TaxTMI 
TaxTMI 
2025 (2) TMI 1934
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....profit of Rs. 3,66,88,639/- under the provision of section 115JB of the Act. 3. Subsequently, the case of the Assessee was reopened and accordingly order dated 30.03.2022 u/s 147 r.w.s. 144B of the Act was passed, whereby the total income of the Assessee was assessed at Rs. 28,06,91,350/-. However, the FAO, subsequently vide order dated 11.03.2024 u/s 154 r.w.s 147 of the Act made the addition of Rs. 24,28,51,100/- on account of disallowance made in the original order which was purportedly missed out in the reassessment order, which is not subject matter before us . 4. The Ld. PCIT considering the order dated 30.03.2022 passed by the Faceless Assessing Officer (in short "FAO") found that FAO has ignored the assessed income of Rs. 52,35,41,450/-. Further, an amount of Rs. 1,68,03,023/- was disallowed in view of the provision of section 14A of the Act in the original assessment order dated 17.01.2018 u/s 143(3) r.w.s. 144C of the Act. Further, for computing 8D(ii) & (iii), the closing value of the investment was taken after deducting provision for different diminution in value of Rs. 7,16,26,80,000/- and therefore the Ld. PCIT opined that it should have been taken the average o....
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....issue, your case was reopened u/s. 147 of the Act. However, the Assessing Officer has erroneously recorded the reasons pertaining to Assessment Year 2013-14 and thus the assessment was completed u/s. 147 r.w.s 1448 vide order dated 30.03.2022 accepting the returned income of Rs. 28,06,90,035/- wherein the Faceless Assessing Officer has ignored the addition/disallowance of Rs. 24,28,51,098/- made in the original assessment order u/s. 143(3) dated 17.01.2018. 4. In view of the aforesaid reasons, it is seen that the Assessment Order dated 30.03.2022 passed is erroneous in so far as it is prejudicial to the interest of the revenue. Therefore, I, the Pr. Commissioner of Income-tax-4, Mumbai, in exercise of the powers conferred on me under the provisions of Section 263 of the I.T. Act, 1961, propose to consider this matter and pass such order thereon as the facts and circumstances of t the case may justify. 5. Before doing so, I hereby give you an STMENT of being heard to explain your stand. If you desire to be heard in person or through an authorised representative, you may please attend before me at my office at the above-mentioned address on 10/10/2023 at 12:00 PM. Y....
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....sary for assessment. So, the case of the assessee for A.Y. 2013-14 is being re-opened /s147 of the I.T. Act to bring to tax the income escaping assessment and also any other income chargeable to tax which has escaped assessment which comes to notice subsequently in the course of proceedings for assessment for A.Y. 2013-14. Accordingly, this is a fit case for re-opening of assessment by issuing notice u/s 148 of the Income Tax Act, 1961. 5. ....................................................................................................................." It is evident from para 1, 2 and 4 of reasons above that all of them refer to the facts relevant to AY 2013-14 though the approval u/s 151 refers to AY 2014-15. 2.3.2 It is settled legal position that if the issues to be considered in the revisionary proceedings are distinct and different from the reasons for reopening the assessment, the time limit for passing the order u/s 263 of the Act would start from the date of the passing of original assessment order and not the date of reassessment order. 2.3.3 Reliance is placed on the decision of Hon'ble Supreme Court in the case of Alagendran Fi....
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.... previous order of assessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of reassessment is distinct and different, the entire proceedings of assessment would be deemed to have been re-opened. Meaning thereby, only in a case where the issues before the Commissioner at the time of exercising powers under section 263 of the Act relate to the subject matter of re- assessment, the limitation would start from the date of Re-assessment Order However, if the subject matter of the re- assessment is distinct and different, in that case the relevant date for the purpose of determination of period of limitation for exercising powers under section 263 of the Act would be the date of the original Assessment Order" 2.3.5 Hon'ble Jurisdictional High Court in the case of ICICI Bank Ltd. (343 ITR 74) (Refer pg. no. 50 to 55 of LPB) held that where jurisdiction u/s 263 of the Act is sought to be exercised with reference to an issue which is covered by order of assessment u/s 143(3) of the Act and which does not form subject-matter of reassessment, limitation u/s 263(2) of the Act shall run from ....
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....rder u/s 1543(3) of the Act and the therefore time period has expired on 31.03.2021, much before issuing the notice dated 25.09.2023 u/s 263 of the Act and therefore as per the decision of the Hon'ble Apex Court and Hon'ble High Courts referred to above in the submission made before the Ld. PCIT, the impugned notice is liable to be set aside, for the want of limitation. 7. On the contrary, the Ld. D.R. has submitted that admittedly the FAO has considered the facts of A.Y. 2013-14, while reopening the case u/s 147 of the Act for the A.Y. 2014-15, which is a blatant mistake and therefore the order u/s 263 of the Act was warranted and thus has rightly been passed by the Ld. PCIT. Further the cause of action has arisen from the date of the reassessment order, but not from the original order as claimed by the Assessee and therefore the appeal of the Assessee is liable to be set aside. 8. We have heard the parties and perused the material available on record. Admittedly the AO in the reassessment proceedings in the reopened case u/s 147 of the Act, has taken into consideration the facts and circumstances and the issues involved in the case pertaining to A.Y. 2013-14 but not relevan....
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....n of income for A.Y 2014-15. The assessee's case was reopened by issuing a notice u/s 148 on 31.03.2021 and Assessee filed return against notice u/s 148. Accordingly, statutory notice u/s 143(2) of the Act dated 24.01.2022 was issued and duly served upon the assessee. 2. In compliance to the notices, assessee filed his submissions on various dates which were examined. 3. Assessee's reply is duly considered and the assessment u/s 147 of the Act is hereby concluded by determining the total income of the assessee as enclosed in the computation sheet." 8.3 However, the Ld. PCIT set aside the re-assessment order dated 30.03.2022 u/s 147 r.w.s. 144 of the Act by holding the same as erroneous in so far as it is prejudicial to the interest of the revenue qua disallowance u/s 14A r.w.r 8D of the Rules. No doubt the FAO in the reassessment proceedings, has done the mistake and pass the erroneous order prejudicial to the interest of the revenue. However, question emerge: "When the issues involved in the revisionary proceedings are distinct and different from the reasons for reopening the assessment then what would be the starting point of time for passing....
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....aim which he either failed to make or which was otherwise rejected at the time of original assessment which has since acquired finality. Of course, in the reassessment proceedings it is open to an assessee to show that the income alleged to have escaped assessment has in truth and in fact not escaped assessment but that the same had been shown under some inappropriate head in the original return, but to read the judgment in Jaganmohan Rao's case, as if laying down that reassessment wipes out the original assessment and that reassessment is not only confined to "escaped assessment" or "under assessment" but to the entire assessment for the year and starts the assessment proceeding de novo giving the right to an assessee to reagitate matters which he had lost during the original assessment proceeding, which had acquired finality, is not only erroneous but also against the phraseology of Section 147 of the Act and the object of reassessment proceedings. Such an interpretation would be reading that judgment totally out of context in which the questions arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this....
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....nstance of an assessee was rejected by a 3-Judge Bench of this Court in Commissioner of Income-Tax v. Shri Arbuda Mills Ltd. [231 ITR 50]. This Court took note of the amendment made in Section 263 of the Act by the Finance Act, 1989 with retrospective effect from June 1, 1988, inserting Explanation (c) to Sub-section (1) of Section 263 of the Act stating: "The consequence of the said amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the Commissioner under section 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." We, therefore, are clearly of the opinion that in a case of this nature, the doctrine of merger will have no application. 14. The Madras High Court in A.K. Thanga Pillai (supra), in our opinion, has rightly considered the matter al....
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.... having, thus, been invoked by the Commissioner of Income Tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity." {highlighted by us for clarity} 8.5 We further observe that Hon'ble Apex Court in the case of CIT vs. Industrial Development Bank of India Ltd. (2023) 454 ITR 811 (SC) while dealing with the identical issue as involved in the instant case and by considering the judgment of the Hon'ble Apex Court in the case of CIT vs. Alagendran Finance Ltd. (supra) reiterated "that where the issues before the Commissioner at the time of exercising the powers u/s 263 of the Act relate to the subject matter of reassessment, the limitation would start from the date of reassessment order. However, if the subject matter of the reassessment is distinct and different, in that case, the relevant date for the purpose of determination of the period of limitation for exercising the powers u/s 263 of the Act would be the date of the original assessment order", by observing and holding as under: "2. The following question of law arises for consideration of this Court in the present appeal "(1) Whether in the facts a....
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....dealt with the identical issue and by following the judgment of the Hon'ble Apex Court in the case of Alagendran Finance Ltd. (supra) ultimately held that subject matter/the issues involved against which the revisionary jurisdiction was exercised, not the subject matter of the reassessment proceedings and therefore the period of limitation provided u/s 263(2) of the Act would begin to run from the date of the order of the assessment and not from the order of the re-assessment. 8.7 On the aforesaid analyzations and respectfully following the judgments referred to above, the question posed by us is answered as under: "When the issue involved in the revisionary proceedings u/s 263 of the Act, is distinct and different from the reasons for reopening the assessment then the period of limitation as provided u/s 263(2) of the Act, would begin to run from the date of assessment and not from the date of re-assessment and the revisional jurisdiction if having, been invoked by the Ld. PCIT, beyond such period of limitation, would be without jurisdiction and render the entire proceeding a nullity." 8.8 Coming to the instant case, the reassessment proceedings were initiated while....
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....7040(1) Sir/ Madam/ M/s. Subject: Reasons for Reopening of Assessment Proceedings. The reasons for reopening of Assessment Proceedings for A.Y. 2014-15 in your case is as under- 1. The assessen has filed its relum of income for A.Y.2013-14 on 29.11.2013 declaring total income at Rs. 15,38,26,900/ -. Thereafter, assessment u/s. 143(3) of the Income Tax Act, 1961 was completed on 31.01.2017 assessing total income at Rs.36,97.59,913/ -. 2.On perusal of case records, It is seen that the case was selected under the category of Complete Scrutiny and the assessment of above assessce has been completed u/s. 143(3) of the I.T. Act determining income of Rs.36,97.59.973/- under normal provisions after allowing Got off of brought forward losses of Rs.5.75,56,973/. (Return income arrived after ant off of loss of Rs.5,79,56,973/. of A.Y. 2012-13). However, the assessment file of AY 2012-13 revealed that the assessment was completed at a positive income of Rs.27,22.87.896/- after scrutiny assessment dated 19.05.2016 and Rs.4,19,91,397/- after giving appeal effect dated 5.10.2018. Hence, there was no loss set off available to the assesse for A.Y. 2013-14. 3. Therefore, irregular ....