Tribunal limits Commissioner's jurisdiction over draft assessment orders .T.Act

The Tribunal partly allowed the appeal, ruling that the Administrative Commissioner lacked jurisdiction to revise the draft assessment order under section 263 of the I.T. Act. The Tribunal emphasized that a draft order is not subject to revision until finalized and a notice of demand is issued, as per precedents and legal interpretations. Therefore, the Commissioner's revisionary jurisdiction does not extend to draft assessment orders that have merged with the final assessment order. The decision was issued on October 3rd, 2018.

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Issues:
1. Jurisdiction of Administrative Commissioner to pass order u/s 263 of the I.T. Act against draft assessment order.

Analysis:
The appeal in this case is against the order of the Commissioner of Income-tax passed under section 263 of the I.T. Act for the assessment year 2012-2013. The grounds raised by the appellant challenge the reopening of the assessment and setting aside of the draft assessment order. The key issue raised in this appeal is whether the Administrative Commissioner has the jurisdiction to pass an order under section 263 of the I.T. Act against a draft assessment order.

The appellant argued that in a previous case for the assessment year 2010-2011, it was held that a draft assessment order cannot be revised under section 263 of the I.T. Act. The Cochin Bench of the Tribunal had also ruled similarly in the appellant's case for the assessment year 2010-2011. Additionally, the Delhi Bench of the Tribunal in the case of Bausch & Lomb India Pvt. Ltd. v. ACIT held that the Administrative Commissioner does not have the power to revise a draft assessment order.

The Delhi Bench emphasized that section 263(1) allows the Commissioner to revise an order passed by the Assessing Officer if it is erroneous and prejudicial to the interests of the revenue. However, a draft order is not considered an 'order' for revision purposes until it is finalized and a notice of demand is issued. Therefore, the power to revise such a draft order does not lie with the Commissioner. Based on the precedents and legal interpretations, the Tribunal held that the CIT is not justified in invoking his revisionary jurisdiction under section 263 of the I.T. Act against a draft assessment order that has already merged with the final assessment order.

Consequently, the Tribunal partly allowed the appeal filed by the assessee, concluding that the CIT did not have the authority to revise the draft assessment order under section 263 of the I.T. Act. The order was pronounced on October 3rd, 2018.

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