2021 (9) TMI 920 - AT - Income Tax

Revision u/s 263 - Revision barred by limitation or not? - Period to be computed from the date of original assessment u/s 143(3) or from the date of subsequent order passed u/s 153C - unexplained cash credit u/s.68 - HELD THAT - It is a well settled principles of law by various courts that PCIT/CIT can exercise his revisional powers on the issue which was subject matter of assessment proceedings whether or not said issue was discussed by the AO. In this case, PCIT has taken up revision proceedings on the issue of deduction claimed u/s.80IA of the Act, and said issue was not a subject matter of assessment in pursuant to search action u/s.143(3) r.w.s. 153C of the Income Tax Act, 1961. Once issue was not a subject matter of assessment proceedings pursuant to search, then date of assessment goes back to original assessment passed u/s.143(3) of the Act and if you go by said assessment order, then date shall be reckoned from 28.03.2016. If you go by that date, revision order passed by the PCIT dated 09.12.2020 is clearly beyond two years from the end of financial year in which order sought to be revised was passed. This legal position is fortified by the decision in the case of M/s.Skyline Builders Vs. CIT 2019 (1) TMI 1533 - KERALA HIGH COURT where under identical set of facts, the Hon ble High Court held that where no revisional order was passed by CIT at the time of completion of original assessment, limitation period for passing order u/s.263 had to commence from first order of assessment. We are of the considered view that revision order passed by the learned PCIT dated 09.12.2020 is barred by limitation because, said order was passed after expiry of two years from the end of financial year in which order sought to be revised was passed. Hence, we quash revision order passed by the learned PCIT u/s.263 - Decided in favour of assessee.

Summary

Issues:
Revision of assessment order u/s.263 of the Income Tax Act, 1961 regarding deduction u/s.80IA for assessment year 2013-14.

Detailed Analysis:

1. Background and Assessment Details:
The appeal was against the order of the Principal Commissioner of Income Tax (PCIT), Central, Chennai-2, under section 263 of the Income Tax Act, 1961, for the assessment year 2013-14. The assessee, engaged in financial activities, filed its return of income admitting total income of ?5,89,30,600. The assessment was completed under section 143(3) on 28.03.2016, allowing a deduction of ?7,63,323 u/s.80IA. Subsequently, a search action was conducted, resulting in a revised assessment on 24.12.2019, determining total income at ?8,39,57,050 after additions for unexplained cash credit u/s.68.

2. Revision Proceedings and Time Limitation:
The PCIT initiated revision proceedings under section 263, claiming the original assessment was prejudicial to revenue due to the deduction u/s.80IA being allowed without proper verification. The assessee argued that the revision was time-barred as the issue was already examined in the original assessment. The PCIT justified the revision within the time limit, citing the wiping out of the original assessment post-search action and the need for reassessment. The PCIT opined that the failure to verify the deduction made the original order erroneous.

3. Legal Interpretation and Precedents:
The PCIT's decision was challenged by the assessee, contending that the revision was beyond the prescribed time limit. The argument focused on the issue of deduction u/s.80IA not being part of the reassessment post-search. The Departmental Representative (DR) supported the PCIT, emphasizing the impact of search actions on the original assessment. Legal precedents, including decisions by the Kerala and Madras High Courts, were cited to support the contention that the revision order was time-barred based on the original assessment date.

4. Judicial Analysis and Decision:
The Tribunal analyzed the legal provisions under section 263 and the time limit for revision orders. It concluded that the revision order passed by the PCIT was indeed beyond the two-year limit from the original assessment date of 28.03.2016. Citing relevant case laws, including decisions by the Kerala and Madras High Courts, the Tribunal held that the revision order was time-barred and quashed the PCIT's decision under section 263.

5. Final Verdict:
The Tribunal allowed the appeal filed by the assessee, pronouncing the order on 17th September 2021, setting aside the revision order passed by the PCIT under section 263 of the Income Tax Act, 1961, as it was found to be barred by limitation.

This comprehensive analysis highlights the legal intricacies, precedents, and the Tribunal's decision regarding the revision of the assessment order under section 263 concerning the deduction u/s.80IA for the assessment year 2013-14.