2018 (12) TMI 1491 - AT - Income Tax

Revision u/s 263 - time limit for passing order under section 263 - assessment under section 143(3) of the Act as already completed and the proceedings u/s 153A initiated - Held that - In the chart of chronological events, the Ld. counsel has computed the limitation in respect of order passed under section 143(3) of the Act. But the said order was not subjected to revision. Actually, the CIT proposed to revise the order passed by the AO u/s 153A dated 28/02/2013. The show cause notice was issued on 17/01/2014 and the order under section 263 has been passed on 12/03/2015. Under section 263(2) the time limit for passing order under section 263 has been provided as before expiry of two years from the end of the financial year in which the order sought to be revised was passed. Since the impugned order dated 12/03/2015 passed by the CIT under section 263 of the Act is within the period of two years from the end of the financial year in which the order under section 153A was passed, i.e., 31/03/2015, we do not find any force in the arguments of the Ld. counsel on this issue and accordingly we reject the same. Since in the instant case originally, the assessment under section 143(3) of the Act was already completed and in the proceedings under section 153A of the Act, there is no mention of any incriminating material particularly on the issues on which the Ld. CIT has held that the Assessing Officer has not made any enquiries. If as per the law laid down by the Hon ble Delhi High Court, the Assessing Officer is not empowered to make any addition, then he is not required to carry out any enquiry or verification in respect of those issues. In such a scenario, the order passed by the Assessing Officer cannot be held as erroneous insofar as prejudicial to the interest of the Revenue. We are of the opinion that CIT has exceeded his jurisdiction provided under section 263 of the Act and accordingly, we set-aside the order passed by the Ld. CIT under section 263 of the Act. Since we have already held that the Ld. CIT was not correct in revising the assessment order in view of the decision in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT - Decided in favour of assessee

Summary

Issues involved:
1. Jurisdiction of CIT to initiate proceedings under section 263 of the Income Tax Act.
2. Limitation period for passing order under section 263.
3. Requirement of incriminating material for making additions in assessment proceedings under section 153A.
4. Compliance with legal grounds and judicial decisions in revising assessment orders.

Detailed Analysis:

1. The appeal challenged an order passed by the Commissioner of Income-tax (CIT) setting aside the assessment order for assessment year 2005-06 as erroneous and prejudicial to the interest of the Revenue. The assessee contended that the CIT lacked jurisdiction to initiate proceedings under section 263 of the Income Tax Act. The CIT found that the Assessing Officer did not inquire into specific issues, leading to the order being set aside for a de novo assessment.

2. The appellant argued that the order passed by the CIT was beyond the limitation period provided in the Act. The chronological events presented by the appellant showed that the original assessment order was passed in 2007, and the CIT's order in 2015 was claimed to be time-barred. However, the Tribunal found that the CIT's order was within the statutory time limit for passing orders under section 263.

3. Another issue revolved around the necessity of incriminating material for making additions in assessment proceedings under section 153A. The appellant relied on the decision of the Delhi High Court in the case of CIT Vs. Kabul Chawla, arguing that without incriminating material, no additions could be made. The Tribunal upheld this argument, stating that without such material, the Assessing Officer was not required to make any additions, thus rendering the CIT's revisionary powers invalid in this context.

4. The Tribunal also addressed the compliance with legal grounds and judicial decisions in revising assessment orders. It emphasized that the Assessing Officer's actions should align with legal precedents, such as the decision in the Kabul Chawla case. The Tribunal concluded that the CIT had exceeded his jurisdiction under section 263 of the Act by revising the assessment order without proper legal basis. Consequently, the order passed by the CIT was set aside, and the grounds of appeal raised by the assessee were allowed.

In summary, the Tribunal's judgment analyzed the issues of jurisdiction, limitation period, incriminating material requirements, and compliance with legal grounds in the context of revising assessment orders, ultimately ruling in favor of the assessee and allowing the appeal.