2023 (10) TMI 1187 - AT - Income Tax

Validity of Revision u/s 263 - prescription and requirement of revision u/s 263 - objection raised by Ld. AR that the show-cause notice issued on the very same day on which proposal is mooted before PCIT - Revenue submitted that there are multiple communications and in-house working in department before show-cause notice is actually issued to assessee and that the draft-notice was prepared by AO at the behest of PCIT - HELD THAT - PCIT received proposal for revision from AO and the AO has even placed draft-notices before PCIT for signature. AR is successfully able to demonstrate that the revision in these cases had been conducted on the bedrock of AO s proposal and draft-notice. That means, the conditions prescribed in section 263 are not fulfilled As relying on Alfa Laval Lund AB 2021 (11) TMI 327 - ITAT PUNE the present case is having a jurisdictional deficit resulting into vitiating the impugned order. Therefore, we quash the impugned order on legality aspect itself and restore the original assessment-order passed by AO - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the jurisdictional deficit in revisionary action undertaken by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income-tax Act, 1961, concerning four different revision-orders dated 17.02.2020 and 31.01.2020, all pertaining to assessment year 2015-16.

Facts and Arguments:
The four assessee-appellants are companies established for highway projects, with Dilip Buildcon Ltd. as their holding company. The PCIT undertook revisionary action under section 263 after the assessments were completed by the Assessing Officers. The appellants challenged the revision-orders, claiming a jurisdictional deficit in the PCIT's actions. The appellants argued that the PCIT did not call for and examine the assessment records as required by section 263, as the AO initiated the revision and prepared the draft notice signed by the PCIT without proper examination. The appellants relied on a decision by ITAT, Pune, which held that revision based on a proposal from the AO without proper examination by the CIT is a jurisdictional deficit.

Decision and Analysis:
The ITAT analyzed the order-sheets and show-cause notices issued by the PCIT, finding that the revision was based on the proposal and draft notices prepared by the AO, indicating a failure to fulfill the conditions of section 263. Despite arguments from the Revenue's representative, the ITAT held that the jurisdictional deficit vitiates the impugned order. Citing the decision of ITAT, Pune, the ITAT quashed the revision-order and restored the original assessment-order passed by the AO. The ITAT concluded that the revision lacked proper examination by the PCIT, leading to a jurisdictional deficit, and therefore allowed all four appeals of the assessees.

Conclusion:
The ITAT, Indore, in its judgment, emphasized the importance of the PCIT's role in calling for and examining assessment records before initiating revisionary action under section 263. The judgment highlighted the necessity for the CIT to independently assess the correctness of the AO's order to avoid jurisdictional deficits. The decision serves as a reminder of the procedural requirements for revisionary actions under the Income-tax Act, ensuring a fair and thorough review process.