2021 (9) TMI 1166 - AT - Income Tax

COVID-19 impact: Tribunal allows appeal, quashes PCIT's order as bad in law

The appeal by the assessee was allowed as the Appellate Tribunal condoned the delay in filing the appeal due to the Covid-19 pandemic. The Principal ... Revision u/s 263 - order passed under Section 143(3) r.w.s. 147 was made without examining the provision of Section 57 - HELD THAT:- As once the issue has been examined in the order passed under Section 143(3) in the order passed u/s 143(3) r.w.s. 147 of the Act the Ld. AO is not further required to revisit the same issue and, thus, the Ld. PCIT has wrongly passed order setting aside the order passed under Section 143(3) r.w.s. 147 of the Act which is impugned before us - It appears from the order dated 13.03.2015 passed by the Ld. AO that the disallowance under Section 57 of the Act for interest has been made upon verification of the records and upon due application of mind. Revision barred by limitation - As impugned under Section 263 of the Act passed by the Ld. PCIT is barred by limitation in view of the particular fact that the original assessment order under Section 143 of the Act was passed on 13.03.2014 and the revision thereof could have been taken by 31.03.2016 within two years from the end of the Financial Year. However, the order impugned was passed much after that. The order is non-est in the eye of law and, thus, liable to be quashed - see JINDAL STEEL AND POWER LTD. VERSUS PR. CIT, GURGAON. [2020 (5) TMI 360 - ITAT DELHI] - Decided in favour of assessee. Issues:1. Delay in filing appeal due to Covid-19 pandemic.2. Alleged erroneous assessment under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961.3. Disallowance under Section 57 of the Act.4. Revision of assessment order under Section 263 of the Act.5. Barred by limitation - Order under Section 263.1. Delay in filing appeal due to Covid-19 pandemic:The appellant filed an appeal against an order passed by the Principal Commissioner of Income Tax (Appeals)-1, Ahmedabad. The delay of 4 days in filing the appeal was condoned by the Appellate Tribunal due to the situation arising from the Covid-19 pandemic.2. Alleged erroneous assessment under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961:The Principal Commissioner of Income Tax (PCIT) contended that the assessment order made under Section 143(3) r.w.s. 147 of the Act was erroneous and prejudicial to the interest of revenue as the provision of Section 57 of the Act was not examined correctly. The PCIT set aside the order and directed a fresh assessment after proper examination of Section 57 issues.3. Disallowance under Section 57 of the Act:The original assessment order disallowed a deduction under Section 57 of the Act, related to income from other sources. The disallowance was based on the failure to establish a clear nexus between the expenditure claimed and the income earned, as required by Section 57(iii). The disallowance was made and added to the total income of the assessee.4. Revision of assessment order under Section 263 of the Act:The Appellate Tribunal noted that the issue under Section 57 had been examined in the original assessment order. The Tribunal held that the PCIT wrongly set aside the order under Section 143(3) r.w.s. 147, as the issue had already been addressed in the initial assessment, and the disallowance was made after due verification.5. Barred by limitation - Order under Section 263:The Appellate Tribunal considered the argument that the order under Section 263 of the Act was beyond the limitation period, as the original assessment order was passed in 2014, and the revision should have been done by 2016. Relying on a judgment, the Tribunal concluded that the PCIT's order under Section 263 was passed beyond the prescribed limitation and, therefore, quashed the order.In conclusion, the appeal by the assessee was allowed, and the order under Section 263 of the Act was deemed bad in law and quashed due to being beyond the limitation period.