2023 (9) TMI 622 - HC - Income Tax

Validity of Revision u/s 263 - consequential order of assessment u/s 143 r.w. Section 263 once Revision proceedings u/s 263 was set aside - HELD THAT - As decided in 2023 (9) TMI 511 - GUJARAT HIGH COURT - 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 Assessing Officer to keep the proceedings in abeyance, the AO proceeded to finalize the assessment. The 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, the Assessing Officer 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 - Appeals being devoid of merits are accordingly dismissed.

Summary

Issues involved:
The judgment deals with the challenge by Revenue against the dismissal of appeals under Section 260A of the Income Tax Act, questioning the quashing of an order under Section 143(3) read with Section 263 of the Act.

Issue 1: Validity of quashing the order under Section 263 of the Act:
The Revenue challenged the quashing of the order under Section 143(3) read with Section 263 of the Act by the Tribunal. The facts revealed that the Principal CIT set aside the assessment order due to errors, leading to a fresh assessment order under Section 143 read with Section 263. However, the ITAT later set aside the order under Section 263, rendering the consequential assessment order void. The CIT(A) and the Tribunal both found in favor of the assessee, leading to the dismissal of Revenue's appeals.

Issue 2: Effect of quashing the revision proceedings:
The Tribunal observed that since the original order under Section 263 was quashed and set aside, the consequential assessment order based on it became void. The Tribunal dismissed the Revenue's appeals as no new facts were presented, and the order under revision had already been deemed final. The pendency of an appeal against the revisional proceedings did not justify keeping the assessment order pending, especially when the ITAT had already set aside the revision proceedings.

Separate Judgment by the Court:
In a separate judgment, the Court held that the order under revision had been quashed by the ITAT, making the consequential assessment order invalid. The Court emphasized that the Revenue did not request to keep the appeal pending during the revision proceedings, and since the ITAT had set aside the Section 263 proceedings, the assessment order was void ab initio. The Court concluded that no substantial question of law was involved, and the appeal was dismissed.

This comprehensive summary highlights the key issues addressed in the judgment, including the validity of quashing the order under Section 263 of the Income Tax Act and the effect of setting aside the revision proceedings on the assessment order.