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2022 (8) TMI 429 - AT - Income TaxRevision u/s 263 - disallowance u/s 14A - HELD THAT - PCIT invoked the provisions of section 263 of the Act on basis of the order passed u/s 143(3) r.w.s. 263 of the Act on 31.03.2016. The entire assessment order was generated as per the direction of the order of the Ld. PCIT u/s 263 of the Act passed on 30.03.2015 but this order u/s 263 of the Act has already quashed by the ITAT in order dated 18.04.2022. Accordingly, this order passed u/s 263 of the Act has no leg to stand. The execution of order u/s 143(3) r.w.s. 263 is also has no life after the order of ITAT. The order passed u/s 263 of the Act on 13.03.2018 was generated on basis of nonest order. So entire foundation of the second round of order u/s 263 is beyond jurisdiction. Accordingly, the order passed u/s 263 of the Act on dated 13.03.218 is quashed.
Issues:
1. Validity of order passed by Ld. PCIT under section 263 of the Income Tax Act. 2. Applicability of revisionary powers without proper grounds. 3. Effect of previous ITAT judgment on subsequent orders. Analysis: 1. The appeal was filed against the order passed by the Principal Commissioner Income Tax -1, Mumbai under section 263 of the Income Tax Act for the assessment year 2010-11. The Assessing Officer (AO) had completed the assessment initially, which was set aside by the Principal Commissioner. The Commissioner of Income Tax (Appeals) upheld most additions except for disallowance under section 14A. Subsequently, the Principal Commissioner issued another order under section 263, directing a fresh assessment. The assessee contended that the second order was based on the first order, which had been quashed by the ITAT in a previous judgment. 2. The assessee argued that the Principal Commissioner erred in invoking revisionary powers without appreciating that the AO had completed the assessment in accordance with the law after due inquiry. The assessee relied on various judgments to support their contention. The ITAT, in a previous order, held that conducting a roving or fishing inquiry to detect potential income sources is impermissible under section 263. The ITAT quashed the order passed by the Principal Commissioner under section 263 in the earlier judgment. 3. The ITAT, in the present case, observed that the order passed by the Principal Commissioner on the basis of the quashed order had no legal basis. The subsequent order under section 263 was deemed to be beyond jurisdiction due to the nullity of the foundation on which it was based. Consequently, the ITAT quashed the order passed under section 263 on 13.03.2018. The appeal of the assessee was allowed, emphasizing the lack of legal standing for the impugned order. In conclusion, the ITAT Mumbai, in its judgment, highlighted the importance of adhering to legal procedures and conducting assessments within the framework of the law. The decision underscored the significance of proper grounds for invoking revisionary powers and the impact of previous judicial pronouncements on subsequent orders.
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