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2019 (11) TMI 1358 - AT - Income TaxRevision u/s 263 - HELD THAT - From the above order of the Tribunal, it is evident that the original assessment order, wherein, the additions/ disallowances had been made and also confirmed by the ld. CIT(A), stand merged in the order of the Tribunal dated 1/5/2013. The provisions of section 263 are attracted only if the assessment order is erroneous and prejudicial to the interests of the Revenue. Since the assessment order and the first appellate order stood merged in the order of the Tribunal, there was no assessment order in existence as on the date of issuance of notice under section 263, i.e., on 8/8/2013. We are of the view that since the assessment order and the order of the first appellate authority stood merged in the order of the Tribunal, and there was no assessment order in existence as on the date of issuance of notice under section 263, i.e., on 8/8/2013, the revisionary proceedings initiated by the ld. CIT under section 263 are not valid in the eyes of law. Accordingly, we set aside the order. Appeal of the assessee is allowed.
Issues Involved:
1. Validity of the order passed under section 263 of the Income Tax Act, 1961. 2. Justification of the order passed under section 143(3) by the Assessing Officer. 3. Consideration of issues by the Assessing Officer during assessment proceedings. 4. Interpretation of facts/expenditure by the Commissioner of Income Tax in the order under section 263. Issue-wise Detailed Analysis: 1. Validity of the order passed under section 263 of the Income Tax Act, 1961: The assessee contended that the initiation of proceedings under section 263 by the Commissioner of Income Tax (CIT) was unjustified, incorrect, and illegal. The Tribunal noted that the original assessment order dated 30/12/2011, which made various additions and disallowances, was confirmed by the CIT(A) on 15/11/2012. The Tribunal, in its order dated 1/5/2013, granted full relief to the assessee, deleting all additions and disallowances. Consequently, the original assessment order merged with the Tribunal's order. Since the assessment order and the first appellate order had merged in the Tribunal's order, there was no assessment order in existence as of the date of issuance of the notice under section 263 on 8/8/2013. Thus, the revisionary proceedings initiated by the CIT under section 263 were not valid. 2. Justification of the order passed under section 143(3) by the Assessing Officer: The assessee argued that the order passed under section 143(3) was well-reasoned, considering the books, audit reports, and various explanations. The Tribunal observed that the Assessing Officer had made various additions/disallowances in the assessment order dated 30/12/2011. However, the Tribunal, in its order dated 1/5/2013, deleted the entire additions/disallowances, indicating that the Assessing Officer's order was not justified. 3. Consideration of issues by the Assessing Officer during assessment proceedings: The assessee maintained that the Assessing Officer had considered all issues related to trading results and the profit and loss account during the assessment proceedings. The Tribunal noted that the Assessing Officer had rejected the books of accounts without pointing out any defect in the books regularly maintained by the assessee. The Tribunal emphasized that the Assessing Officer is bound to accept the book results if no defects are found, and the method of accounting employed by the assessee is consistent and regularly followed. 4. Interpretation of facts/expenditure by the Commissioner of Income Tax in the order under section 263: The assessee contended that the CIT wrongly interpreted the facts/expenditure issue in the order under section 263. The Tribunal observed that the CIT's order dated 26/3/2014, which set aside the Assessing Officer's order to the extent of proper valuation of the closing stock, was not valid. The Tribunal highlighted that the CIT's revisionary powers under section 263 are attracted only if the assessment order is erroneous and prejudicial to the interests of the Revenue. Since the assessment order had merged with the Tribunal's order, the CIT's order under section 263 was invalid. Conclusion: The Tribunal concluded that the revisionary proceedings initiated by the CIT under section 263 were not valid as the original assessment order had merged with the Tribunal's order. Consequently, the Tribunal set aside the CIT's order under section 263, allowing the appeal of the assessee. The Tribunal emphasized that the Assessing Officer is bound to accept the book results if no defects are found in the books of accounts regularly maintained by the assessee. The Tribunal's decision was pronounced in the open Court on 20/11/2019.
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