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TMI Blog2019 (6) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... s 254 is not erroneous, and thus one of the twin conditions is not fulfilled. Pr. CIT exceeded the jurisdiction by invoking the powers u/s 263 and is therefore, liable to be quashed. - Decided in favour of assessee. - ITA No.824/Ind/2018 - - - Dated:- 13-6-2019 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member For the Appellant : Shri S.S. Deshpande, CA For the Respondent : Smt. Ashima Gupta, CIT-DR ORDER PER MANISH BORAD, A.M: This appeal at the instance of assessee pertaining to Assessment Year 2007-08 is directed against the order of Pr. Commissioner of Income Tax-2, Bhopal, (in short Pr. CIT ), dated 31.07.2018 framed u/s 263 of the Income Tax Act 1961(hereinafter called as the Act ). 2. Brief facts of the case as culled out from the records are that the assessee is a Private Limited Company engaged in Manufacturing of Papers. Return of income filed on 31.10.2007 declaring income at Rs.Nil. Case selected for scrutiny and assessment u/s 143(3) of the Act framed on 31.12.2009. The Learned Assessing Officer ( in short Ld. AO) while framing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not justified in holding that the provisions of section 115JB are applicable in the case of the assessee. 7. At the outset, Ld. counsel for the assessee submitted that the impugned order u/s 263 of the Act passed by Ld. Pr. CIT is barred by limitation and also exceeds the jurisdiction because the order framed by the ld. AO u/s 143(3) r.w.s 254 of the Act was for the limited purpose of adjudicating the issues of examining genuineness of five sundry creditors as per direction given by the Tribunal vide order dated 05.10.2015. There was no occasion with the Ld. AO to examine any other aspect other than to make compliance to the direction given in the order of the Tribunal. He further submitted that as regards original assessment framed u/s 143(3) of the Act dated 31.12.2009, time limit to frame the order u/s 263 of the Act stood expired on 31.03.2012 as per the provisions u/s 263(2) of the Act. He, therefore, prayed that the impugned order u/s 263 of the Act may be quashed. 8. Per contra, Learned Departmental Representative (Ld. DR) vehemently argued supporting the order of Pr. CIT. 9. We have heard rival contentions and perused the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. For better understanding we will go through the provisions of the section 263 of the Act which reads as follows: 263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 13. From perusal of the above provisions in our understanding, Ld. Pr. CIT has power to revise the assessment order u/s 263 of the Act but to invoke the power, twin conditions must be satisfied with(i) the order of the assessing officer should be erroneous (ii) It must be prejudicial to the interest of the revenue. Unless both these conditions are satisfied, the Pr. CIT cannot assume jurisdiction to revise the assessment order. It is not necessary that every order which is erroneous may be prejudicial to the interest of the revenue or vise-versa. In some cases order passed by the Ld. AO may be erroneous but it may not be prejudicial to the interest of revenue or vise-versa. Therefore, unless the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that such a decision is the subject-matter of further appeal or revision as the case may be. He may expect that the higher court or authority may decide in favour of the Revenue, but that may take a number of years. He may be of the view that by the time of decision of the higher court or authority arrives, a number of years may elapse by which time the exercise of the power under section 263 may become barred. When an Assessing Officer has passed an order on the basis of the law laid down by the court, can it be said that the Assessing Officer's order is erroneous ? We are of the view that exercising of the power to review in such a situation is not in accordance with law for the simple reason that the order of the assessing authority cannot be said to be erroneous as he has rendered the decision following the decision of a higher authority or a court on the same point. It is required to be note that the decisions reached by the Tribunal or the High Court are binding upon the Assessing Officer and discipline demands that he should follow the decision of the Tribunal or the High Court, as the case may be. It is not open for him to ignore the same on the ground that the Tribu ..... 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