2021 (9) TMI 281 - AT - Income Tax

Revision u/s 263 by CIT - period of limitation - CIT setting aside order passed u/s 143(3) r.w.s. 147 on the ground that the same is erroneous and prejudicial to the interest of the revenue as the issue of share capital and share premium were not verified by the AO - Assessee argued revisionary proceedings as barred by limitation in terms of section 263(2) - HELD THAT - We are quite convinced with the submissions of the assessee that period of limitation has to be taken from the original assessment order dated 11.03.2013 and not from re-assessment order dated 29.12.2017. It is also true that the issue which was subject matter of revisionary proceedings u/s 263 of the Act was not at all subject matter of re-assessment proceedings u/s 147 of the Act nor addition was made on the items of escapement of income as recorded u/s 148(2). The revisionary order is barred by limitation and accordingly the entire proceedings are invalid and nullity. The case of the assessee is squarely covered by the decision of the Apex court in the case of CIT Vs. Alagendran Finance Ltd. 2007 (7) TMI 304 - SUPREME COURT wherein the very same issue of limitation has been decided in favour of the assessee under similar facts. - Decided in favour of assessee.

Summary

Issues:
1. Jurisdiction of the ld PCIT to pass order u/s 263 of the Act on the ground that the proceedings are time-barred.

Detailed Analysis:

Issue 1: Jurisdiction of the ld PCIT to pass order u/s 263 of the Act on the ground that the proceedings are time-barred:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) relevant to the assessment year 2010-11. The assessment was re-opened by the AO beyond four years to verify transactions carried out by the assessee company with specific parties. The ld PCIT initiated revisionary proceedings under section 263 of the Act based on the AO's letter stating that the issue of share capital raised by the assessee could not be verified due to a shortage of time. The assessee challenged the revisionary order on the grounds of being time-barred, arguing that the period of limitation should be reckoned from the original assessment order and not from the re-assessment order. The ld AR contended that the revisionary proceedings and order were invalid as they exceeded the time limit set by section 263(2) of the Act. The ld DR, however, argued that the period should be calculated from the re-assessment order. The Tribunal examined the facts, noting that the issue subject to revision was not part of the re-assessment proceedings, and no additions were made during the reassessment. Citing the decision in CIT Vs. Alagendran Finance Ltd., the Tribunal held that the revisionary order was time-barred and, therefore, null and void. Consequently, the revisionary proceedings and the order passed under section 263 were quashed.

In conclusion, the Tribunal allowed the appeal of the assessee based on the limitation issue, rendering the other grounds raised moot. The order was pronounced in the open court on 01.09.2021.