2023 (9) TMI 511 - HC - Income Tax

Revision u/s 263 - Effect of consequent assessment order giving effect to the revision order, once the Section 263 proceedings were set aside by itself - HELD THAT - As in the present appeal, the subject matter is the assessment order passed in consonance with the directions issued by the PCIT, Surat, in exercise of powers under Section 263 of the Act. That order of the Principal CIT, Surat, has already been set aside by the ITAT. That being so, the order under Revision being quashed has become final and the consequential order of assessment dated 28.06.2019 would not stand. Pendency of an appeal against the revisional proceedings would not be a ground for this appeal to be kept pending. Though the assessee had brought it to the notice of the AO to keep the proceedings in abeyance, the AO proceeded to finalize the assessment. Revenue, did not, before the ITAT also make a request to keep the appeal pending or in abeyance on the ground that this Court was seized of an appeal against the revision proceedings. In absence of this, the Tribunal could not be faulted in holding that once the Section 263 proceedings were set aside by itself, the consequent assessment order giving effect to the revision order is void ab initio. If the Revenue were to succeed in the pending appeal before this Court, AO will have to undertake a fresh exercise in light of the directions therein. On this ground too, no useful purpose can be served to entertain this appeal on the count of the other appeal pending. No substantial question of law.

Summary

Issues:
The judgment involves the challenge to an order passed by the Income Tax Appellate Tribunal regarding the assessment year 2014-15. The substantial questions of law raised in the appeal relate to the validity of quashing the assessment order and the reliance on a previous tribunal decision without deciding the issue on merits.

Issue 1 - Assessment Order Quashing:
The case involved an assessee, a housing society, filing a return of income showing total income NIL after claiming a deduction under Section 80P of the Income Tax Act. The initial assessment order under Section 143(3) was accepted but later found to be erroneous and prejudicial to the revenue's interest. The Principal CIT set aside the order and directed a fresh assessment, which was done pending the assessee's appeal. The ITAT quashed the assessment order, holding that once the revision order was set aside, the consequent assessment order was void ab initio.

Issue 2 - Merits of the Case:
The CIT(A) considered the appellant's submissions and noted a previous decision by the ITAT in the appellant's case, which allowed the deduction under Section 80P(2)(d) of the IT Act. As the revision order was quashed and the issue of eligibility under Section 80P(2)(d) was decided in favor of the appellant, the appeal was allowed.

Tribunal's Findings:
The Revenue appealed to the ITAT, arguing that the assessment order was not void ab initio. However, the ITAT upheld the assessee's position, citing a previous decision where the revision order was set aside, leading to the voidness of the consequent assessment order.

Conclusion:
The High Court dismissed the Tax Appeal, stating that the order under revision had been quashed and the consequential assessment order was void ab initio. The pendency of an appeal against the revisional proceedings did not justify keeping the present appeal pending. The Tribunal's decision was upheld, and no substantial question of law was found to be involved in the case.