2023 (1) TMI 467

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....eal mentioned hereunder are without prejudice to one another. 2. The order passed by Pr. Commissioner of Income-tax, Rajkot-1 [hereinafter referred as to the "PCIT"] is bad in law, invalid and requires to be quashed, the same may kindly be quashed. 3. The Ld. PCIT erred in law and on facts in arriving at a conclusion that the assessment order passed by the AO is erroneous as well as prejudicial to the interest of the revenue as the AO has allowed brought forward losses of the Asst. Year 2015-16 without inquiring into such claim. The order passed by Ld. PCIT requires to be quashed and may kindly be quashed. 4. The learned Pr. CIT erred on facts as also in law by ignoring fact that the appeal for Asst. Year 2015-16 ....

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....red to disallowed. However, the AO while completing the assessment had not disallowed the same while passing the assessment order under Section 143(3) of the Act. Accordingly, the PCIT held that order passed by the AO is erroneous, in as much as it is prejudicial to the interests of the Revenue. The Principal CIT set-aside the assessment order with the following observations: "4. I have gone through the records and the submission made by the assessee during the proceedings. It is on record that in the assessment completed by the AO for A Y 2015-16, the income has been assessed at Nil then a consequential effect of the same was required to be given in the year under consideration when it has claimed the set off of the carried forwar....

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....s and prejudicial to the interest of revenue." 4. The assessee is in appeal before us against the aforesaid order passed by Principal CIT under Section 263 of the Act setting aside the original assessment order. The Ld. Counsel for the assessee submitted that this is not a subject matter of proceeding under Section 263 of the Act since incorrect view was not taken by the Ld. Assessing Officer during the course of assessment proceedings. The assessee is in appeal before Ld. CIT(Appeals) against the additions made for Assessment Year 2015-16. Notably, even for the immediately preceding Assessment Year 2016-17, the assessee was given set-off of losses amounting to Rs.29,26,118/-. Further, Ld. CIT(Appeals) did not appreciate a crucial aspect....

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....eriod of 3 months from the end of the month in which the order of CIT(A) is received. On the other hand, if the contention of Principal CIT is accepted that benefit of carry-forward of losses is disallowed on the basis of assessed income i.e. on the basis of additions made during the course of assessment, then this would lead to multiplicity of proceedings, which would have a bearing on the proceedings for various years under consideration, in which the benefit of carry-forward of losses and set off thereof has been availed. Therefore, in order to avoid multiplicity of proceedings, Section 153(5) of the Act gives a shorter time-frame of 3 months from the date of receipt of order passed by CIT in appeal effect proceedings, and at the same ti....