TaxTMI 
TaxTMI 
2025 (5) TMI 1945
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....issue raised in ground no.1 is a legal issue, challenging the assessment framed in pursuance of the revisionary order passed u/s 263 of the Act, when the order passed u/s 263 of the Income-tax Act, 1961 (the Act), revising the assessment u/s 143(3) of the Act, itself is bad in law. The ground raised is as under:- "1. For that the assessment in pursuance of the order u/s 263 of the Act is bad in law in view of the fact that the order passed u/s 263 of the Act revising and setting aside the order u/s 143(3)/147 itself was bad in law." 04. The ld. Counsel at the outset submitted that the legal issue raised goes to the root of the matter and could not be taken earlier due to inadvertence. The ld. Counsel for the assessee further submitted that all the facts qua the said ground are available on record and no further verification of facts is required to be made from many quarters whatsoever. The ld. Counsel for the assessee therefore submitted that the same may be admitted for adjudication for relying on the decisions of Hon'ble Apex Court in the case of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688, ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by ....
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....n the ground that the ld. AO has failed to examine the genuineness of the cash purchases and also failed to examine whether there was any violation of provisions of Section 40A(3) of the Act. The ld. PCIT noted that according to clause (a) to explanation 2 to section 263 of the Act with effect from 01.06.2015, order passed without making enquiries/ verifications, which should have been made, shall be deemed to be erroneous and prejudicial to the interest of the Revenue. The ld. Pr. CIT finally passed the order u/s 263 of the Act on 20.11.2017, revising the assessment framed u/s 143/147 dated 25.03.2016, with a direction to pass fresh assessment order and compute the total income as per the provisions of the Act after due examination of issue of violation of provisions of Section 40A(3) of the Act after giving a reasonable opportunity of hearing to the assessee. Thereafter in the set aside proceedings,the ld. AO issued notice to the assessee calling for certain details and information which were duly furnished by the assessee and finally, made an addition of Rs. 1,25,32,915/- on account of disallowances u/s 40A(3) of the Act in respect of purchase of coal and bricks. 09. Thereafter....
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....onary order was not subject matter of the reopening of assessment u/s 147 of the Act nor was it ever came to the notice of the ld. AO during the re-assessment proceedings. Therefore, the ld. PCIT could not have validly revised the assessment framed u/s 143/147 of the Act dated 25.03.2016. The ld. AR further submitted that the limitation to pass the revisionary order u/s 263 of the Act in respect of the order passed u/s 143(1) of the Act had already expired on or before 31st March, 2017. The ld. AR submitted that the reopening of assessment u/s 147 of the Act was made for cash deposits in the bank account, whereas the issue in 263 was purchases made in violation of section 40A(3) of the Act. The ld. AR prayed that the same is bad in law by relying on the decision of Hon'ble Apex Court in the case of CIT vs. Alagendran Finance Ltd (2007) 293 ITR 1 (SC). The ld. AR further submitted that the said decision of the Apex Court has been followed in the case of Lark Chemicals Ltd. (2014) 368 ITR 655 (Bom), wherein the original assessment was u/s 143(1) then reopened u/s 147 of the Act wherein the issue for which 263 done was not there in the re-assessment proceedings. The Hon'ble Bombay....
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....le Apex Court was followed by Hon'ble Bombay High Court in the case of CIT Vs Lark Chemicals Ltd. (supra) and also by Hon'ble Calcutta High Court in case of Keshab Narayan Banerjee Vs CIT & Another (supra). Therefore, we are inclined to hold that the assessment framed u/s 144/263 of the Act dated 20.12.2018 is invalid and is hereby quashed on the ground that the same was framed in pursuance to invalid revisionary order passed u/s 263 of the Act. The Hon'ble Apex Court in the case of PCIT Vs. Bulbul Agrawal (supra), wherein the Hon'ble Court dismissed petition for Special Leave to appeal (C) No. 26629/2023 order dated 19.02.2025, wherein the Hon'ble Apex Court while dismissing the SLP referred to the decision of the co-ordinate Bench in Para 14 and 15, whereby the Tribunal held that the validity of order can be taken in the collateral proceeding and in Para 16 quashed the order u/s 263 of the Act. Similarly, considering the facts and circumstances of the case and in the light of aforesaid decisions, we quash the assessment u/s 144/263 of the Act. The appeal of the assessee is allowed on legal issue. 014. The issue raised in all these appeals namely ITA Nos.522 t....
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....54/- in respect of violation of Section 40A(3) of the Act for purchase of coal and bricks and Rs. 1,81,96,959/- u/s 40A(3) of the Act in respect of Carriage Inward and Rs. 4,97,26,457/- u/s 40A(3) in respect of labour charges. 018. In this case also the ld. AO has disallowed the entire payment for purchase of bricks Rs. 15,49,50,054/- Rs. 1,81,96,959/- for carriage inward and the entire labour payments of Rs. 4,97,26,457/-, by stating the same to be in violation of the provisions of Section 40A(3) of the Act. We note that the books of accounts were already audited and there was no such remarks to this effect by the auditors in the audited report and it was also pointed out before us with reference to the bank statements and other supporting records that the substantial amount out of the above payments were made by cheques and almost all the payments made in cash were below the limit as specified in Section 40A(3) of the Act. Therefore, we feel that the same needs verification at the end of the ld. AO and accordingly, we restore the issue back to the file of the ld. AO with a direction to frame the assessment denovo after affording reasonable opportunity of hearing to the assessee.....