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TMI Blog2022 (1) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the subsequent order dated 22.6.18. 4. The CIT failed to appreciate that the capitalization of tax and interest as per the order under sec.245D(4) of the ITSC was carried out in the return filed on 30.3.2013 and the assessment completed on 28.3.14 and that the later order passed u/s.147 dated 22.6.18 had accepted the income returned and determined in the earlier order of the officer and hence the present proceedings u/s.263 are clearly barred by limitation and hence are to be annulled. 5. The CIT failed to appreciate that the order of the assessing officer is neither erroneous nor prejudicial to the interests of the revenue and the officer having considered the issue while passing the order dated 28.3.14, his direction to examine the issues afresh amounts to review of the order of officer and hence is untenable in law. 6. The CIT failed to appreciate that the AC had examined the ITSC Order and accepted that the capitalization of tax and interest were carried out in accordance with the directions of ITSC and thus accepted the income returned in the proceedings and his observation that proper investigation was not done by the officer cannot be a reason to warrant the exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of appeal before Tribunal was on 15.06.2020. The assessee has filed present appeal on 01.04.2021. Therefore, the Registry has intimated delay of 291 days in filing appeal. We have gone through delay noticed by the Registry in light of petition filed by the assessee and find that delay noticed by the Registry falls within the period of general exemption granted by the Hon'ble Supreme Court in computing period of limitation for any suit, appeal, application or proceedings and thus, we are of the considered view that there is no delay in filing present appeal and hence, appeal filed by the assessee is admitted for hearing. 6. Brief facts of the case are that the assessee Company is running group of educational institutions. A search and seizure operation u/s.132 of the Income Tax Act, 1961, was conducted on 12.08.2019 in the premises of the assessee company. The search assessments of the group were completed for impugned assessment year. The assessee company had filed application with the Income Tax Settlement Commission for settlement of its dispute for assessment years 2004-05 to 2010-11. The assessee company did not file its return of income for assessment year 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on proceedings were not emanating from reassessment order passed by the Assessing Officer u/s.143(3) r.w.s. 147 dated 22.06.2018 and thus, period of limitation for above two issues should be reckoned from first reassessment order passed by the Assessing Officer dated 28.03.2014. Therefore, if we consider period of two years for revision of assessment order by the learned PCIT from the date of first reassessment order, i.e. 28-03-2014, then the learned PCIT ought to have issued show-cause notice on or before 28.03.2016 and hence, the show-cause notice issued u/s.263 dated 04.03.2020 is clearly barred by limitation and consequently, proceedings become time barred. 8. The learned PCIT, after considering relevant submissions of the assessee and also has taken note of various facts, including limitation issue raised by the assessee observed that although, the Income Tax Settlement Commission has allowed 50% of tax and interest calculated as per its order to be capitalized for assessment years 2004-05 to 2010-11, but the assessee has claimed it as tax credit allowed by Income Tax Settlement Commission for earlier assessment years. The claim made for this assessment year is not covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred by limitation. Therefore, he submitted that order passed beyond prescribed limit cannot be sustained. In this regard, he relied upon decision of the Hon'ble Supreme Court in the case of CIT Vs Alagendran Finance Ltd. (2007) 293 ITR 001 (SC). 10. The learned DR, on the other hand, supporting order of the learned PCIT submitted that once case is reopened and assessment is framed, then earlier proceedings gets wiped out and the Assessing Officer shall have powers to assess / reassess total income including income escaped from assessment. Therefore, when there is subsequent assessment order which is passed u/s.143(3) r.w.s. 147 of the Act, then limitation provided u/s. 263(2) starts from date of subsequent assessment order, but not from the date of original order is passed. Therefore, if subsequent order passed u/s 143(3) r.w.s. 147 of the Act, dated 22.06.2018 is considered, then show cause notice issued u/s.263 of the Act, dated 04.03.2020 and subsequent order dated 23.03.2020 is well within two years time prescribed for revision of any order and thus, there is no merit in the arguments taken by the assessee and accordingly, revision order passed by the learned PCIT shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT in light of limitation prescribed under sub section (2) and the issues considered for revision of assessment. 13. It is a well settled principle of law by various courts that PCIT/CIT can exercise revision powers u/s 263 of the Act on the issue which was subject matter of assessment/reassessment proceedings whether or not said issue was discussed by the Assessing Officer. In this case, the learned PCIT has taken up revision proceedings on two issues i.e. (i) claim of credit for taxes paid on undisclosed income offered before Settlement Commission for assessment years 2004-05 to 2010-11 at Rs. 8,67,47,215/- from net profit of the company for assessment year 2011-12 as tax credit allowed by the Income Tax Settlement Commission for earlier years and (ii) Deducted of a sum of Rs. 5,11,38,500/- from business profit of the company for assessment year 2011-12 towards pre-due receipts. Admittedly, above two issues were not subject matter of assessment in pursuant to second reopening of assessment and consequent reassessment order u/s.143(3) r.w.s 147 of the Income Tax Act, 1961 dated 22.06.2018. Therefore, once issues on which the PCIT exercised his revision powers was not subject m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 empowers Pr.CIT / CIT to revise assessment order passed by the Assessing Officer, if PCIT satisfies that assessment order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of revenue. Sub-section (2) of section 263 prescribes time limit for passing revision order, as per which no order shall be made under sub-section (1) after expiry of two years from the end of financial year in which order sought to be revised was passed. If a combined reading of subsection (1) and (2) of section 263 of the Act, it is very clear from the provisions of the Act that if the PCIT wants to exercise his powers u/s.263 of the Act, then he should be satisfied himself about assessment order passed by the Assessing Officer and observed that assessment order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of revenue and further, such powers can be exercised within two years from the end of the financial year in which order sought to be revised was passed. 8. In light of above legal position, if you examine present case one has to see whether revisional order passed by the learned PCIT is within the time limit prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sub-section (2) of section 263 would begin to run from date of original assessment. The Hon'ble Madras High Court while considering the issue had followed decision of the Hon'ble Supreme Court in the case of CIT Vs.Alagendran Finance Ltd. (293 ITR 1) (SC), where a similar view had been taken by the Hon'ble Supreme Court. As regards case law relied upon by the learned DR in the case of M/s.Canara Housing Development Co. Ltd. Vs. DCIT (supra) and other case law, we find that those case laws rendered under different set of facts and has no application to the facts of the present case and hence, case laws relied upon by the learned DR are not considered. 9. In this view of the matter and considering facts and circumstance of the case and also by following ratio of various case laws discussed herein above, we are of the considered view that revision order passed by the learned PCIT dated 09.12.2020 is barred by limitation because, said order was passed after expiry of two years from the end of financial year in which order sought to be revised was passed. Hence, we quash revision order passed by the learned PCIT u/s.263 of the Income Tax Act, 1961. 10. In the result, appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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