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2021 (12) TMI 1172 - AT - Income TaxRevision u/s 263 by CIT - Reopening of assessment u/s 147 - HELD THAT - As per the ratio laid by the Hon'ble Bombay High Court in the case of Jet Airways India Pvt. Ltd. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY and case of Ranbaxy Laboratories Ltd. 2011 (6) TMI 4 - DELHI HIGH COURT which ratios were concurred by the Hon'ble jurisdictional Calcutta High Court in the case of M/s. Infinity Infotech Parks Ltd. 2014 (9) TMI 1142 - CALCUTTA HIGH COURT though in the context of reopening u/s. 147 of the Act wherein the ratio held was that if the AO reopens the assessment of an assessee on 'x' ground and if he finds during the reassessment proceedings, that 'x' ground is absent/non-existing, then the AO should drop the proceedings and cannot make any other addition unless the AO makes an addition on 'x' ground. We thus find merit in the contention of Ld. A.R. that jurisdictional fact to exercise the revisional jurisdiction being absent/non-existing in this case, the Ld. PCIT ought to have dropped the proceedings and if he found any other issues/error on the part of the AO while framing the assessment order, then he ought to have given opportunity to the assessee and confronted it to the assessee and thereafter he could have made fresh endeavour to exercise revisional jurisdiction, which is not the case before us. Therefore the impugned order of Ld. PCIT dated 08.03.2021 is bad for want of jurisdiction and therefore stands quashed - Appeal of an assessee is allowed.
Issues Involved:
1. Delay in filing the appeal. 2. Usurpation of jurisdiction by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act. 3. Erroneous carry forward of loss under Section 80 of the Income Tax Act. 4. Validity of the revisional order passed by the PCIT. Issue-wise Detailed Analysis: 1. Delay in Filing the Appeal: The appeal was filed by the assessee with a delay of 39 days. The tribunal noted that the appeal was filed on 22nd June 2021, which was time-barred by 39 days. A petition for condoning the delay was submitted on 07.09.2021. Upon reviewing the reasons for the delay, the tribunal found a reasonable cause for the late filing and concluded that there was no deliberate omission by the assessee. Despite the objection from the Departmental Representative (D.R.), the tribunal condoned the delay and admitted the appeal for hearing. 2. Usurpation of Jurisdiction by PCIT under Section 263: The assessee challenged the jurisdiction of the PCIT to exercise revisional jurisdiction under Section 263 of the Income Tax Act without satisfying the condition precedent that the Assessing Officer’s (AO) order was erroneous and prejudicial to the revenue. The PCIT issued a show cause notice (SCN) dated 20.01.2021, raising an issue regarding the erroneous carry forward of loss under Section 80 of the Act. The assessee promptly objected, explaining that there was no error on the part of the AO regarding this issue. The PCIT accepted this contention but still set aside the assessment order for a de novo assessment, which the assessee argued was without jurisdiction. 3. Erroneous Carry Forward of Loss under Section 80: The sole issue raised by the PCIT in the SCN was the erroneous carry forward of loss under Section 80 of the Income Tax Act. The PCIT noted that the assessee filed the return of income beyond the due date, claiming a net loss of ?232,88,87,118/-. According to Section 80, no loss determined in a belated return shall be carried forward. The AO failed to disallow the carry forward of such loss, rendering the order erroneous and prejudicial to the interests of the revenue. However, the assessee pointed out that the AO had not allowed the carry forward of the loss and had assessed the income at NIL, thus the issue raised by the PCIT was non-existent. 4. Validity of the Revisional Order: The tribunal examined the facts and found that the PCIT had issued the SCN based on a non-existent issue of carry forward of loss. The assessee had not carried forward the loss as confirmed by the AO and the return of income for the subsequent assessment year. The tribunal noted that the PCIT did not confront the assessee with any other issues during the revisional proceedings. According to the tribunal, the PCIT should have dropped the revisional proceedings when the jurisdictional fact (erroneous carry forward of loss) was found to be absent. The tribunal referred to the principles laid down by the Hon’ble Bombay High Court in CIT vs. Jet Airways (I) Ltd. and the Hon’ble Delhi High Court in Ranbaxy Laboratories Ltd. vs. CIT, which were concurred by the Hon’ble Calcutta High Court in CIT vs. M/s. Infinity Infotech Parks Ltd. These cases established that if the initial ground for reopening or revising an assessment is found to be non-existent, the proceedings should be dropped unless the assessee is confronted with new issues. The tribunal concluded that the PCIT's order dated 08.03.2021 was bad in law for want of jurisdiction and quashed it. The appeal of the assessee was allowed. Conclusion: The tribunal allowed the appeal, holding that the PCIT lacked jurisdiction to pass the impugned order as the foundational issue for invoking revisional jurisdiction was non-existent. The tribunal emphasized the necessity of confronting the assessee with any new issues before proceeding with revisional actions. The order was pronounced in the open court on 15 December 2021.
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