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2022 (3) TMI 1021 - AT - Income TaxValidity of Revision u/s 263 - Period of limitation - date from which limitation begin to run - issue covered by the original order of assessment under section 143(3) or from reassessment - whether order of Ld. PCIT is barred by limitation under the Act as the period of two years under section 263(1) of the Act is to be reckoned from the date of original assessment framed under section 143(3) dated 31.03.2016 and not from the dated reassessment order passed under section 143(3) read with section 147 of the Act dated 31.12.2018? - HELD THAT - Hon'ble Bombay High Court in the case of CIT vs. ICICI Bank Limited 2012 (2) TMI 308 - BOMBAY HIGH COURT as held that where the jurisdiction under section 263(1) of the Act is sought to be exercised with reference to an issue which is covered by the original order of assessment under section 143(3) of the Act and which does not form the subject matter of the reassessment, the limitation must necessarily begin to run from the date of order passed under section 143 The issue on which the Ld. PCIT proposed the revision of reassessment order dated 31.12.2018, we note that the issue of payment of bogus commission was not the subject matter of reassessment proceedings. Therefore, the period of limitation has to run from the date of assessment as framed under section 143(3) dated 31.03.2016. In view of this, we incline to hold that the revisionary jurisdiction exercised by the Ld. PCIT is hopelessly barred by limitation. The appeal of the assessee is allowed.
Issues Involved:
1. Whether the revisionary jurisdiction exercised by the Ld. PCIT under section 263 of the Act is barred by limitation. 2. Whether the reassessment order under section 143(3) read with section 147 dated 31.12.2018 can be revised for an issue not subject matter of the reassessment proceedings. Issue-wise Detailed Analysis: 1. Limitation for Exercising Revisionary Jurisdiction: The primary issue is whether the Ld. PCIT's action to revise the reassessment order under section 263 is barred by the limitation period prescribed under section 263(2) of the Act. The assessee argued that the limitation period should be reckoned from the date of the original assessment order dated 31.03.2016, which expired on 31.03.2018, making the revisionary jurisdiction exercised by Ld. PCIT on 15.01.2021 barred by limitation. The Ld. A.R. relied on the decisions in CIT vs. Alagendran Finance Limited (2007) 293 ITR 1 (SC) and CIT vs. ICICI Bank Limited (2012) 343 ITR 74 (Bom.), where it was held that the limitation period runs from the date of the original assessment order when the issue was not part of the reassessment proceedings. 2. Scope of Reassessment Proceedings: The reassessment proceedings were initiated to examine the allowance of deduction under section 35(2AB) of the Act, and the issue of payment of bogus commission to M/s. Reynolds Petro Chems Limited was not part of the reassessment. The Ld. A.R. contended that the Assessing Officer (AO) did not have the occasion to examine the issue of bogus commission during the reassessment proceedings, and such an issue could only be examined during the original assessment proceedings. The Ld. D.R. argued that the revisionary jurisdiction should be upheld as it would not prejudice the assessee, who would have the opportunity to present their case during the set-aside assessment proceedings. Judgment Analysis: The Tribunal noted that the AO did not examine the issue of commission payment during the original assessment proceedings under section 143(3) dated 31.03.2016. The reassessment under section 147 read with section 148 dated 31.12.2018 was initiated for a different issue (deduction under section 35(2AB)), and the commission payment issue did not come to the AO's notice during the reassessment proceedings. The Tribunal held that the revisionary jurisdiction exercised by the Ld. PCIT under section 263 is barred by limitation, as the limitation period should be reckoned from the date of the original assessment order, not the reassessment order. The Tribunal relied on the decisions in CIT vs. Alagendran Finance Limited and CIT vs. ICICI Bank Limited, which supported the assessee's contention that the limitation period runs from the date of the original assessment order when the issue was not part of the reassessment proceedings. Conclusion: The Tribunal concluded that the revisionary jurisdiction exercised by the Ld. PCIT is barred by limitation, and the reassessment order under section 143(3) read with section 147 dated 31.12.2018 cannot be revised for an issue not subject matter of the reassessment proceedings. Consequently, the appeals of the assessee were allowed. Separate Judgments: The judgment in ITA No. 23/PAT/2021 followed the same reasoning as in ITA No. 22/PAT/2021, with the additional note that the issue of payment of bogus commission was examined in the original assessment for A.Y. 2014-15. The Tribunal applied the same principle and allowed the appeal. Final Order: Both appeals of the assessee were allowed, and the revisionary jurisdiction exercised by the Ld. PCIT was quashed as being barred by limitation.
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