2024 (4) TMI 498 - HC - Income Tax

Validity of revision u/s 263 against order u/s 143(3) r/w section 153A - authority of PCIT (Central), Bhopal challenged on the ground that the assessment order was passed u/s 143(3) r/w section 153A upon taking prior approval from the Assistant Commissioner, Income Tax (Central) 1, Indore under Section 153D of the Act - ITAT held that the order passed by the PCIT is unsustainable due to lack of jurisdiction in invoking Section 263 - In this appeal, the tax effect is below than Rs. 1,00,00,000/-. HELD THAT - As decided in Ramamoorthy Vasudevan 2018 (11) TMI 1874 - ITAT PUNE once the order under Section 143(3) r/w section 153A of the Act has been passed after taking prior approval of the ACIT under Section 153D of the Act, then the jurisdiction under Section 263 of the Act cannot be invoked. Therefore, the view taken by the Co-ordinate Bench of the Appellate Tribunal had attained finality. Hence, the ITAT, Indore has not committed any error of law by following the same view. For passing any order under Sections 143(3) 153A of the Act, prior approval of Joint Commissioner is required under Section 153A of the Act, or Principal Commissioner or Commissioner as the case may be. Therefore, once prior approval had already been taken by the Assessing Officer and accepted the return submitted by the assessee, then the same authority cannot exercise the power under Section 263 of the Act to reverse the order of AO. Even otherwise, the total tax effect of this appeal is less than Rs. 1,00,00,000/-, therefore, we do not find any ground to interfere with the order passed by the Income Tax Appellate Tribunal, Indore. Decided against revenue.

Summary

Issues Involved:
The appeal filed by the Principal Commissioner of Income Tax (PCIT) under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITAT) regarding the assessment of the respondent/assessee.

Condonation of Delay:
The appeal faced a delay of 107 days, which was condoned after considering the reasons provided in the application under Section 5 of the Limitation Act supported by an affidavit.

Background and Assessment Details:
The respondent, a real estate company, filed a return of income for the Assessment Year 2012-13 under Section 139(1) of the Act. Subsequently, a search and seizure operation was conducted, leading to notices under Section 153A for various assessment years. The assessment for 2012-13 was completed by the Assessing Officer, accepting a 'NIL' income.

Proceedings Under Section 263:
The PCIT initiated proceedings under Section 263 against the assessee for not disallowing cash payments made, leading to the order being set aside and remanded for fresh examination. The ITAT, based on a precedent, held that the PCIT's order was unsustainable due to lack of jurisdiction under Section 263.

Proposed Questions of Law:
The Income Tax Authority proposed substantial questions of law related to the justification of ITAT's decision in allowing the appeal, quashing the order under Section 263, and the applicability of revisionary proceedings without JCIT's directions.

Arguments and Decision:
The appellant argued that the cash payment for land purchase violated tax rules, causing prejudice to revenue. However, the counsel failed to provide information on challenges to the precedent cited. The judgment highlighted the requirement of prior approval for orders under Sections 143(3) and 153A and reiterated that once approved, the same authority cannot invoke Section 263.

Conclusion:
The Court dismissed the Income Tax Appeal, emphasizing that the tax effect was below the specified threshold and found no grounds to interfere with the ITAT's decision.