Reassessment dropped after change of opinion on cooperative deduction; revision barred where original assessment revision time-bar expired.

Reassessment proceedings were dropped by the assessing officer on the basis of change of opinion, with the original assessment's allowance of a cooperative deduction reiterated; therefore no valid fresh assessment was framed and no prejudicial order under reassessment arose, removing any basis for a valid revision under revision jurisdiction. The defect in allowing the deduction lay in the original assessment, but the time limit to revise that original order had lapsed, so revision could not be lawfully exercised. Identical authority supports that absence of any addition in reassessment vitiates the reopening. Decision favourable to the taxpayer.

---

---

Issues: (i) Whether the Principal Commissioner of Income Tax correctly exercised jurisdiction under Section 263 of the Income-tax Act, 1961 to revise the reassessment order dated 30.03.2022 when the Assessing Officer had dropped the reassessment proceedings on the ground of change of opinion.

Analysis: The original assessment under Section 143(3) stood completed on 16.12.2019 with deduction claimed under Section 80P(2)(d). The case was reopened invoking Section 147 on the basis that interest from deposits with a co-operative bank was not eligible for deduction. During reassessment proceedings the Assessing Officer obtained information under Section 133(6), found that the bank was a cooperative society, recorded that there was no omission by the assessee or the Assessing Officer in the original assessment, and dropped the reassessment as based on mere change of opinion. The asserted mistake, if any, thus lay in the original assessment order dated 16.12.2019, and the statutory time-limit to revise that original order under Section 263 had expired. Where no substantive reassessment order is sustainable because proceedings were dropped, there is no valid order under Section 147 which can be the subject of revision under Section 263.

Conclusion: The revision order passed under Section 263 in respect of the reassessment order dated 30.03.2022 is quashed; the exercise of jurisdiction under Section 263 was incorrect. The assessee's Ground No. 1 is allowed and the appeal is allowed.

---