2023 (5) TMI 412 - AT - Income Tax

Revision u/s 263 - assessment was framed based on survey findings - appeal is pending before Ld. CIT(A) - discrepancy in stock and disallowance u/s 40A(3) for jewellery acquired in cash - HELD THAT - The discrepancy in stock was added under the head business income whereas disallowance u/s 40A(3) for jewellery acquired in cash through exchange was estimated at 10%. It is quite clear that there was clear application of mind on the issues as flagged in the revisionary order. Proceeding further, it could also be seen that the assessee preferred further appeal against both the issues which was pending for adjudication at the time of revision. This being so, the case of the assessee would be covered under Clause (c) of Sec.263(1) which puts a bar on initiation of revision u/s 263 when an appeal is pending before Ld. CIT(A). As relying on Smt. Renuka Philip case 2018 (12) TMI 129 - MADRAS HIGH COURT and similar ratio has been laid down in CIT vs. VAM Resorts and Hotels Pvt. Ltd. 2019 (8) TMI 1418 - ALLAHABAD HIGH COURT we would hold that the revision u/s 263 was bad-in-law and the same is therefore, liable to the quashed. Decided in favour of assessee.

Summary

Issues involved:
The validity of revisional jurisdiction u/s. 263 exercised by Ld. Principal Commissioner of Income Tax against the assessment framed by Ld. Assessing Officer u/s. 143(3) of the Act.

1. Validity of Revisionary Order:
The appellant challenged the revisionary order on various grounds, including failure to consider explanations, passing the order while an appeal was pending, and misconstruing provisions of Explanation 2(a) to sec. 263. The Ld. AR argued that the doctrine of merger applied as the issues were already subject to adjudication before the first appellate authority. The Ld. CIT-DR contended that the revision was justified due to incorrect application of provisions by the Assessing Officer.

2. Assessment and Revisionary Proceedings:
The assessment was based on a survey, with additions made for discrepancies in stock and violation of Sec. 40A(3) for cash purchases of old jewellery. The Ld. Pr. CIT invoked revisionary jurisdiction based on unaccounted stock and disallowance u/s 40A(3). The appellant objected to the revision, citing a pending appeal before the first appellate authority.

3. Findings and Adjudication:
The Tribunal found that the revision u/s 263 was not valid as the appellant had appealed the issues before the CIT(A), invoking the bar on revisionary jurisdiction when an appeal is pending. Citing judgments from the Hon'ble Madras High Court and Hon'ble Allahabad High Court, the Tribunal concluded that the revision was without jurisdiction and ordered it to be quashed.

In conclusion, the Appellate Tribunal held that the revision u/s 263 was not valid due to the pending appeal before the CIT(A), following the principles established in judicial precedents. The appeal was allowed, and the revisionary order was quashed.