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of <h1>Reassessment dropped after change of opinion on cooperative deduction; revision barred where original assessment revision time-bar expired.</h1> Reassessment proceedings were dropped by the assessing officer on the basis of change of opinion, with the original assessment's allowance of a ... Revision u/s 263 - Validity of re-assessment order u/s. 147 - deduction u/s. 80P(2)(d) - AO had dropped the reopened assessment proceeding and the income as determined in the original assessment u/s. 143(3) of the Act was reiterated - change of opinion - HELD THAT:- When the re-assessment proceeding u/s.147 of the Act was dropped by the AO on the ground of change of opinion and also holding that the deduction u/s. 80P(2)(d) of the Act was correctly allowed in the original assessment, no order u/s.147 of the Act could have been legally passed. Therefore, the question of the order u/s.147 being erroneous and prejudicial to the interest of the revenue doesn’t arise, as the AO in essence had not passed any re-assessment order but had merely dropped the proceeding. The mistake of wrong allowance of deduction u/s. 80P(2)(d) of the Act, if any, was in the original assessment order u/s. 143(3) of the Act dated 16.12.2019 as acknowledged in the reason for reopening, and only that order could have been subject to revision u/s. 263 of the Act. However, as a time limit to revise the original order u/s. 143(3) of the Act had also expired, the Ld. PCIT could not have passed any order u/s. 263 of the Act in respect of the original assessment order as well. Identical issue was involved in the case of Smt. Daya Rani [2024 (2) TMI 1149 - ITAT DELHI] wherein no addition was made in the re-assessment proceedings in respect of the issues, on which the case was reopened. It was held that in the absence of any such addition the very basis of formation of belief had vanished and the AO could not have framed any re-assessment per se. When the re-assessment order passed by the AO was not sustainable in the eye of law, any revision order u/s. 263 of the Act of such unsustainable order was also not correct in the eyes of law. Decided in favour of assessee. 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.
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