2013 (3) TMI 123 - AT - Income Tax

Tribunal dismisses appeal, ruling revision not time-barred. Return under Section 143(1) not order for Section 263.

The tribunal dismissed the appeal, ruling that the revision order under Section 263 was not time-barred. It held that the return processed under Section ... Revision u/s 263 - whether the return of income processed u/s 143(1) and intimation u/s 143(1)(a) amounts to an order passed by the Assessing Officer or not and whether it is subjected to revision u/s 263. - held that:- In view of the decisions and as the issue understood by the Hon’ble Punjab & Haryna High Court in Kartar Singh & Co P Ltd (2007 (12) TMI 132 - PUNJAB AND HARYANA HIGH COURT) after considering the decision of the Hon’ble jurisdictional High Court in the case of Anderson Marine &Sons P Ltd (2003 (12) TMI 47 - BOMBAY HIGH COURT) as well as the decision of the Hon’ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd (2007 (5) TMI 197 - SUPREME COURT), it is clear that the return processes u/s 143(1) is not subjected to revision. - in favor of assessee. Revision u/s 263 in respect of order u/s 147 r.w.s. 143(3) - held that:- Once the assessment has been reopened, the Assessing Officer was expected to follow all the relevant general provisions for framing the assessing as in the case of regular assessment and find out whether any income chargeable to tax has escaped assessment or not. - n a case where the Assessing Officer allowed a claim without examining the records but there is possibility of taking a view in favour of the assessee, then it may be said that the Assessing Officer has taken a possible view. But when the claim of the assessee is not allowable and there is no possibility of two views, then allowing the claim by the Assessing Officer without examining and application of mind would definitely render the assessment order erroneous so far as prejudicial to the interest of revenue and Commissioner has the power to exercise the jurisdictional u/s 263. The Full Bench of the Hon’ble Kerala High Court in CIT vs Best Wood Industries & Saw Mills [2010 (12) TMI 748 - KERALA HIGH COURT] has held that there is no difference between the income escaping assessment and regular assessment so far as the proceedings to be followed by the Assessing Officer. It is observed by the Full Bench of the Hon’ble High Court that taking all evidences etc., which are the same for the regular assessment and the income escaping assessment. The Hon’ble High Court has thus, overruled the decision in the case of Travancore Cements Ltd. (2006 (9) TMI 174 - KERALA HIGH COURT). Non address of the issue resulting allowance of impossible claim establishes the non application of mind on the part of the Assessing Officer during the reassessment proceedings and consequently render the order passed u/s 147 r.w.s 143(3) as erroneous and prejudicial to the interest of revenue. - Decided in favor of revenue. Period of limitation for revision u/s 263 - held that:- limitation as stipulated under sub sec. (2) of sec. 263 would be counted from the reassessment order passed u/s 143(3) r.w.s 147 being the first regular assessment. - Decided in favor of revenue. Issues Involved:1. Whether the revision order passed under Section 263 is time-barred.2. Whether the return processed under Section 143(1) constitutes an order for the purposes of Section 263.3. Whether the order under Section 147 read with Section 143(3) is erroneous and prejudicial to the interest of the revenue.4. Whether the Commissioner of Income Tax (CIT) has the jurisdiction to revise the order under Section 263 on issues not subject to reassessment.Issue-wise Detailed Analysis:1. Whether the revision order passed under Section 263 is time-barred:The primary issue raised by the assessee is whether the revision order passed under Section 263 dated 5.3.2009 is time-barred. The assessee argued that the limitation period for invoking Section 263 should be reckoned from the date of the original assessment order processed under Section 143(1) on 8.9.2000. Since the original assessment was made on 25.9.2000, any notice under Section 263 after March 2003 would be barred by limitation. The CIT, however, contended that the limitation period should be counted from the date of the reassessment order passed under Section 147 read with Section 143(3) on 30.11.2006. The tribunal concluded that since there was no original assessment and the reassessment was the first order of assessment, the limitation period should be counted from the reassessment order.2. Whether the return processed under Section 143(1) constitutes an order for the purposes of Section 263:The tribunal examined whether the return of income processed under Section 143(1) and the intimation issued under Section 143(1)(a) amounts to an order passed by the Assessing Officer and whether it is subject to revision under Section 263. The tribunal referred to the Supreme Court's decision in Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers P. Ltd., which clarified that an intimation under Section 143(1)(a) cannot be treated as an order of assessment. Consequently, the tribunal held that the return processed under Section 143(1) is not an order as stipulated under Section 263 and is not subject to revision.3. Whether the order under Section 147 read with Section 143(3) is erroneous and prejudicial to the interest of the revenue:The CIT proposed to revise the assessment order under Section 263 on the grounds that the Assessing Officer did not make necessary and adequate inquiries on various issues, such as the deduction claimed for setting up an export-oriented unit, write-down in the value of investment, current repairs and replacement of plant and machinery, and payment under the Kar Vivad Samadhan Scheme (KVSS). The tribunal noted that the assessee did not challenge the disallowance on merits but only on technical/legal grounds. The tribunal emphasized that when the Assessing Officer allows a claim without examining the records and there is no possibility of two views, the order is erroneous and prejudicial to the interest of revenue. Therefore, the tribunal concluded that the reassessment order was erroneous due to the lack of application of mind by the Assessing Officer.4. Whether the Commissioner of Income Tax (CIT) has the jurisdiction to revise the order under Section 263 on issues not subject to reassessment:The tribunal discussed whether the CIT can invoke Section 263 on issues not subject to reassessment after the expiry of two years from the end of the financial year in which the original assessment was passed. The tribunal referred to the Full Bench of the Kerala High Court in Best Wood Industries & Saw Mills, which held that there is no difference between income escaping assessment and regular assessment in terms of the procedure to be followed by the Assessing Officer. The tribunal concluded that once the assessment is reopened, the Assessing Officer is expected to apply his mind to all issues to determine whether any income chargeable to tax has escaped assessment. Therefore, the CIT has the jurisdiction to revise the order under Section 263 on issues not subject to reassessment, and the limitation period should be counted from the reassessment order.Conclusion:The tribunal dismissed the appeal filed by the assessee, holding that the revision order passed under Section 263 was not time-barred, the return processed under Section 143(1) is not an order for the purposes of Section 263, the reassessment order was erroneous and prejudicial to the interest of revenue, and the CIT had the jurisdiction to revise the order under Section 263 on issues not subject to reassessment.