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2021 (12) TMI 767 - HC - Income TaxRevision u/s 263 - As per CIT assessee s claim for deduction under Section 80IB ought to have been rejected by the Assessment Officer but the same had been allowed - merger of order of CIT with tribunal - Consequently levy of concealment penalty under Section 271(1)(c) - HELD THAT - AO in proceedings under Section 143(3) of the said Act was pleased to disallow the amount that was claimed towards recovery of amount written off in the earlier year as well as amount being towards receipt of commission disallowed these deductions under Section 80IA of the said Act. This order was challenged by the assessee before the Commissioner of Income Tax (Appeals) and on 31/01/2007 the aforesaid two deductions that were disallowed by the AO came to be permitted. A finding was recorded that the deduction as claimed by the assessee under Section 80IA/80IB was in accordance with law and was hence granted. This appellate order was challenged by the Revenue before the Tribunal. In the judgment dated 29/10/2007 the Tribunal subsequently considered the aforesaid two heads of disallowances and proceeded to dismiss the appeal preferred by the Revenue on merits. It was thus clear from the aforesaid sequence of events that the order passed by the Commissioner of Income Tax (Appeals) dated 31/01/2007 merged in the order passed by the Tribunal on 29/10/2007 and attained finality. Thus as the order of the Commissioner Income Tax (Appeals) having merged with the order of the Tribunal, there was no scope for the Commissioner of Income Tax to initiate proceedings under Section 263 - As on merger of the order passed by the Commissioner with that passed by the Tribunal, the jurisdiction under Section 263 (1)(c) of the said Act could not have been invoked is settled in view of judgment of this Court in Slum Rehabilitation Authority 2019 (4) TMI 64 - BOMBAY HIGH COURT - Decided in favour of assessee.
Issues involved:
1. Interpretation of Section 263 of the Income Tax Act regarding the Commissioner's jurisdiction to nullify an exercise under Section 263(1)(c). 2. Merger of orders passed by the Assessing Officer, Commissioner of Income Tax (Appeals), and Tribunal in relation to deductions under Section 80IA and 80IB of the Income Tax Act. 3. Validity of penalty proceedings under Section 271(1)(c) of the Income Tax Act. Detailed Analysis: 1. The judgment addressed the interpretation of Section 263 of the Income Tax Act concerning the Commissioner's authority to nullify an exercise under Section 263(1)(c). The central question was whether the ITAT was justified in nullifying the Commissioner's exercise under Section 263 regarding disallowance under Section 80-IB of the Act. The Tribunal found that the Commissioner was not justified in invoking revisional jurisdiction under Section 263 for the disallowance under Section 80-IB, leading to the cancellation of the penalty under Section 271(1)(c). 2. The issue of merger of orders passed by different authorities, including the Assessing Officer, Commissioner of Income Tax (Appeals), and Tribunal, in relation to deductions under Section 80IA and 80IB was extensively discussed. The judgment highlighted that once the order passed by the Commissioner of Income Tax (Appeals) was upheld by the Tribunal, there was no scope for the Commissioner to initiate proceedings under Section 263. The principle of merger was crucial in determining the finality of decisions and the subsequent jurisdiction of the Commissioner. 3. The validity of penalty proceedings under Section 271(1)(c) of the Income Tax Act was also examined. It was established that since the deductions under Section 80IA and 80IB were permitted and upheld by the Tribunal, there was no basis for imposing any penalty on the assessee. The dismissal of the appeals challenging the deductions consequently led to the dismissal of the penalty proceedings as well, as there was no substantial question of law arising in this regard. In conclusion, the judgment provided a detailed analysis of the issues surrounding the Commissioner's jurisdiction under Section 263, the concept of merger of orders, and the implications for penalty proceedings under Section 271(1)(c) in the context of deductions under Section 80IA and 80IB of the Income Tax Act.
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