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2025 (1) TMI 1159 - AT - Income TaxRevision u/s 263 - disallowance of payment made towards transport charges and outward transport charges u/s 40a(ia) of the Act which was subject matter of pending adjudication before the National Faceless Appeal Centre New Delhi - HELD THAT - As decided in Renuka Philip 2018 (12) TMI 129 - MADRAS HIGH COURT when the appeal is pending before the Commissioner the exercise of jurisdiction under Section 263 of the Act is barred. Thus finding rendered by the Commissioner is wholly unsustainable since the assessee went on appeal against the re-assessment order stating that his claim for deduction under Section 54 should be accepted. Also in the process of considering as to what relief the assessee is entitled to the AO held that the assessee is entitled to claim deduction u/s 54F of the Act and assigned certain reasons for that. Therefore the larger issue was pending before the Commissioner of Appeals and in such circumstances the Commissioner could not exercise power under Section 263 of the Act on account of the statutory bar. Decided in favour of assessee.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this case was whether the Principal Commissioner of Income Tax (PCIT) was justified in invoking the provisions of section 263 of the Income Tax Act to revise an order passed by the National Faceless Assessment Centre (NFASC) when an appeal concerning the same subject matter was already pending before the National Faceless Appeal Centre (NFAPC). Specifically, the issue revolved around the disallowance under section 40(a)(ia) of the Act, concerning transport charges where tax was not deducted at source. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework involved section 263 of the Income Tax Act, which allows the PCIT to revise any order passed by the Assessing Officer if it is deemed erroneous and prejudicial to the interests of the revenue. However, clause (c) of Explanation 1 to section 263 bars the revision of any order on issues that are the subject matter of an appeal pending before the appellate authority. The Tribunal referred to the judgment in Renuka Philip Vs ITO, which clarified that the power under section 263 cannot be exercised if an appeal concerning the same issue is pending. This principle was further supported by other precedents cited by the assessee's counsel. Court's Interpretation and Reasoning The Tribunal interpreted clause (c) of Explanation 1 to section 263 to mean that the PCIT's jurisdiction to revise an order is barred when the issue is already under appeal. The Tribunal reasoned that allowing the PCIT to revise the order would result in parallel proceedings, which is not recognized under the law. The Tribunal emphasized that the statutory bar under section 263 is clear and unambiguous. Key Evidence and Findings The key evidence was the pending appeal before the NFAPC concerning the disallowance of transport charges under section 40(a)(ia). The Tribunal noted that the PCIT had initiated revision proceedings on the same issue, which was already being contested in the appeal. Application of Law to Facts The Tribunal applied the legal principle from the Renuka Philip case, holding that the PCIT's revision of the assessment order was unjustified due to the pending appeal on the same issue. The Tribunal found that the PCIT's action violated the statutory bar under section 263, as the matter was already under consideration by the appellate authority. Treatment of Competing Arguments The Tribunal considered the arguments of the PCIT, who contended that the issues in the appeal and the revision proceedings were different. However, the Tribunal rejected this argument, finding that both proceedings concerned the same disallowance under section 40(a)(ia). The Tribunal concluded that the PCIT's reasoning was flawed and did not justify the exercise of revisionary powers. Conclusions The Tribunal concluded that the PCIT's invocation of section 263 was invalid due to the pending appeal on the same issue. The Tribunal set aside the PCIT's order, thereby allowing the assessee's appeal. SIGNIFICANT HOLDINGS The Tribunal held that the exercise of jurisdiction under section 263 is barred when an appeal on the same issue is pending before an appellate authority. This holding reinforces the principle that parallel proceedings on the same issue are not permissible under the Income Tax Act. Core Principles Established The judgment reaffirms the principle that the jurisdiction under section 263 cannot be exercised when the issue is the subject of a pending appeal. This ensures that the appellate process is respected and prevents conflicting decisions on the same matter. Final Determinations on Each Issue The Tribunal determined that the PCIT's order was invalid and set it aside, allowing the assessee's appeal. The Tribunal did not address other grounds raised by the assessee, as the decision on the preliminary issue rendered them moot.
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