TaxTMI 
TaxTMI 
2021 (11) TMI 240
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....ax (PCIT) has erred in passing ex-parte order U/s 263 of the Income Tax Act, 1961 without providing sufficient opportunity of being heard to the appellant. 2. On the fact and circumstances of the case as well as in Law, the Learned Principal Commissioner of IncomeTax(PCIT)haserredininitiating proceedings U/s 263 of the Income Tax Act, 1961 (the Act) vide show-cause notice dated 22.01.2021 and passing an order U/s 263 of the Act without considering facts fit Circumstances of the case. 3. On the fact and circumstances of the case as well as in Law, the Learned Principal CIT has erred in passing Revision Order u/s.263 of the Income Tax Act, 1961 for the assessment order u/s. 143(3) r.w.s 153A of the Act passed by the Learned Assessing Officer after making adequate enquiries and application of mind, without considering the facts and circumstances of the case. 4. On the fact and circumstances of the case as well as in Law, the Learned Principal CIT has erred in considering the order passed u/s. 143(3) r.w.s 153A of the Income Tax Act, 1961 by the Learned Assessing officer is erroneous and prejudicial to the interest of the revenue, without appreciating the fac....
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.... vide his order passed u/s 263, dated 05.02.2021 directed the A.O to modify the order passed by him u/s 143(3) r.w.s 153A, dated 29.12.2017 and make the additions as per his observations recorded in the order of revision. 6. The assessee being aggrieved with the order passed by the Pr.CIT u/s. 263 of the Act has carried the matter in appeal before us. At the very outset, it was submitted by Shri Rakesh F. Joshi, Ld. Authorized Representative (for short "A.R") for the assessee that the short issue involved in the present appeal was the validity of the jurisdiction that was assumed by the Pr. CIT for passing the order u/s. 263 of the Act. Elaborating on his aforesaid contention, it was submitted by the Ld. A.R that the assessment framed by the A.O vide his order passed u/s. 143(3) r.w.s. 153A, dated 29.12.2017 was thereafter assailed before the Commissioner of Income Tax (Appeals)-53, Mumbai [for short "CIT(A)"]. It was submitted by the ld. A.R that the CIT(A) vide his consolidated order dated 25.01.2019 had after exhaustive deliberations deleted the said respective additions by granting telescoping benefit of unrecorded sales of the group company. Backed by the aforesaid facts, i....
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....th the permission of the bench had placed on record written submissions in support of his aforesaid contentions. 7. Per contra, the ld. Departmental Representative (for short "D.R") relied on the order passed by the Pr.CIT u/s 263 of the Act. It was submitted by the Ld. D.R that the Pr.CIT had rightly assumed jurisdiction and revised the order u/s. 263 of the Act. It was submitted by the Ld. D.R that as the appeal filed by the assessee was devoid and bereft of any merit, therefore, the same did not merit acceptance and was liable to be dismissed. 8. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. A.R in order to drive home his aforesaid contentions. As is discernible from the order passed by the Pr.CIT u/s. 263 of the Act, dated 05.02.2021, the assessment order passed by the A.O u/s. 143(3) r.w.s 153A of the Act, dated 29.12.2017 was held by him to be erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act, for two fold re....
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....directions issued by the Board or by the [Principal Chief Commissioner or Chief Commissioner] or [Principal Director General or Director General] or [Principal Commissioner or Commissioner] authorised by the Board in this behalf under section 120; (b) "record" [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the [Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner]; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the [Principal Commissioner or Commissioner] under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal]. [Explanation 2.- For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chie....
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....ed in such appeal. Basically the controversy in the case before us hinges around the aspect as to how the term "...such matters as had not been considered and decided in such appeal" as contemplated in "Explanation 1(c)" to sub-section (1) of Sec. 263 is to be construed. In our considered view, once an order passed by the assessing officer had been subjected to an appeal, then, as per "Explanation 1(c)" to sub-section (1) of Section 263 of the Act, any such matter that had been considered and decided in such appeal would fall beyond the scope and realm of the jurisdiction vested with the revisional authority u/s 263 of the Act. In other words, once a matter i.e an addition, disallowance or any other issue emanating from the assessment order have been considered and decided in an appeal, then, it would thereafter not be open for the CIT/Pr.CIT to extend his revisional jurisdiction as regards such matters. Although, the "Explanation 1(c)" to sub-section (1) of Sec. 263 of the Act circumscribes the powers vested with a revisional authority as regards an order passed by the A.O which had been the subject matter of any appeal, however, the jurisdiction to revise such matters as had not ....
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....eal. Accordingly, even in respect of the aforesaid three items, the powers of the CIT under s. 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred." Accordingly, on the basis of the aforesaid settled position of law, we may herein observe, that the jurisdiction of a revisional authority as per the "Explanation 1(c)" to sub-section (1) of Sec. 263 would be circumscribed only as regards such matters that had been considered and decided in appeal, and not otherwise. Also, support is drawn from the judgment of the Hon'ble High Court of Bombay in the case of CIT (Exemption) Vs. Slum Rehabilitation Authority (2019) 412 ITR 521 (Bom). In the said case the assessee had in its return of income claimed exemption u/s 11 of the Act. However, the A.O vide his order u/s 143(3), dated 22.12.2011 after considering the activities carried out by the assessee and its legal status declined its claim for exemption u/s 11 of the Act. On appeal, the CIT(A) granted the benefit of exemption u/s 11 to the assessee and allowed its appe....
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....quiries about the same claim on the ground that one of the aspects of such a claim was not considered by the A.O. For the sake of clarity the observations of the Hon"ble High Court are culled out as under: "8. According to the Revenue, since the receipts of the assessee from the activities referred to in the first proviso far exceeds 25 lakh Rupees in the previous year, by virtue of first proviso, the activities of the assessee would be excluded from the expression "charitable purpose". In the present appeal, we are not required to examine the correctness of this contention. We have referred to this proviso only in order to get better clarity on the issue at hand. The question to be decided by us is whether the Tribunal was correct in holding that the Commissioner committed an error in exercising his revisional powers. In this context, we may recall, the Assessing Officer had rejected the assessee's entire claim of exemption under Section 11 of the Act, not with the aid of the proviso to Section 2(15) of the Act but on entirely different ground. Be that as it may, the assessee's claim stood rejected upon which the assessee had filed appeal before the Appellate Comm....
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....were very much the subject matter of the appeal in relation to the income which was disallowed by the A.O, therefore, on the ground of merger the CIT could not have exercised his revisional powers. Further, we find that a similar issue had came up before the Hon'ble High court of Gujarat in the case of Haryana Paper Distributors Pvt. Ltd. Vs. PCIT (2009) 412 ITR 515 (Guj). In the case before the Hon"ble High Court the A.O had doubted the genuineness of the purchases that were claimed to have been made by the assessee. It was submitted by the assessee before the A.O that the purchases, however, in any case if the same were not to be believed as genuine, then, profit from such dealing be calculated @ 4% of the turnover. The A.O accepted the assessee"s latter contention and made G.P addition @ 4% of the impugned purchases and after granting adjustment of the already offered G.P of 1.79% made an addition of the balance amount. On appeal, the assessee sought deletion of the entire addition made by the A.O. During the pendency of the appeal the CIT issued a notice u/s 263 for revision of the order of assessment, on the ground, that now when the A.O had held that the entire purchases were....
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.... is concerned, the same is found to be distinguishable on facts. In the aforesaid case as both the issues in question were evidently considered and decided by the CIT(A), therefore, it was held by the Hon"ble High Court that the Commissioner of Income Tax could not have exercised his revisional jurisdiction u/s 263 of the Act. 11. Backed by the aforesaid settled position of law, we are of the considered view that as both the issues in question on the basis of which the Pr.CIT had assumed jurisdiction u/s 263 of the Act had been considered and decided in appeal by the CIT(A), therefore, the Pr.CIT was clearly divested of his jurisdiction to have exercised the revisional jurisdiction vested with him u/s 263 of the Act as regards the said issues. We, thus, in terms of our aforesaid observations set-aside the order passed by the Pr.CIT u/s 263 of the Act, dated 05.02.2021 and restore the order passed by the A.O u/s 143(3) r.w.s 153A, dated 29.12.2017. 12. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. ITA No. 281/Mum/2021 A.Y. 2011-12 13. As the facts and the issue involved in the present appeal remains the same as were t....