2021 (10) TMI 99 - AT - Income Tax

Revision u/s 263 - main grievance of the Assessee in this appeal is that no incriminating material or documents were unearthed and seized during the course of survey operation u/sec.132 and even otherwise, the assessment in this case was not pending as on the date of initiation of search and had already attained finality - HELD THAT - Hon'ble Bombay High Court in the case of CIT Vs. Murli Agro Products Ltd. 2010 (10) TMI 1052 - BOMBAY HIGH COURT has held that the AO while passing independent assessment u/sec. read with section 143(3) could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/ reassessment were contrary to the facts unearthed during the course of 153A proceedings. The CIT could not have invoked the jurisdiction u/sec. 263 of the Act on the ground that the assessment order passed by the AO u/sec. 153A r.w.s. 143(3) was erroneous and prejudicial to the interest of revenue. From the conclusion of the Hon'ble Bombay High Court in the said case it is clear that if no incriminating material found during the course of search operation u/sec. 132 of the Act and the assessment /reassessment has attained finality, then the same cannot be disturbed u/sec. 263 of the Act by the ld. Pr.CIT. In the instant case the Pr.CIT could not have invoked the revisional jurisdiction u/sec. 263 of the Act to revise the subjected unabated assessments which have attained finality by accepting the income of the Assessee as NIL and yielded no addition, therefore we are inclined to quash the impugned order. - Decided in favour of assessee.

Summary

Issues:
Appeal against order u/sec. 263 of the Income Tax Act for A.Ys. 2008-09 to 2010-11.

Analysis:
The appeals were filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income Tax u/sec. 263 of the Income Tax Act for the assessment years 2008-09 to 2010-11. The issues in all three appeals were similar and were considered together. The main contentions revolved around the revision order passed by the Ld. PCIT under section 263 of the Act, challenging the justification, legality, and jurisdiction of the revision. The Assessee argued that the assessment order could not be revised as no incriminating material was found during the search operation and the assessment had already been finalized. The Assessee contended that the Ld. PCIT erred in concluding that necessary inquiries were not carried out by the Assessing Officer. The Assessee's primary grievance was the lack of incriminating material or pending assessment at the time of the search, rendering the revision order unjustified.

The Assessee's argument was countered by the Department, asserting that the Ld. PCIT had the authority to revise the assessment under section 263 of the Act. The Department maintained that the revision was lawful and based on valid grounds, warranting no interference. After hearing both parties and examining the records, it was established that no incriminating material was seized during the search, and the assessment had been completed without utilizing any such material. The Hon'ble Delhi High Court's decision in a similar case was cited, emphasizing that completed assessments should not be disturbed without valid grounds.

The Tribunal referred to various legal precedents, including the case law of the Hon'ble Delhi High Court and the Hon'ble Bombay High Court, which highlighted that if no incriminating material was found during the search and the assessment had attained finality, the assessment could not be disturbed under section 263 of the Act. Relying on these precedents and the lack of incriminating material in the present case, the Tribunal concluded that the revisional jurisdiction under section 263 could not be invoked to revise assessments that had already been finalized with no additions made. Consequently, the impugned order was quashed, and all appeals filed by the Assessee were allowed.

In conclusion, the Tribunal found in favor of the Assessee, emphasizing the importance of incriminating material and finalized assessments in determining the validity of revision orders under section 263 of the Income Tax Act. The decision was based on legal principles established by various High Courts, ensuring assessments are not disturbed without proper grounds or new material warranting revision.