2018 (7) TMI 2330 - AT - Income Tax

Pr. CIT's revisionary powers over DRP-directed assessment orders under Section 263 requires jurisdictional determination

ITAT Mumbai-AT restored matter to Pr. CIT to determine jurisdictional competence under Section 263. The tribunal addressed whether Pr. CIT can exercise ... Validity of revision order against order passed by AO u/s 143(3) r.w.s. 144C(13) in pursuance to the direction of the Ld. DRP - Jurisdiction of CIT - As argued assessment order passed by AO u/s 143(3) r.w.s. 144C(13) of the 1961 Act is in pursuance to directions of learned DRP which in itself is a body consisting of collegiums of 3 Senior Judicial Functionaries of the Revenue and hence learned Pr. CIT cannot sit on judgment of collegiums of three senior functionaries of Revenue which are not below the rank of Commissioner of Income-tax - HELD THAT:- As both the parties have agreed and conceded that in view of non-disposal of aforesaid jurisdictional issue by learned Pr. CIT which is purely legal issue which goes to the root of the matter as to whether learned Principal CIT is competent and empowered to invoke its revisionary powers within provisions of Section 263 with respect to the assessment order of the AO which is passed u/s 143(3) r.w.s. 144C(13) of the 1961 Act in pursuance of direction issues by learned DRP. Thus we consider it appropriate and deem fit to restore this matter back to the file of learned Principal CIT for disposal of this jurisdictional ground which is a legal ground as to competence of learned Pr. CIT to revise an assessment order passed by the AO u/s 143(3) r.w.s. 144C(13) in pursuance to directions given by learned DRP and which in our considered view goes to the root of the matter. Issues:1. Jurisdictional issue regarding the powers of the Principal Commissioner to revise an assessment order passed by the Assessing Officer in pursuance of directions from the Dispute Resolution Panel.Detailed Analysis:Jurisdictional Issue:The appeal was filed against a revisionary order passed by the Principal Commissioner under Section 263 of the Income-tax Act, 1961, challenging the revision of an assessment order for the assessment year 2009-10. The key contention raised was the jurisdictional issue regarding the Principal Commissioner's authority to revise an assessment order passed by the Assessing Officer under Section 143(3) read with Section 144C(13) in compliance with the directions of the Dispute Resolution Panel (DRP). The argument put forth was that the Principal Commissioner lacked the power to review an assessment order already approved by the DRP, which is composed of three senior judicial functionaries of the Revenue. It was emphasized that the assessment order under dispute was appealable before the Commissioner of Income Tax (Appeals) under Section 246A(1)(a), while an order passed following DRP directions was directly appealable before the Income Tax Appellate Tribunal under Section 253(1)(d). The absence of provisions for the Revenue to appeal against such orders post the Finance Act, 2016 amendment was highlighted, indicating that the Principal Commissioner exceeded jurisdiction by attempting to revise the assessment order. Both parties agreed that the jurisdictional issue was pivotal and should be reconsidered by the Principal Commissioner, along with other grounds raised in the appeal, for a fresh decision.The Tribunal acknowledged the significance of the jurisdictional issue and directed the matter to be remanded to the Principal Commissioner for a comprehensive review. It was emphasized that the legal question of the Principal Commissioner's authority to invoke revisionary powers under Section 263 in the context of an assessment order passed pursuant to DRP directions needed to be addressed. The Tribunal refrained from commenting on the merits of the other issues raised, emphasizing the need for the Principal Commissioner to conduct a de novo assessment, considering all submissions and evidence presented by the assessee. The order allowed the appeal for statistical purposes, emphasizing the need for proper and fair consideration of all aspects by the Principal Commissioner in the fresh proceedings under Section 263 of the Income-tax Act, 1961.