2024 (1) TMI 1331 - AT - Income Tax

Revision u/s 263 - as per CIT AO has not examined the exemption u/s 54B/54F and deduction of transfer expenses claimed by assessee against long-term capital gain - HELD THAT - Revision in this case had been conducted on the bedrock of AO s proposal. That means, the conditions prescribed in section 263 are not fulfilled. We have gone through the decision of Alfa Laval Lund AB 2021 (11) TMI 327 - ITAT PUNE and find that the said decision quashing the revision has been rendered on exactly same set of facts as involved in present appeal of assessee. Although Ld. DR for the revenue has dutifully made certain arguments as noted in foregoing paragraph but neither been able to rebut the arguments made by Ld. AR nor the applicability of the decision of ITAT, Pune on facts or in law. Therefore, we are inclined to hold that 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. Assessee appeal allowed.

Summary

Issues:
Jurisdictional deficit in revisionary-action undertaken by PCIT under section 263 of the Income-tax Act, 1961.

Detailed Analysis:

1. Background:
The appeal was filed by the assessee against the revision-order passed by the Principal Commissioner of Income-Tax (PCIT) under section 263 of the Income-tax Act, 1961. The PCIT set aside the assessment-order passed by the Assessing Officer (AO) and directed a re-assessment after finding errors prejudicial to the interest of revenue.

2. Jurisdictional Deficit Argument by Assessee:
The assessee's representative argued that the PCIT's revisionary-action was flawed due to a jurisdictional deficit. The argument was based on the fact that the PCIT initiated the revision based on a proposal from the AO, rather than independently examining the assessment proceedings. The assessee contended that section 263 requires the PCIT to call for and examine the record independently before deeming an order as erroneous and prejudicial to revenue.

3. Precedent and Legal Analysis:
The assessee cited a similar case decided by the ITAT, Pune, where the revision exercise by the PCIT was deemed to suffer from a jurisdictional deficit. The ITAT held that the CIT must independently examine the record before considering an order as erroneous and prejudicial to revenue. The ITAT emphasized that the power under section 263 is vested exclusively in the CIT and cannot be invoked by another authority.

4. Decision and Rationale:
After considering the arguments from both sides and analyzing the facts, the ITAT in the present case found that the revision by the PCIT was based on the proposal from the AO, indicating a jurisdictional deficit. The ITAT relied on the precedent set by the ITAT, Pune, and concluded that the revision-order was vitiated due to the lack of independent examination by the PCIT. Consequently, the ITAT quashed the revision-order and restored the original assessment-order passed by the AO.

5. Conclusion:
The ITAT allowed the appeal of the assessee, emphasizing the importance of the CIT's independent examination before invoking revisionary powers under section 263. The decision highlighted the statutory requirement for the CIT to fulfill specific conditions before revising an assessment order, ensuring the protection of the revenue's interest.