Tribunal quashes time-barred revisional orders, emphasizes limitation period from original assessments

The Tribunal allowed the appeals, quashing the revisional orders as the Principal Commissioner of Income Tax's jurisdiction was time-barred and the assessments were not erroneous or prejudicial to the revenue's interest. The Tribunal emphasized that the limitation period for issuing notices under Section 263(2) should be reckoned from the original assessments, rendering the revisional orders unsustainable.

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Issues:
1. Challenge to revisional orders passed under Section 263 of the Income Tax Act, 1961 concerning Assessment Years 2012-13 & 2013-14.
2. Legitimacy of Long Term Capital Gain (LTCG) claimed as exempt under Section 10(38) of the Act.
3. Jurisdiction exercised by the revisional authority and time limitation under Section 263(2) of the Act.

Analysis:

Issue 1:
The appeals were filed against revisional orders by the Principal Commissioner of Income Tax (Central) under Section 263 of the Act, seeking to set aside assessment orders passed by the Assessing Officer concerning AYs 2012-13 & 2013-14. The assessee challenged the assumption of jurisdiction by the PCIT, arguing that the assessment orders were not erroneous or prejudicial to the revenue's interest.

Issue 2:
The PCIT alleged that LTCG claimed as exempt under Section 10(38) of the Act, arising from transactions of shares of a penny stock company, was not legitimate. The PCIT directed the AO to conduct further inquiries, which the assessee contested, stating that the LTCG was bona fide after verification of relevant details. The Tribunal found that the AO was precluded from making additions/disallowances post-search assessment when no incriminating documents were found, rendering the revisional order time-barred and non est.

Issue 3:
The additional ground raised by the assessee questioned the time limitation under Section 263(2) of the Act. The Tribunal admitted this ground for adjudication. The assessee argued that the PCIT's jurisdiction was time-barred as the assessments were concluded before the search, and the show-cause notice issued under Section 263(1) was non est in law. Referring to legal precedents, the Tribunal held that the revisional orders based on the time-barred notice were quashed.

In conclusion, the Tribunal allowed the appeals, quashing the revisional orders as the PCIT's jurisdiction was time-barred and the assessments were not erroneous or prejudicial to the revenue's interest. The Tribunal emphasized that the limitation period for issuing notices under Section 263(2) should be reckoned from the original assessments, rendering the revisional orders unsustainable.

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