2021 (10) TMI 872 - AT - Income Tax

Revision u/s 263 by CIT - action u/s. 132A of the act was initiated and concluded - cash seized by the SST-FS team of District Administration - case was selected under scrutiny by issuance of notice u/s 143(2) - SCN issued to assessee seeking to tax the surrender of ₹ 20 Lakhs @ provided under s. 115BBE - requisition has been made u/s 132A of the Act, the jurisdiction to complete the assessment is governed by the provisions of Section 153A - assessee contends that the assessment made u/s 143(3) of the Act in pursuance of requisition u/s 132A of the Act is grossly opposed to the very scheme of the Act and such assessment is wholly unsustainable in law and thusan ab initio void order cannot be subject to revision under s. 263 HELD THAT - The normal provisions of assessment under s. 143(3) of the Act would not apply in the case where action has been taken either under s. 132 of the Act or under s. 132A of the Act. The assessment, however, has been wrongly framed with the aid of Section 143(3) under the normal provisions of the Act. The assessment made under s. 143(3) of the Act in pursuance of requisition under s. 132A of the Act is grossly opposed to the very scheme of the Act and such assessment is wholly unsustainable in law. We find considerable substance in the plea of the assessee. The order which is a nullity in law and has no legal effect, cannot be revised under s. 263 of the Act. The assessment order being infructuous in law, the consequential action under s. 263 of the Act is equally infructuous. The assessment, in the instant case, has not been framed under s. 153A of the Act despite requisition under s. 132A of the Act. The error committed by the AO in contravention of express provisions of Act is incurable and has rendered the assessment void ab initio and a nullity in law. Such assessment order being devoid of any legal effect could not be revised. The revisional order is accordingly quashed and set aside. - Decided in favour of assessee.

Summary

Issues:
Challenge to jurisdiction under section 263 of the Income Tax Act, 1961 and revisional order passed by the Principal Commissioner of Income Tax, Raipur. Assessment under section 143(3) for AY 2017-18 based on cash seizure during Municipal Elections in Vidarbha.

Analysis:
The appeal was filed against the Principal Commissioner of Income Tax's order under section 263 of the Income Tax Act, seeking to set aside the assessment order passed by the Assessing Officer for AY 2017-18. The assessee challenged the jurisdiction assumed by the PCIT under section 263 and the revisional order. The case involved cash seizure during Municipal Elections in Vidarbha, where cash was seized from the assessee without satisfactory explanations. The assessment under section 143(3) was completed, and later, the PCIT sought to tax the surrendered amount under section 115BBE, leading to the revisional order.

The assessee contended that the assessment order under section 143(3) was void ab initio as it should have been completed under section 153A due to the cash seizure under section 132A. The assessment order was time-barred and lacked jurisdiction, rendering it null and void. The assessee argued that the PCIT misdirected himself in revising an illegal assessment order. The Revenue defended the PCIT's action, but the Tribunal found merit in the assessee's argument.

The Tribunal agreed with the assessee, stating that an assessment order that is null and void cannot be revised under section 263 of the Act. The assessment order, made under section 143(3) instead of section 153A following the cash seizure under section 132A, was against the Act's scheme and unsustainable. Citing legal precedents, the Tribunal held that the assessment order, being void ab initio, could not be subject to revision. Consequently, the revisional order was quashed and set aside, and the appeal of the assessee was allowed.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that an assessment order lacking legal effect cannot be revised under section 263 of the Income Tax Act. The incorrect framing of the assessment order under section 143(3) instead of section 153A rendered it void ab initio, leading to the quashing of the revisional order by the PCIT.