2022 (12) TMI 427 - AT - Income Tax

Revision u/s 263 - assessment completed - reopening of assessment u/s 147 - CIT-A enlarging the scope of reopening u/s 147 - HELD THAT - Once the return income stands concluded either by way of intimation or later on by way scrutiny proceedings u/s 143(3), then it is said to be that assessment has been completed. If the return income has been accepted and no scrutiny has been done, then also it is treated as assessment has been completed and has attained finality. Such assessment can be reopened u/s 147, if AO has reason to believe based on any material or information coming on record that income chargeable to tax has escaped assessment. It is only on such reasons to believe and the issues raised in reasons recorded, AO can pass assessment order or re-assessment and it cannot travel beyond the reasons unless something tangible material comes on record during such assessment /reassessment proceedings. Here in this case, it is not a case that AO has reopened assessment on account of any set off of long term capital loss or determination of ALV u/s 22 for the inventory unsold flats. Ld. PCIT in his revisionary jurisdiction u/s 263 cannot enlarge the scope of reopening u/s 147 and go beyond the reasons recorded. Here, the present order of the Ld. PCIT is on the issues which are beyond the scope of section 147 and therefore, he could not have roped in some other issues based on the figures given in the balance sheet or profit and loss account which already stood concluded and assessed way back in the year 2013. As in CIT vrs. Lark Chemical Ltd. 2013 (9) TMI 959 - BOMBAY HIGH COURT on a similar situation and circumstances has held that notice u/s 263 cannot be issued beyond the period of 2 years from the date when order sought to be revised is passed and jurisdiction u/s 263 cannot be exercise with reference to the issue which were not subject matter of reopening of assessment and the period of limitation provided u/s 263(2) would commence from the date of order and not from the date of order of reassessment has been passed. PCIT has travelled beyond the scope of issues which were not subject matter of consideration in the re-assessment order which he cannot go beyond the reasons recorded and therefore the order of PCIT is barred by limitation. Thus, on this ground, we quashed the impugned order.

Summary

Issues Involved:
1. Challenge to order passed under section 263 for A.Y. 2012-13.
2. Barred by limitation - Reopening of assessment beyond scope.
3. Enlarging scope of reopening u/s 147.
4. Jurisdiction of PCIT under section 263.
5. Time limitation for revision u/s 263.

Issue 1: Challenge to order passed under section 263 for A.Y. 2012-13
The appellant challenged the order passed under section 263 for the assessment year 2012-13, contending various grounds, including the limitation of the order. The case involved the filing of revised returns, reopening of assessment under section 147, and subsequent additions made by the Assessing Officer.

Issue 2: Barred by limitation - Reopening of assessment beyond scope
The primary contention raised was that the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 was barred by limitation as it went beyond the scope of the reopening of assessment under section 147. The appellant argued that the PCIT could not raise issues not subject to reopening, and the period of limitation for revision should commence from the date of the original assessment order.

Issue 3: Enlarging scope of reopening u/s 147
The dispute centered on whether the PCIT, in exercising revisionary jurisdiction under section 263, could expand the scope of reopening under section 147. The appellant emphasized that the PCIT's order addressed issues beyond the reasons recorded for reopening, thereby exceeding the permissible limits of revisionary powers.

Issue 4: Jurisdiction of PCIT under section 263
The analysis delved into the jurisdictional boundaries of the PCIT under section 263 concerning the assessment order passed under section 147. It was debated whether the PCIT had the authority to revisit and revise aspects of the assessment that were not part of the reasons for reopening, leading to a discussion on the limitations of the PCIT's revisionary powers.

Issue 5: Time limitation for revision u/s 263
A crucial aspect of the judgment revolved around the time limitation for exercising revisionary powers under section 263. The appellant relied on legal precedents to argue that the PCIT's order was time-barred as it addressed issues not within the scope of the original assessment or reopening, emphasizing the commencement of the limitation period from the date of the original assessment order.

This detailed analysis of the judgment highlights the intricate legal arguments and interpretations surrounding the issues raised in the appeal against the order passed by the PCIT under section 263 for the assessment year 2012-13.