2022 (5) TMI 1230 - HC - Income Tax

Revision u/s 263 - notice for demand made by the assessing officer against the assessee till the disposal of the appeal - HELD THAT - As against the order under Section 263 of the Act, the appeal has been admittedly filed, which is pending before the ITAT, though attempt has been made to seek for a stay, that has been negated for the reasons stated. Be that as it may, once the appeal has been entertained and unless it is decided one way or other, if the Assessing Officer is permitted to go ahead pursuant to the order passed by the authority concerned under Section 263 of the Act, then that will make the very challenge in the appeal before the ITAT otiose. We are inclined to dispose this writ petition with the following orders 1.That the assessing authority can go ahead with the assessment proceedings pursuant to the notice dated 26.03.2022 on the basis of the order passed by the revisional authority under Section 263 of the Act for which the petitioner shall cooperate by filing any reply or evidence or documents as sought for in the notice dated 26.03.2022 within a period of two weeks from the date of receipt of a copy of this order. 2. It is made clear that, once an order is passed by the assessing authority and if it goes against the interest of the assessee, then pursuant to which no further proceedings including the notice for demand shall be made by the assessing officer against the assessee till the disposal of the appeal which is pending before the Income Tax Appellate Tribunal, for which already date of hearing is given as 12.04.2022. 3. In view of the above, the ITAT is hereby directed to complete the hearing of the appeal proceedings and pass orders in the appeal on or before 31.05.2022 on its own merits and in accordance with law.

Summary

Issues:
1. Writ of Mandamus sought to restrain assessment for Assessment Year 2016-17.
2. Invocation of Section 263 of the Income Tax Act, 1961.
3. Notice issued by Assessing Officer for compliance with assessment proceedings.
4. Dispute regarding Assessing Authority's power during pendency of appeal before ITAT.

Analysis:
1. The petitioner requested a Writ of Mandamus to prevent the third respondent from continuing the assessment for the Assessment Year 2016-17 until the first respondent issued orders in ITA No.46/CHNY/2022. The Principal Commissioner, under Section 263 of the Income Tax Act, 1961, passed an order on 30.03.2021, leading to an appeal by the petitioner before the ITAT. Despite seeking a stay, the Assessing Authority issued a notice on 21.01.2022, rejecting the stay application due to perceived lack of power by the Tribunal. Subsequently, the Assessing Officer scheduled a hearing for 28.03.2022, prompting the petitioner to file the writ petition to halt further proceedings based on the Principal Commissioner's order.

2. The Assessing Officer's notice on 26.03.2022 directed the petitioner to provide information for the completion of assessment proceedings for the said year, despite the pending appeal before the ITAT. The petitioner's contention was that the Assessing Authority should refrain from proceeding based on the Section 263 order until the appeal outcome is determined. The Senior Standing Counsel for the Revenue argued that the Assessing Officer retains the power to proceed with assessment, irrespective of the pending appeal, leading to the petitioner's rush to the Court through the writ petition.

3. The Court reviewed the submissions from both sides and acknowledged the previous cases where similar issues were addressed. Referring to a specific case, the Court highlighted the importance of balancing the interests of both the assessee and the Revenue. The Court directed the Assessing Authority to continue with the assessment proceedings based on the Section 263 order, with the petitioner's cooperation within a specified timeline. Additionally, it outlined that no further actions, including demand notices, should be initiated against the assessee until the ITAT's decision, emphasizing the need to safeguard both parties' interests.

4. In alignment with the earlier precedent, the Court disposed of the writ petition by permitting the Assessing Authority to proceed with the assessment proceedings as per the Section 263 order. The petitioner was instructed to cooperate within a designated timeframe, and the Assessing Officer was prohibited from taking further steps against the assessee until the ITAT's decision. The ITAT was directed to conclude the appeal proceedings by a specified date, allowing the Assessing Authority to act accordingly based on the Tribunal's decision. The Court emphasized the importance of following due process and ensuring fairness in the assessment proceedings.