Assessment order restored after revisionary proceedings under section 263 deemed invalid without prior section 153D revision

ITAT Patna quashed the revisionary order u/s 263 where Pr. CIT revised an assessment order u/s 153A without first revising the approval u/s 153D. The tribunal held that when AO obtained prior approval u/s 153D and conducted detailed enquiry taking a legally permissible view, Pr. CIT cannot assume jurisdiction u/s 263. The Pr. CIT failed to conduct independent enquiry and merely referred to documents already examined by AO. Since the assessment order was neither erroneous nor prejudicial to revenue interest, the revisionary proceedings were invalid. The original assessment order u/s 153A/143(3) was restored.

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Issues Involved:
1. Condonation of Delay
2. Validity of Revisionary Proceedings u/s 263
3. Detailed Enquiry Conducted by Assessing Officer
4. Merits of the Case

Summary:

Condonation of Delay:
The Tribunal condoned a 14-day delay in filing the appeals, acknowledging the assessee's reasonable cause for delay based on directions from the Hon'ble Patna High Court.

Validity of Revisionary Proceedings u/s 263:
The Tribunal examined whether the Principal Commissioner of Income Tax (Pr. CIT) could invoke revisionary powers u/s 263 without revising the approval granted u/s 153D. It was held that the Pr. CIT erred in assuming jurisdiction u/s 263 by revising the assessment order u/s 153A without revising the approval u/s 153D. The Tribunal relied on multiple judicial pronouncements, including the Hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd. vs. CIT, which established that an order cannot be revised unless it is both erroneous and prejudicial to the revenue. The Tribunal concluded that the revisionary proceedings were invalid and deserved to be quashed.

Detailed Enquiry Conducted by Assessing Officer:
The Tribunal noted that the Assessing Officer (AO) had conducted a detailed enquiry during the assessment proceedings, including issuing questionnaires and receiving detailed replies from the assessee. The AO's assessment order was passed after obtaining the necessary approval u/s 153D, indicating that the AO had taken one of the legally permissible views. The Tribunal held that the Pr. CIT could not invoke revisionary powers merely on the grounds of inadequate enquiry when a reasonable enquiry had been conducted.

Merits of the Case:
On the merits, the Tribunal found that the Pr. CIT had not made any specific enquiry to substantiate the assumption that the documents in question belonged to the assessee. The Tribunal emphasized that the Pr. CIT should have conducted an independent enquiry before assuming jurisdiction u/s 263. The Tribunal also noted that the documents referred to by the Pr. CIT did not pertain to the assessment year in question and some documents did not belong to the assessee. Therefore, the Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the revenue.

Conclusion:
The Tribunal quashed the impugned order u/s 263 and restored the assessment order framed u/s 153A/143(3). The appeals for Assessment Years 2015-16 to 2018-19 were allowed.

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