2022 (11) TMI 540 - AT - Income Tax
Rectification u/s 154 of the Revision order passed u/s 263 by CIT - Period of limitation - matter was pending before the ITAT - Rectification order passed after the inquiry sought by the ITAT from the CIT - CIT directed the AO to pass fresh assessment order - HELD THAT:- Assumption of jurisdiction u/s. 263 to hold an assessment order as erroneous in so far as prejudicial to the interest of on the issues on which final consideration could not be drawn by the CIT while giving directions to the Ld. AO for fresh assessment is going beyond the limitation prescribed u/s. 263 (2) of the Act in the garb of provision of section 154 of the Act. The limitation prescribed u/s. 263(2) of the Act cannot be extended by resorting to the provisions of section 154 of the Act.
Such an approach, if permitted, will never lead to finality of the proceedings invoked u/s. 263 and, therefore, cannot be appreciated, making the provision prescribing the limitation otiose. It is like when a case is reopened say on four issues and addition/disallowance are made only on three of the issues and one is missed for the purpose of making any addition or disallowance. Subsequently, by resorting to section 154 addition/disallowance cannot be made on the one issue which was missed in the assessment proceeding completed, once the time limit to pass the assessment order has expired.
It is an issue of assumption of jurisdiction and not a mistake apparent from record since provisions of section 263 requires the Ld. Pr. CIT to apply his mind by calling for and examining the records and giving the assessee an opportunity of being heard and thereafter, forming an opinion/consideration to pass an order by holding it as erroneous in so far as it is prejudicial to the interest of revenue.
In the present case, we hold that the impugned order u/s. 263 by way of rectification is time barred and liable to be quashed. Also, we hold that the original order u/s. 263 has already been quashed on the two issues raised under the first show cause notice by the coordinate bench. There cannot be any occasion for rectification u/s. 154 of the Act for that order which has already been quashed. Accordingly, grounds taken by the assessee are allowed.