2021 (8) TMI 506 - AT - Income Tax

Tribunal overturns revision order for lack of evidence & time limit violation

M/s. Shree Shyam Sponge & Power Pvt. Ltd. Versus Principal Commissioner of Income Tax (Central), Bhopal

The Tribunal allowed the appeal of the assessee, quashing the revision order under section 263 for the A.Y. 2008-09. The Tribunal held that the Principal ... Revision u/s 263 - disallowance under section 43B - HELD THAT:- It is an admitted position under the law that at the time of search, assessment for the assessment year under consideration was not pending, therefore the assessment for the A.Y. 2008-09 remained unabated. Further, in the assessment order passed u/s 153A r.w.s. 143(3), there was no issue that any incriminating material with regard to disallowance under section 43B was passed. The time limit for revising the assessment order, if any, for A.Y. 2008-09 could be passed within two years from the end of financial year in which the order sought to be revised was passed. Admittedly, the impugned order is passed by the ld. PCIT on 08/02/2016 which is much beyond the prescribed period of limitation of two years from the end of relevant assessment year. Our view is also supported in CIT Vs Alagendran Finance Ltd. [2007 (7) TMI 304 - SUPREME COURT] and in CIT Vs. ICICI Bank Ld.[2012 (2) TMI 308 - BOMBAY HIGH COURT]. Accordingly, the action initiated under section 263 is barred by time period prescribed under section 263(2) of the Act. Thus, the revision order passed qua A.Y. 2008-09 is bad in law and subsequent action initiated therein is void ab-initio.- Decided in favour of assessee. Issues:Reopening of assessment under section 263 for A.Y. 2008-09, validity of the order passed by the Principal Commissioner of Income Tax, examination of specific issues related to tax audit report, jurisdiction under section 263, assessment under section 153A r.w.s. 143(3), time limitation for revising assessment order.Analysis:The appeal was filed by the assessee against the order of the Principal Commissioner of Income Tax for the A.Y. 2008-09, challenging the reopening of assessment under section 263. The assessee contended that the assessment order was not erroneous or prejudicial to the interests of the Revenue. The Principal Commissioner identified specific issues related to the tax audit report, including provisions of payments like bonus, professional tax, commercial tax, and entry tax, which were not examined by the Assessing Officer (AO).The assessee responded to the show-cause notice stating that the observations were incorrect and provided details of payments made before the due date of filing the return. However, the Principal Commissioner held that the AO did not properly investigate the issue, leading to an erroneous assessment. The Principal Commissioner directed the AO to conduct necessary inquiries on limited issues, prompting the assessee to appeal the decision before the Tribunal.During the hearing, the assessee argued that the completed assessment under section 153A r.w.s. 143(3) could not be disturbed in the absence of incriminating material found during the search. The assessee emphasized that the jurisdiction under section 263 was invalid as there was no reference to any incriminating material in the assessment order. On the other hand, the Revenue supported the Principal Commissioner's order, highlighting the lack of proper inquiries by the AO on provisions in the tax audit report.The Tribunal observed that the assessment for the A.Y. 2008-09 was not pending at the time of the search, and there was no incriminating material related to the identified issue. The Tribunal also noted that the time limit for revising the assessment order had expired, rendering the Principal Commissioner's order beyond the prescribed period of limitation. Citing relevant court decisions, the Tribunal concluded that the action initiated under section 263 was barred by the time limit, rendering the revision order invalid. Consequently, the Tribunal allowed the appeal of the assessee, quashing the revision order on the limitation issue.In conclusion, the Tribunal's decision focused on the jurisdictional validity of the Principal Commissioner's order under section 263, emphasizing the importance of incriminating material and adherence to the prescribed time limit for revising assessment orders. The Tribunal's ruling highlighted the significance of procedural compliance and time limitations in tax assessment proceedings.