pr. CIT's order. The ld. Authorized Representative (A.R) argued that the Pr. CIT's order was based on the view that the jurisdictional High Court (Hon'ble High Court of Bombay) had not rendered any judgment supporting the assessee's claim, thus invalidating the applicability of the Karnataka High Court's judgment. The A.R rebutted this by citing the judgment of the Hon'ble High Court of Bombay in CIT vs. Godavaridevi Saraf (1978) 113 ITR 589 (Bom), which observed that until a contrary decision is given by a competent High Court, the law declared by another state's High Court is binding. The Departmental Representative (D.R) opposed the restraint, arguing that the Tribunal's powers under Section 254(2A) were limited to granting a stay on the recovery of demand, not on restraining the A.O from passing an assessment order. The D.R contended that the application lacked merit and should be rejected. The Tribunal, after considering the arguments, observed that the exercise of powers by the Income-Tax Appellate Tribunal must remain within the scope conferred by the legislature. The Tribunal noted that the de novo assessment directed by the Pr. CIT must be framed within the specified time period under Section 153(3) of the Act. The Tribunal acknowledged that the period during which assessment proceedings are stayed by a court order is excluded from the limitation period, but no such exclusion is provided for stays by the Tribunal. Despite recognizing the limitation on staying assessment proceedings, the Tribunal aimed to avoid multiplicity of litigation. Therefore, it refrained from restraining the A.O from proceeding with the assessment but directed the A.O not to pass the assessment order for a period of three months from the date of the Tribunal's order or until the disposal of the appeal, whichever is earlier. Conclusion: The application filed by the assessee was allowed, subject to the Tribunal's observations, with the A.O directed not to pass the assessment order for three months or until the disposal of the appeal, whichever is earlier. The order was pronounced in the open court on 28.06.2021.
|
