2020 (7) TMI 331 - AT - Income Tax

Revision u/s 263 - assessment order passed by the assessing officer under section 153A/ 143(3) - HELD THAT - It is a settled position in law that provisions of sec. 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Further, in the instant case, to reiterate, there was no allegation by the Ld. revenue authorities that the evidences produced were fictitious or invented, thus accepted the authenticity of the same. Such an order cannot be called erroneous and prejudicial to interests of revenue only because the A.O. made the assessment without discussing such details therein, as held in the case of Chroma Business Ltd. vs. DCIT 2003 (10) TMI 256 - ITAT CALCUTTA-C . Revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. A.O. and verified by him in original assessment order u/s 153A / 143(3) dated 28.12.2016 and second assessment order u/s 143(3) r.w.s 263 of the Act dated 31.12.2018 and that being so the order passed u/s. 263 of the Act on such erroneous stand is liable to be quashed. Therefore, based on these facts and precedents narrated above, we quash the second 263 order of ld. PCIT. - Appeal filed by the assessee is allowed.

Issues Involved:
1. Legality of the order passed under section 263 by the Principal Commissioner of Income Tax (PCIT).
2. Examination of the original assessment order under section 153A/143(3) dated 28.12.2016.
3. Validity of the second 263 order passed by the PCIT on 28.03.2019.
4. Examination of specific expenses and income disclosures by the assessee.
5. Jurisdiction of the PCIT to pass multiple orders under section 263 on the same assessment order.

Detailed Analysis:

1. Legality of the order passed under section 263 by the Principal Commissioner of Income Tax (PCIT):
The assessee challenged the correctness of the order dated 28.03.2019 passed by the PCIT under section 263 of the Income Tax Act, 1961. The assessee argued that the order was illegal, unjustified, arbitrary, and liable to be quashed. The PCIT had previously canceled the original assessment order dated 28.12.2016 and directed a fresh assessment, which was completed on 31.12.2018. The assessee contended that there was no existing assessment order dated 28.12.2016 that could have been canceled again, making the order dated 28.03.2019 perverse, illegal, and void.

2. Examination of the original assessment order under section 153A/143(3) dated 28.12.2016:
The original assessment order was completed by the Assessing Officer on 28.12.2016. The PCIT exercised his revisionary jurisdiction under section 263 on the premise that the assessee had not incorporated the admitted undisclosed income of ?95,50,500/- in the return of income filed under section 153A. The PCIT held that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of Revenue and directed the Assessing Officer to pass a fresh assessment order.

3. Validity of the second 263 order passed by the PCIT on 28.03.2019:
The PCIT again exercised his jurisdiction under section 263 to revise the original assessment order dated 28.12.2016. The second 263 order was passed on 28.03.2019, observing that the assessment order was erroneous and prejudicial to the interest of revenue due to omissions by the Assessing Officer in examining certain issues. The assessee argued that the second 263 order was not sustainable in law as the original assessment order dated 28.12.2016 was already canceled by the PCIT's first 263 order dated 29.12.2017. The Tribunal noted that the PCIT cannot exercise his jurisdiction twice under section 263 to revise the same original assessment order, especially when it was already canceled by the first 263 order.

4. Examination of specific expenses and income disclosures by the assessee:
The Tribunal examined whether the Assessing Officer had properly verified the issues raised by the PCIT in the second 263 order. The Tribunal noted that the Assessing Officer had already examined the expenses and income disclosures during the original assessment proceedings and the subsequent assessment proceedings under section 143(3) read with section 263. The Tribunal found that the Assessing Officer had conducted sufficient inquiry and verification of the issues, and the order passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of revenue.

5. Jurisdiction of the PCIT to pass multiple orders under section 263 on the same assessment order:
The Tribunal held that the PCIT could not exercise his jurisdiction twice under section 263 to revise the same original assessment order. The Tribunal emphasized that there must be a point of finality in legal proceedings, and the same issues should not be reactivated beyond a particular stage. The Tribunal relied on the judgment of the Hon'ble Supreme Court in Malabar Industries Ltd. vs. CIT, which held that twin conditions need to be satisfied before exercising revisional jurisdiction under section 263: the order of the Assessing Officer must be erroneous and prejudicial to the interest of revenue. The Tribunal concluded that the second 263 order passed by the PCIT was not sustainable in law and quashed it.

Conclusion:
The Tribunal quashed the second 263 order passed by the PCIT on 28.03.2019, holding that it was not sustainable in law. The Tribunal found that the Assessing Officer had conducted sufficient inquiry and verification of the issues during the original assessment and subsequent assessment proceedings, and the order passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of revenue. The Tribunal emphasized the need for finality in legal proceedings and held that the PCIT could not exercise his jurisdiction twice under section 263 to revise the same original assessment order.

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