TMI Blog2022 (12) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of the revenue. On this count alone, the invoking the jurisdiction u/s 263 of the Act bythe Ld. PCIT is wrong and cannot be sustained as the assessment framed pursuant to the order of ld PCIT u/s 263 of the Act is neither erroneous nor prejudicial to the interest of the revenue.This is the ratio which has been laid down in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that in order to invoke jurisdiction u/s 263 of the Act the order passed by the AO has to be erroneous as well as prejudicial to the interest of the revenue and thus satisfaction of both conditions is sine non quo and mandatory before invoking the jurisdiction u/s 263. Period of limitation - Issue on which the ld. PCIT proposed the revision of order framed u/s 143(3) r.w.s. 263 of the Act dated 23.12.2019, issue which was directed by the ld PCIT in the order u/s 263 of the Act dated 23.03.2022 was not the subject matter of revisionary proceedings in the first round. Therefore, the period of limitation has to run from the date of assessment as framed under section 143(3) dated 26.12.2016 i.e. from the end of financial year 31.3.2017. In view of this, we in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e various grounds of appeal, the assessee has challenged the order passed by the LD. PCIT u/s 263 of the Act in the second round on the ground that the issue raised stood examined by the AO in the first round and therefore the jurisdiction invoked u/s 263 of the Act and the consequent order passed by Ld. PCIT are nullity and bad in law. 4. Facts in brief are that the assessment was framed in the instant case u/s 143(3) of the Act vide order dated 26.12.2016 determining total income at Rs. Nil. Thereafter the Ld. PCIT invoked revisionary jurisdiction u/s 263 of the Act on two issues (a) non-verification of the genuineness of the brokerage expenditure incurred on new loans and renewal of loans taken for the purpose of business and (b) interest of free advances given by the assessee. The assessment was completed u/s 143(3) read with 263 of the Act vide order dated 23.12.2019 determining at Rs. 17,70,850/- thereby raising total demand of Rs. 5,47,192/-. This was the first round of 263 proceedings. The AO in the said assessment proceedings( first round) examined these issues in detail as discussed in para no. 4 to 16 of the assessment order passed u/s 143(3) read with Section 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in defense of his arguments: i) Basudeo Prasad Agarwalla vs. ITO Ors 180 ITR 388 (Cal) ii) CIT vs. V. Hope Textiles Ltd. 225 ITR 993 (MP) iii) CIT vs. Lal Chand Agarwal 259 ITR 497 (Raj.) iv) S.P. Kocher vs. ITO 145 ITR 255 (All.) The Ld. A.R. therefore argued that the exercise of jurisdiction by the Ld. PCIT in second round treating the assessment order passed pursuant to the direction by the Ld. PCIT in the first round in the order passed u/s 263 of the Act is contrary to the provisions of the Act. The ld AR contended that the order passed pursuant to first order u/s 263 of the Act in the first innings is neither erroneous nor prejudicial to the interest of the revenue.At the most the Ld. PCIT could have revised the assessment framed u/s 143(3) dated 26.12.2016 in which the AO has unlimited powers to examine the issues which could be treated an order to be erroneous and prejudicial to the interest of the revenue but not the order passed u/s 143(3) read with Section 263 of the Act dated 23.12.2019. The ld. AR argued that, in any case, the order passed u/s 143(3) dated 26.12.2016 is also barred by limitation so the power of the Ld. PCIT can also not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but in a limited manner,if there is any order of the appellate authority permitting the authorities concerned to proceed in the light of the directions made therein. In the case of V. Hope Textiles Ltd. (supra) wherein the Hon ble Madhya Pradesh High Court has held that while appellate authority remanding the case can give directions and lay down limit for the enquiry to be made by the lower Court. When such a direction is made and limits are laid down, the power and jurisdiction of the lower Court to deal with the case, after remand, depend on the specifications of the remand order and the lower Court has no jurisdiction to enter into any question which falls outside this limit. Similar issue has been laid down in the case of Lal Chand Agarwal (supra) by the Hon ble Rajasthan High Court and also by the Hon ble Allahabad High Court in the case of S. P. Kochar (supra). In our considered opinion, assessment u/s 143(3) read with Section 263 dated 23.12.2019 was framed in accordance with directions by Ld. PCIT as contained in the order passed u/s 263 dated 20.03.2019 and accordingly the assessment so framed is neither erroneous nor prejudicial to the interest of the revenue. On this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation has to run from the date of order of assessment and not from the date of order of reassessment, where the item/issue in respect of which order is revised under section 263 of the Act by the ld. PCIT is not the subject matter of reassessment proceedings. The facts before the Hon ble Apex Court were that , the ld. PCIT had sought to revise the part of the order of assessment, which related the lease equalization fund. The reassessment proceeding was initiated and culminated under section 143(3) read with section 147 of the Act in which the issue of lease equalization fund was not the subject matter and the Hon ble Court has, therefore, held that doctrine of merger did not apply in the case of this nature and the period of limitation commences from the date of original assessment and not from the date of reassessment since the latter had not anything to do to lease equalization fund and this was not a case where subject matter of assessment and subject matter of reassessment were same. The Hon ble Apex Court while passing the order has relied on the decision of Coordinate Bench in the case of CIT vs.- Arbuda Mills (1998) 231 ITR 50 (SC). Similar ratio as laid down by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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