Pr. CIT's revision order u/s 263 quashed when original order no longer existed after earlier quashing

ITAT Raipur quashed Pr. CIT's revision order u/s 263 regarding genuineness of business and source of cash deposits/credit entries. The Tribunal held that when the original 263 order was quashed, the consequential assessment order u/s 143(3) r.w.s. 263 could not survive independently. Pr. CIT lacked jurisdiction to revise an order that no longer existed. Additionally, the AO's scope was limited to specific directions from the set-aside proceedings and could not address depreciation issues not covered in original directions. The revision was also barred by limitation. Assessee's appeal was allowed.

---

---

Issues Involved:
1. Legitimacy of invoking Section 263 of the Income-tax Act, 1961 by the Pr. CIT.
2. Scope of jurisdiction in limited scrutiny cases.
3. Validity of the Pr. CIT's directive to re-examine the assessment order.
4. Correctness of the assessee's claim for depreciation.
5. The relevance of the original assessment order and its quashing by the ITAT.
6. Limitation period for revising the original assessment order.

Detailed Analysis:

1. Legitimacy of Invoking Section 263:
The Pr. CIT invoked Section 263, setting aside the assessment order for fresh enquiry. The assessee contended that the order was unsustainable, passed without proper appreciation of facts and evidence, and that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue.

2. Scope of Jurisdiction in Limited Scrutiny Cases:
The case was selected for limited scrutiny under CASS to verify the claim for depreciation. The ITAT observed that the scope of jurisdiction of the AO was confined to the specific issue for which the case was picked up for scrutiny. The Pr. CIT, in revisional proceedings, could not traverse beyond these issues. This position is supported by CBDT Instruction No.20/2015 and relevant case laws, including ITAT Mumbai in M/s Su-Raj Diamond Dealers Pvt. Ltd. and ITAT Raipur in Chhattisgarh State Beverages Corporation Ltd.

3. Validity of the Pr. CIT's Directive to Re-examine the Assessment Order:
The original assessment was set aside by the Pr. CIT to verify the genuineness of the business and the source of cash deposits and credit entries. The ITAT noted that the Pr. CIT could not have held the consequential assessment order as erroneous for allowing the depreciation claim, an issue not forming the basis for the original set-aside directive.

4. Correctness of the Assessee's Claim for Depreciation:
The ITAT found that the assessee's claim for depreciation was well in order and had rightly been allowed by the AO. The income disclosed by the assessee from his business was higher than that determined on a presumptive basis under Section 44AD, thus justifying the claim for depreciation.

5. Relevance of the Original Assessment Order and Its Quashing by the ITAT:
The ITAT had previously quashed the Pr. CIT's order dated 18.03.2021, which had set aside the original assessment order. Consequently, the assessment order dated 26.03.2022, passed u/s 143(3) r.w.s. 263, could not survive independently and was liable to be quashed.

6. Limitation Period for Revising the Original Assessment Order:
The ITAT observed that if the Pr. CIT sought to revise the original assessment framed on 30.11.2017, it would be barred by limitation. Hence, the order passed u/s 263 on 21.03.2024 was quashed.

Conclusion:
The ITAT allowed the appeal, quashing the order passed by the Pr. CIT u/s 263 dated 21.03.2024, and restoring the original assessment order dated 30.11.2017. The ITAT emphasized that the Pr. CIT could not assume jurisdiction to revise an assessment order that had already been quashed and that any revision beyond the specified issues in limited scrutiny was unjustified.

---