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TMI Blog2019 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessment order passed is erroneous. On a perusal of the assessment order dated 25th March 2013, passed under section 143(3) of the Act r/w section 144C of the Act for assessment year 2009–10, it is very much clear that while completing the assessment the Assessing Officer has determined the loss for that year at ₹ 405,93,06,230 and has allowed carry forward of the same. It is an accepted factual position that the aforesaid assessment order passed for the assessment year 2009–10 still holds good as it has neither been subjected to any proceeding under section 263 of the Act nor it has been varied/disturbed by any other mode or manner. Though, AO has initiated action u/s 147 for the purpose of revising the income / loss determined in the said assessment order, however, it is a fact on record that such re–assessment proceeding has been stayed by the Hon'ble Jurisdictional High Court. Thus, as on date, the assessment order passed under section 143(3) of the Act for Assessment Year 2009–10 remains valid and so also the loss determined therein. It is equally true that at this stage learned PCIT could not have exercised jurisdiction under section 263 of the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draft assessment order so passed, the assessee raised objections before the Dispute Resolution Panel (DRP). On the basis of directions issued by the DRP, vide order dated 29th December 2015, the Assessing Officer passed the final assessment order under section 143(3) r/w section 144C(13) of the Act on 29th February 2016.When the matter stood thus, learned PCIT, under purported exercise of power under section 263 of the Act called for and examined the assessment records of the assessee pertaining to the impugned assessment year. After examining the assessment record, he observed that the DRP has held that since the assessee is in life insurance business it has to compute its total income under section 44 r/w rule 2 of First Schedule. He observed, while considering the objections of the assessee against the draft assessment order the DRP has found that the assessee has not filed its return of income for the impugned assessment year as well as the preceding assessment years as per Form I. He observed, the DRP has worked out the income / loss of the assessee in different assessment years by considering the surplus / deficit declared as per Form I and as reduced by the surplus / deficit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions of DRP after due application of mind. He submitted, the assessee in fact has computed its income under section 44 r/w rule 2 of First Schedule of the Act. Referring to the draft assessment order passed by the Assessing Officer, a copy of which is at Page 44 of the paper book, the learned Sr. Counsel submitted, the Assessing Officer, in fact, has started with the deficit shown in Form I as per the First Schedule. Drawing our attention to the order passed by the DRP for the impugned assessment year, the learned Sr. Counsel submitted, the DRP has not given any direction to the Assessing Officer to revise the loss determined for the assessment year 2009 10. He submitted, the direction of the DRP is simply confined to the impugned assessment year. He submitted, even otherwise also, the DRP could not have given directions to the Assessing Officer to work out the loss for any earlier year while disposing off the objections of the assessee for the impugned assessment year. He submitted, as per the provisions of section 144C of the Act, the directions of the DRP is year specific. Thus, the Assessing Officer while implementing the directions of the DRP could not have re computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2009 10. Thus, he submitted, when learned PCIT himself was uncertain about the directions of the DRP, he could not have held the assessment order to be erroneous. That is why, he submitted, learned PCIT has not given any clear directions to the Assessing Officer in the order passed under section 263 of the Act and has advised him to keep in view the clarification to be issued by the DRP. Thus, he submitted, in these circumstances the assessment order cannot be held to be erroneous and prejudicial to the interests of Revenue. In support of his contention, the learned Sr. Counsel relied upon the following decisions: i) ITO v/s D.G. Housing Projects Ltd., 343 ITR 329; ii) DIT v/s Jyoti Foundation, 357 ITR 388; iii) CIT v/s Prithvi Raj And Co., 199 ITR 424; iv) CIT v/s O.P. Seth, 201 ITR 635; v) CIT v/s T. Narayana Pai, 98 ITR 422; vi) J.P. Srivastava And Sons (Kanpur) Ltd. v/s CIT, 111 ITR 326; vii) S.B. Sankar v/s State of Kerala and Anr., 171 ITR 689; viii) CIT v/s Kanda Rice Mills, 178 ITR 446; and ix) CIT v/s Chawla Trunk House, 139 ITR 182 7. The learned Sr. Counsel submitted,from the notice issued under section 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r., v/s State of Orissa, AIR 1953 SC 375; and iii) CIT v/s Shri Paul John, 200 Taxman 154 (Ker.). 8. Finally, the learned Sr. Counsel submitted, the proceeding under section 263 of the Act has been initiated solely on the basis of Revenue audit objection and without any independent application of mind by learned PCIT. Thus, he submitted, for this reason also the revision order passed is legally unsustainable. For such proposition, he relied upon the following decisions: i) CIT v/s SohanaWoolen Mills, 207 CTR 178; ii) Bongaigaon Refinery Petrochemicals Ltd. v/s UOI, 287 ITR 120; iii) Vinay Pratap Thacker v/s CIT, ITA no.2939 of 2011; iv) Aditi Developers v/s ACIT, 49 SOT 664; v) Lotus Energy India Ltd. v/s CIT, 53 ITR 227; vi) Surinder Kumar Jain v/s ITO, ITA no.2481 of 2014; vii) Jaswinder Singh v/s CIT, 150 TTJ 33; and viii) Shri Sartaj Singh v/s PCIT, ITA no.154 of 2015. 9. In conclusion, the learned Sr. Counsel submitted, the primary conditions of section 263 of the Act having not been satisfied, the impugned order passed by the learned PCIT deserves to be quashed. 10. The learned Departmental Representative relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,929. 13. In view of the aforesaid factual position, the basic issues which arise for consideration are, firstly, whether in the given facts and circumstances of the case the impugned assessment order passed by the Assessing Officer can be considered to be erroneous and prejudicial to the interests of Revenue and secondly, while exercising revisional jurisdiction under section 263 of the Act for the impugned assessment year i.e., A.Y. 2011 12, learned PCIT is competent to revise the loss determined in the assessment order passed under section 143(3) of the Act for the assessment year 2009 10. So far as the first issue relating to the correctness of the assessment order passed by the Assessing Officer is concerned, undisputedly, the said assessment order has been passed by the Assessing Officer under section 143(3) of the Act r/w section 144C(13) of the Act. A reading of the provision contained under section 144C of the Act and specifically sub section (13) of section 144C of the Act makes it clear that on receipt of the directions issued by the DRP, it is mandatory upon the Assessing Officer to pass the final assessment order strictly in conformity with the directions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Act for Assessment Year 2009 10 remains valid and so also the loss determined therein. 15. It is equally true that at this stage learned PCIT could not have exercised jurisdiction under section 263 of the Act, to revise the assessment order passed for the assessment year 2009 10 insofar as it relates to computation of income / loss. Therefore, learned PCIT having no authority in law to initiate any action to rectify an error, if at all there is any, in the assessment order passed for assessment year 2009 10, has attempted to do so by invoking his revisional jurisdiction for assessment year 2011 12. One cannot lose sight of the fact that only for the purpose of revising the loss determined in the assessment order passed for Assessment Year 2009-10, learned PCIT has revised the assessment order passed for the impugned assessment year. We fail to understand how the loss determined in the assessment order passed under section 143(3) of the Act for assessment year 2009-10 can be revised without disturbing the said assessment order. Thus,what the learned PCIT could not have done directly, has tried to do so indirectly by exercising his revisional power for assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessment year 2009 10. Thus, in a way, learned PCIT has attempted to sit in judgment over a matter which is already subjudice before the Hon'ble Jurisdictional High Court. When the Assessing Officer has already initiated re assessment proceedings for assessment year 2009 10 and 2010 11 on the issue of determination of loss, learned PCIT could not have initiated proceeding under section 263 of the Act, since, two parallel proceedings on the same issue and at the same time cannot continue. Once the assessee brought to the notice of learned Principal Commissioner that proceedings under section 147 of the Act have already been initiated on the very same issue and the matter is subjudice before the Hon'ble Jurisdictional High Court, the learned Principal Commissioner should have done well to desist himself from continuing further with the proceedings initiated under section 263 of the Act. 17. In any case of the matter, in our opinion, the Assessing Officer having passed the assessment order in compliance to the directions of the DRP, the assessment order so passed cannot be held to be erroneous and prejudicial to the interests of Revenue. Therefore, the primary condit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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