2023 (2) TMI 121 - AT - Income Tax

Revision u/s 263 - Jurisdiction of CIT when the matter is pending before the CIT(A) - unexplained share capital including share premium from Group of Companies - subject matter of reassessment order is also relates to addition on account of share premium and share capital received from different unlisted Companies - HELD THAT - The assessee did not submit anything in both these orders. Appeals against both these orders are stated to be pending before the CIT(Appeals). CIT(Appeals) has the coterminus power with that of AO and if any error lies in the quantification of the alleged undisclosed income required to be added with the aid of section 68 that aspect can easily be gone through by the CIT(Appeals) under section 251(1)(a) of the Act. Since these items are subject matter of appeal before the 1st Appellate Authority, no action under section 263 ought to have been taken by the CIT by exercising revisionary power. We have highlighted the powers of ld. CIT(A) for deciding the appeals and the subject matter of the appeals pending before the ld. CIT(Appeals) relates to quantification of the share capital including share premium received by the assessee. It is not a separate issue, which has to be taken care in revisionary jurisdiction. It can easily be examined by the ld. 1st Appellate Authority while deciding the appeals against the above two assessment orders. Therefore, we allow this appeal of the assessee and quash 263 order. The observations made by us will not impair or injure the case of ld. Assessing Officer and will not cause any prejudice to the defence/explanation of the assessee in the quantum appeals pending before the ld. CIT(Appeals). The provision of the Income Tax Act discussed by us is only with the angle to bring the point at home that no 263 action can be taken up in such type of issues. Appeal of the assessee is allowed.

Summary

Issues:
Appeal against order under section 263 of the Income Tax Act for A.Y. 2012-13.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata involved a single issue where the assessee challenged the order of the Principal Commissioner of Income Tax passed under section 263 of the Income Tax Act for the assessment year 2012-13. The primary grievance of the assessee was that the Commissioner had erred in invoking section 263 and setting aside the assessment order for a denovo assessment. The facts revealed that the assessee had received substantial share capital and share premium from unlisted companies, leading to an assessment order under section 144(1) estimating the income. Subsequently, a reassessment was done under section 147, with the Assessing Officer determining undisclosed income. The Commissioner initiated proceedings under section 263, citing a variance in the undisclosed income figures between the original and reassessment orders, causing prejudice to revenue.

The Tribunal considered the contentions of both parties and analyzed the legal provisions governing revisionary powers. It noted that section 263(1)(c) restricts the Commissioner from revising an issue subject to appeal before the CIT(Appeals). Additionally, the powers of the CIT(Appeals) under section 251(1)(a) allow for confirmation, reduction, enhancement, or annulment of assessments. The Tribunal observed that the original and reassessment orders primarily dealt with additions related to share capital and premium from unlisted companies, with pending appeals before the CIT(Appeals. As the CIT(Appeals) had the authority to address errors in quantification of undisclosed income, the Tribunal held that the Commissioner's revisionary action under section 263 was unwarranted. The Tribunal emphasized that the CIT(Appeals) could adequately address the issues raised in the assessment orders, and hence, the Commissioner's order under section 263 was set aside, allowing the assessee's appeal.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the observations made did not prejudice the Assessing Officer or the assessee's defense in pending quantum appeals before the CIT(Appeals). The decision highlighted the limitations on revisionary powers under section 263 and affirmed the role of the CIT(Appeals) in addressing assessment issues, ultimately quashing the Commissioner's order under section 263.