2023 (4) TMI 482 - AT - Income Tax

Revisionary proceedings under section 263 quashed as time-barred, assessment order upheld

M/s. Bonjour Estates (P) Ltd. Versus The PCIT (1), New Delhi

The Tribunal held that the revisionary proceedings initiated by the Ld. PCIT were time-barred and therefore null and void. It was determined that the ... Revisionary proceedings belatedly beyond prescribed time limit - time limit for issuance of notice u/s. 263 - HELD THAT:- Initiation of reassessment proceedings to revise assessment order dated 11.02.2011 would reckoned from said dated would and on 31.03.2013 and beyond this period revisionary proceedings u/s. 236 of the Act is not permissible as being barred by limitation. Thus we reach a conclusion that the Ld. PCIT was not validly entitled to assume revisionary jurisdictional u/s. 263 of the Act to issue notice and to pass impugned order for alleging the same as erroneous and prejudicial to the interest of revenue. Addition u/s 68 - When the AO enlarging the scope of reassessment proceedings from two entities to all entities and after considering and verifying the documentary evidences filed by the assessee has taken a causable view u/s. 68 taxing the entire amount received by the assessee from two entities and accepting that the assessee has discharged onus as per requirement of section 68 of the Act, pertaining to other entities. In such a situation the learned PCIT is not empowered to invoke revisionary proceedings u/s. 263 of the Act, merely because he is not agree with the view taken by the AO thus, the assessment cannot be treated as erroneous and prejudicial to the interest of revenue unless he establishes that view taken by the AO is unsustainable in law. Therefore impugned revisionary notice, revisionary order u/s. 263 of the Act is hereby quashed being bad in law. Issues Involved:1. Validity of revisionary proceedings initiated by Ld. PCIT u/s 263 of the Income Tax Act.2. Whether the assessment order passed by the AO was erroneous and prejudicial to the interest of revenue.Summary:1. Validity of Revisionary Proceedings Initiated by Ld. PCIT u/s 263 of the Income Tax Act:The primary issue in this appeal was the validity of the revisionary proceedings initiated by the Ld. PCIT-1, New Delhi under section 263 of the Income Tax Act, 1961. The assessee contended that the revisionary proceedings were time-barred. The assessee filed its return for AY 2010-11 on 24.09.2010, processed u/s 143(1) on 11.02.2011. Reassessment proceedings were initiated u/s 148 on 24.03.2017, and the reassessment order u/s 143(3) r.w.s 147 was passed on 13.12.2017. The reassessment was based on the genuineness of share capital received from two entities, Advanced Technology Ltd. and Yantra Natural Resources Ltd. The assessee surrendered the transaction and paid taxes. The Ld. PCIT issued a notice u/s 263 on 09.02.2021 and passed the order on 28.03.2021, alleging improper inquiries by the AO regarding share capital from other entities. The assessee argued that the time limit for issuing the notice u/s 263 should be reckoned from the date of intimation u/s 143(1), i.e., 11.02.2011, making the notice time-barred.The Tribunal, referencing the Supreme Court judgment in CIT vs Alagendran Finance Ltd., held that the period of limitation for invoking section 263 starts from the date of the original assessment order and not from the reassessment order. Therefore, the revisionary proceedings initiated by the Ld. PCIT were barred by limitation and rendered a nullity.2. Whether the Assessment Order Passed by the AO was Erroneous and Prejudicial to the Interest of Revenue:The assessee argued that the reassessment proceedings were initiated based on the genuineness of receipts from two entities, and the AO made additions u/s 68 for the entire amount. The Ld. PCIT, however, alleged that the AO did not make proper inquiries regarding other entities. The assessee provided voluminous documentary evidence to establish the identity, creditworthiness, and genuineness of the transactions, which the AO accepted. The Tribunal noted that the AO had made a plausible and sustainable view after verifying the documentary evidence and making the addition for the two entities. The Tribunal held that when the AO has taken one of the permissible views, the Ld. PCIT cannot invoke section 263 merely because he disagrees with the AO's view. The Tribunal referenced judgments from the Hon'ble Delhi High Court in CIT vs. Kelvinator of India Ltd. and CIT vs. DLF Ltd., which held that an order cannot be treated as erroneous and prejudicial to the interest of revenue if the AO has adopted a permissible view.Conclusion:The Tribunal concluded that the Ld. PCIT was not validly entitled to assume revisionary jurisdiction under section 263 of the Act, as the proceedings were barred by limitation. The assessment order passed by the AO was not erroneous and prejudicial to the interest of revenue. The revisionary order u/s 263 was quashed, and the appeal of the assessee was partly allowed.