2018 (10) TMI 722 - AT - Income Tax

Administrative Commissioner jurisdiction to pass order u/s 263 as against draft assessment order - Draft assessment already merged with the final assessment order - Held that - As in assessee s own case for assessment year 2010-2011 2017 (1) TMI 1422 - ITAT COCHIN had held that draft assessment order cannot be revised u/s 263 of the I.T.Act. It is informed that the said order (supra) of the Tribunal in assessee s own case is pending adjudication before the Hon ble High Court. We also noticed that the Delhi Bench of the Tribunal in the case of Bausch & Lomb India Pvt.Ltd. v. ACIT 2017 (12) TMI 348 - ITAT DELHI was of the view that the Administrative Commissioner does not have power to revise the draft assessment order. We hold that the CIT is not justified in invoking his revisionary jurisdiction u/s 263 of the I.T.Act as against the draft assessment order, which in this case already merged with the final assessment order dated 25.01.2017. It is ordered accordingly.

Summary

Issues:
1. Jurisdiction of Administrative Commissioner to pass order u/s 263 of the I.T. Act against draft assessment order.

Analysis:
The appeal in this case is against the order of the Commissioner of Income-tax passed under section 263 of the I.T. Act for the assessment year 2012-2013. The grounds raised by the appellant challenge the reopening of the assessment and setting aside of the draft assessment order. The key issue raised in this appeal is whether the Administrative Commissioner has the jurisdiction to pass an order under section 263 of the I.T. Act against a draft assessment order.

The appellant argued that in a previous case for the assessment year 2010-2011, it was held that a draft assessment order cannot be revised under section 263 of the I.T. Act. The Cochin Bench of the Tribunal had also ruled similarly in the appellant's case for the assessment year 2010-2011. Additionally, the Delhi Bench of the Tribunal in the case of Bausch & Lomb India Pvt. Ltd. v. ACIT held that the Administrative Commissioner does not have the power to revise a draft assessment order.

The Delhi Bench emphasized that section 263(1) allows the Commissioner to revise an order passed by the Assessing Officer if it is erroneous and prejudicial to the interests of the revenue. However, a draft order is not considered an 'order' for revision purposes until it is finalized and a notice of demand is issued. Therefore, the power to revise such a draft order does not lie with the Commissioner. Based on the precedents and legal interpretations, the Tribunal held that the CIT is not justified in invoking his revisionary jurisdiction under section 263 of the I.T. Act against a draft assessment order that has already merged with the final assessment order.

Consequently, the Tribunal partly allowed the appeal filed by the assessee, concluding that the CIT did not have the authority to revise the draft assessment order under section 263 of the I.T. Act. The order was pronounced on October 3rd, 2018.