Tribunal quashes PCIT order based on non-existent tax provision, assessee appeal succeeds.

The Tribunal held that the Principal Commissioner of Income Tax (PCIT) could not exercise jurisdiction under section 263 based on the omitted clause (i) of section 92BA, which was deemed to have never existed. As the omission lacked a saving clause, the provision was considered non-existent. Consequently, the revisionary order passed by the PCIT was quashed, and the appeal of the assessee was allowed, determining that the Assessing Officer's actions were not erroneous or prejudicial to revenue interests.

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Issues Involved:
1. Validity of the revisionary order passed under section 263 of the Income Tax Act, 1961.
2. Impact of the omission of clause (i) of section 92BA on the jurisdiction exercised by the Principal Commissioner of Income Tax (PCIT).
3. Applicability of section 6 of the General Clauses Act to the omission of a statutory provision.
4. Interpretation of "omission" versus "repeal" in the context of statutory provisions.

Detailed Analysis:

1. Validity of the Revisionary Order Passed Under Section 263 of the Income Tax Act, 1961:
The assessee challenged the correctness of the revisionary order dated 13.03.2019 passed by the PCIT under section 263 of the Income Tax Act, 1961. The primary contention was that the revisionary order was bad in law, facts, and procedure. The PCIT had issued a notice under section 263 proposing to set aside the assessment order dated 28.10.2016 on the grounds that it was erroneous and prejudicial to the interest of the revenue. The PCIT argued that the Assessing Officer (AO) had failed to refer related party transactions to the Transfer Pricing Officer (TPO) as required under section 92CA.

2. Impact of the Omission of Clause (i) of Section 92BA on the Jurisdiction Exercised by the PCIT:
The assessee argued that since clause (i) of section 92BA was omitted with effect from 01.04.2017, it should be treated as if it never existed in the statute book. Therefore, the PCIT could not exercise jurisdiction under section 263 based on this clause. The Tribunal noted that the omission of clause (i) was intended to reduce the compliance burden on taxpayers. The effect of such omission without any saving clause means that the provision was not in existence or never existed in the statute book. This interpretation was supported by the judgments of the Hon'ble Supreme Court in the cases of Rayala Corporation (P) Ltd. and Kolhapur Canesugar Works Ltd.

3. Applicability of Section 6 of the General Clauses Act to the Omission of a Statutory Provision:
The Tribunal examined whether section 6 of the General Clauses Act, which applies to repeals, could be extended to omissions. It was noted that section 6 applies to repeals and not to omissions, and it applies when the repeal is of a Central Act or Regulation and not of a Rule. The Tribunal referred to the judgment of the Hon'ble Supreme Court in the case of General Finance Company, which held that an omission is different from a repeal, and section 6 of the General Clauses Act does not apply to omissions.

4. Interpretation of "Omission" Versus "Repeal" in the Context of Statutory Provisions:
The Tribunal discussed the distinction between "omission" and "repeal" as established by the Hon'ble Supreme Court. It was noted that the omission of a provision means it is obliterated from the statute book as if it never existed. This principle was reiterated in the case of Kolhapur Canesugar Works Ltd., where it was held that the effect of an omission without a saving clause is that the provision is considered never to have existed. The Tribunal also referred to the judgment in the case of M/s. Fibre Boards, which clarified that an omission would amount to a repeal only if there is a saving clause or re-enactment with modification.

Conclusion:
The Tribunal concluded that since clause (i) of section 92BA was omitted with effect from 01.04.2017, the PCIT could not exercise jurisdiction under section 263 based on this clause. The omission was unconditional and without a saving clause, meaning the provision was never in existence. Therefore, the revisionary order passed by the PCIT was quashed. The Tribunal upheld the contention of the assessee and allowed the appeal, emphasizing that the action of the AO could not be held to be erroneous or prejudicial to the interest of the revenue.

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