2023 (2) TMI 199 - AT - Income Tax

Revisionary proceedings u/s 263 - Whether CIT(A) has erred in allowing assessee s appeal on account of the hon ble ITAT setting aside PCIT s order u/s. 263 whereas the matter being subjudice as the hon ble ITAT decision has not attained finality? - HELD THAT - The original assessment proceedings were carried out u/s 143(3) of the Act and the same was subject matter of the proceedings carried out u/s 263 of the Act wherein ld. Pr. CIT set aside the assessment order u/s 143(3) of the Act and directed ld. AO to reframe it in light of the directions given in this order u/s 263 of the Act. In compliance thereto, ld. AO carried out the assessment proceedings u/s 143(3) r.w.s. 263 of the Act making addition in the hands of the assessee. These additions were challenged before ld. CIT(A). As far as revisionary proceedings u/s 263 of the Act are concerned, the same were challenged by the assessees before this Tribunal and vide order 2020 (2) TMI 1686 - ITAT KOLKATA the revisionary proceedings were quashed and the assessment order u/s 143(3) of the Act has been restored. Under these given circumstances of the case since revisionary proceedings u/s 263 of the Act being quashed, the order u/s 143(3) r.w.s. 263 of the Act has become infructuous. Since, all the proceedings carried out in pursuance to the revisionary proceedings u/s 263 of the Act have become infructuous, therefore, ld. CIT(A) has rightly allowed the assessee s appeal. Appeals filed by the Revenue are dismissed.

Summary

Issues Involved:
Appeals by Revenue against orders u/s 250 for AY 2014-2015, condonation of delay, validity of CIT(A) order setting aside PCIT's order u/s 263, infructuous nature of assessment order u/s 143(3) r.w.s. 263, restoration of original assessment order by ITAT.

Analysis:
The Appellate Tribunal ITAT Kolkata heard appeals by the Revenue against separate orders passed u/s 250 for AY 2014-2015 by the CIT(A) dated 18.02.2021. The appeals were time-barred by 493 days, but the delay was condoned due to reasonable cause (COVID-19 restrictions), allowing the appeals for adjudication. The Revenue raised common grounds challenging the CIT(A)'s decision to set aside the PCIT's order u/s 263. The Tribunal consolidated the appeals due to common issues and identical facts for convenience.

The assessee argued that the CIT(A)'s order was not operative as the revisionary proceedings u/s 263 were quashed by the ITAT, rendering subsequent proceedings infructuous. The Tribunal found that the CIT(A) rightly allowed the assessee's appeal as the original assessment proceedings under 143(3) were subject to revision under 263, which was subsequently quashed by the ITAT. Consequently, the order u/s 143(3) r.w.s. 263 became infructuous, leading to the dismissal of the Revenue's appeals.

The CIT(A) allowed the assessee's appeal based on the ITAT's decision to restore the original assessment order and quash the revisionary proceedings. The Tribunal upheld the CIT(A)'s decision, stating that all proceedings post-revision under 263 had become infructuous. As a result, the Revenue's appeals were dismissed on 24th January 2023.