2016 (12) TMI 1901 - AT - Income Tax

Tribunal rules in favor of assessee on time-barred appeal and validity of assessment order

Lotus Energy (India) Ltd Versus Dy. Commissioner of Income Tax

The Tribunal ruled in favor of the assessee, finding the appeal not time-barred due to a valid explanation for the delay. Additionally, the assessment ... Revision u/s 263 - validity of assessment was framed u/s 143(3) - HELD THAT:- As in Tribunals order [2016 (12) TMI 863 - ITAT MUMBAI] whereby the order of CIT-8, Mumbai for the A.Y. 2006-07 was quashed stating the record of proposal to take action by the AO u/s 154 of the Act was before the CIT before issuing notice u/s 263 and hence the order of the AO cannot be termed as erroneous so far as prejudicial to the interest of Revenue as the word ‘records’ used in Section 263 of the Act shall also contemplate including the record pertaining to proceedings u/s 154 arising subsequently out of the assessment order passed by the AO u/s 143(3) of the Act and such record was before ld CIT before he issued notice u/s 263 on 11.03.2011. Thus, in our considered view, the assessment order dated 23.12.2008 passed by the A.O. u/s 143(3) of the Act is neither erroneous nor it is prejudicial to the interest of Revenue, and the CIT has not correctly invoked the provisions of section 263 hence, the order of the CIT in our considered view is not sustainable in law and is hereby ordered to be quashed. Assessee stated that the consequential assessment framed u/s 143(3) r. w. s. 263 dated 30-08-2011 will not survive and accordingly, the order of CIT(A) will not survive. We find from the above that the Tribunal has quashed the revision order of CIT-8, Mumbai dated 30-03-2011 and once the basic order is quashed, the consequential orders will not survive. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee. Issues Involved:1. Timeliness of the appeal filing.2. Validity of the assessment order under Section 263 of the Income Tax Act, 1961.Issue 1: Timeliness of the appeal filing:The appeal by the assessee was initially deemed time-barred by 3 days due to the delay in filing. However, the assessee provided a valid explanation for the delay, stating that the order of CIT(A) was received late, and the appeal was filed within the stipulated time frame considering the intervening holidays. The Tribunal accepted the explanation, ruling that the appeal was not time-barred and thus admitted it for consideration.Issue 2: Validity of the assessment order under Section 263:The Tribunal reviewed the assessment order framed by the Assessing Officer (AO) under Section 143(3) r. w. s. 263 of the Income Tax Act, 1961. The Tribunal noted that necessary inquiries were conducted during the assessment proceedings, and tax-audit reports were duly submitted by the assessee. It was observed that the AO had considered all relevant details before arriving at a plausible decision, which was not deemed erroneous or prejudicial to the revenue's interest. The Tribunal further highlighted that the AO had addressed audit objections raised by the internal audit party, demonstrating a thorough examination of the issues on merit. The Tribunal concluded that the assessment order was not erroneous or prejudicial to the revenue's interest, thereby quashing the revision order of CIT-8, Mumbai. Consequently, the Tribunal set aside the orders of the lower authorities, allowing the appeal of the assessee.In conclusion, the Tribunal ruled in favor of the assessee, holding that the appeal was not time-barred and that the assessment order under Section 263 was valid, leading to the quashing of the revision order and subsequent orders of the lower authorities.