Section 263 revision fails where assessment under section 143(3) already annulled and tax demands extinguished post-IBC

ITAT Ahmedabad held that, consequent to the resolution plan approved under the Insolvency and Bankruptcy Code by NCLT and the HC order quashing the assessment for AY 2019-20, all tax demands prior to the effective date stood extinguished. As the original assessment order passed u/s 143(3) had already been annulled by HC, the Principal CIT's order u/s 263 seeking to revise and thereby revive the quashed assessment was rendered infructuous. Accordingly, the ITAT set aside and quashed the revisional order u/s 263 in toto.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether revisional orders passed under section 263 of the Income-tax Act, 1961, can survive when the underlying assessment orders passed under section 143(3) have been quashed by the jurisdictional High Court.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Survival of section 263 revisional orders after quashing of underlying assessment orders

Interpretation and reasoning

2.1 The Tribunal noted that the impugned revisional orders under section 263 were passed to revise assessment orders framed under section 143(3) for the relevant assessment years.

2.2 It was brought on record that the assessee had challenged the validity of the assessment orders before the jurisdictional High Court by writ petitions, inter alia on the ground that the assessments were contrary to the Insolvency and Bankruptcy Code, 2016 and to the resolution plan approved by the National Company Law Tribunal.

2.3 The Tribunal recorded that, for the assessment year 2019-20, the High Court, by order dated 14 October 2025, had quashed the assessment order dated 28 September 2021, noting that (i) the assessment order was passed after approval of the resolution plan by the NCLT on 3 December 2020, and (ii) the concerned financial year fell prior to the effective date of the resolution plan, i.e., 22 December 2020.

2.4 The Tribunal held that, once the assessment order itself stands quashed by the High Court, the foundational order sought to be revised under section 263 ceases to exist in the eyes of law.

2.5 Consequently, the revisional order purporting to revise or revive such a non-existent assessment order cannot survive and becomes a nullity.

2.6 For the assessment year 2018-19, the Tribunal observed that the facts were identical and that the assessment order dated 22 April 2021 passed under section 143(3) had also been quashed by the High Court vide order dated 6 October 2025. Therefore, the same legal consequence followed in relation to the section 263 order for that year.

Conclusions

2.7 For the assessment year 2019-20, the Tribunal held that, since the assessment order dated 28 September 2021 under section 143(3) had been quashed by the High Court, the revisional order dated 29 March 2024 under section 263 did not survive and was liable to be quashed.

2.8 For the assessment year 2018-19, the Tribunal held that, as the assessment order dated 22 April 2021 under section 143(3) had been quashed by the High Court, the revisional order dated 28 March 2024 under section 263 also could not stand and was quashed.

2.9 Both appeals were allowed, and the impugned section 263 orders were set aside for the respective assessment years.

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