TaxTMI 
TaxTMI 
2023 (7) TMI 1259
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.... PCIT has erred in passing the order u/s 263 for AY 2008-09 for revision of an order dt. 31.07.2017 which itself was an order passed u/s 143(3) r.w.s. 263. The appellant craves leave to amend, alter add to the grounds of appeal and or raise any other ground of appeal." 2. In ground no. 2, the assesse has challenged the validity of the impugned order passed u/s 263 of the Act being barred by limitation as the same has been passed after more than two years from the date of original order passed u/s 147 r.w.s. 143(3) dated 03.03.2016. Ld. AR of the assessee has submitted that the assesse company filed its return of income for year under consideration on 13.10.2008 declaring total income at Rs. 4,13,050/-. The assessment was initially processed u/s 143(1) and thereafter, it was reopened by issuing notice u/s 148 of the Income Tax Act and reassessment order was passed on 03.03.2016. Thereafter, Pr. CIT invoked the provisions of section 263 against the reassessment order dated 03.03.2016, on the issue of loan transactions found recorded in the seized material but were not considered and added by the Ld. AO while passing the reassessment order. The Ld. Pr. CIT then pass a revision order....
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....t revision order. He has also relied upon the judgment of Hon'ble Madras High Court in case of Indira Industries vs. Pr. CIT 95 taxman 103. Hence the Ld. AR has pleaded that show cause notice dated 09.02.2021 and consequential order dated 24.02.2021 are beyond the period of two years from the end of the financial year when the reassessment order dated 03.03.2016 was passed and therefore the impugned order is unsustainable and liable to be quashed. 4. On the other hand, Ld. DR has submitted that the assessment order dated 03.03.2016 was set aside by the Pr. CIT while passing revision order dated 15.03.2017 and thereafter the said order has merged with the subsequent order passed by the Ld. AO u/s 143(3) r.w.s. 263 on 31st July 2017. After the assessment order was set aside by the Ld. Pr. CIT u/s 263 the same was no more inexistence and get merged with the subsequent order passed by the Ld. AO u/s 143(3) r.w.s. 263 of the Act. Therefore, the limitation will reckon from the subsequent order passed by the Ld. AO on 31st July 2017. He thus submitted that the revision order is valid and within the period of limitation. He has relied upon the judgment of Hon'ble Delhi High Court in case ....
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....f Rs. 1,15,00,000/- which is alleged to be advanced by the assessee to PATH in cash (not by PATH to the Assessee) and was subsequently repaid along with the interest of Rs. 14,659 by PATH to the Assessee. 7. Thus, the issue on which provisions of section 263 of the Act were invoked by the Pr. CIT was regarding the entries of cash loan of Rs. 1,15,00,000/- was found in the seized material at page no. 23 of LPS-1 which was not considered by the Ld. AO while passing reassessment order dated 03.03.2016. The Pr. CIT finally set aside the reassessment order as under: "After careful examination of the facts placed on record and the legal position levitated as above, I am of the view that the Assessing Officer did not examine the facts of the case properly as it was required from him. In view of the above facts. I am satisfied that the order passed by the Assessing Officer u/s 147 rws 143(3) for A.Y. 2008-09 on 03/03/2016 is erroneous and prejudicial to the interest of the revenue. Therefore, the order passed by the Assessing Officer w/s 147 r.ws. 143(3) for A.Y. 2008-09 on 03/03/2016 is set aside. The Assessing Officer is directed to reframe the assessment after examining the above sa....
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....nded to Sub-section (1) of Section 263 of the Act is clear and unambiguous as in terms thereof doctrine of merger applies only in respect of such items which were the subject matter of appeal and not which were not. The question came up for consideration before this Court in Commissioner of Income Tax v. Sun Engineering Works P. Ltd. [198 ITR 297]. Therein the assessee raised a contention that once jurisdiction under Section 147 of the Act is invoked, the whole assessment proceeding became reopened, which was negatived by the court opining: "Section 147, which is subject to Section 148, divides cases of income escaping assessment into two clauses i.e. viz. (a) those due to the non- submission of return of income or non-disclosure of true and full facts and (b) other instances. Explanation (1) defines as to what constitutes escape of assessment. In order to invoke jurisdiction under Section 147(a) of the Act, the ITO must have reason to believe that some income chargeable to tax of an assessee has escaped assessment by reason of the omission or failure on the part of the assessee either to make a return under Section 139 for the relevant assessment year or to disclose fully and t....
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.... of Section 34 of the Act was reproduced which reads as under: "Section 34 in terms states that once the Income- tax officer decides to reopen the assessment, he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or reassess such income, profits or gains. It is, therefore, manifest that once assessment is reopened by issuing a notice under sub-section (2) of section 22, the previous underassessment is set aside and the whole assessment proceedings start afresh. When once valid proceedings are started under section 34(1)(b), the Income-tax Officer had not only the jurisdiction, but it was his duty to levy tax on the entire income that had escaped assessment during that year." 10. There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment 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 proceeding of assessment would be deemed t....
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.... which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings " It was furthermore held: "As a result of the aforesaid discussion, we find that in proceedings under Section 147 of the Act, the Income Tax Officer may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of notice under Section 148 and where ressessment is made under Section 147 in respect of income which has escaped tax, the Income Tax Officer's jurisdiction is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only ....
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....t is assessable to tax has escaped assessment for any assessment year. The power to deal with underassessment and the scope of reassessment proceedings as explained by the Supreme Court in the case of Sun Engineering [1992] 198 ITR 297, is in relation to that which has escaped assessment, and does not extend to reopening the entire assessment for the purpose of redoing the same de novo. An assessee cannot agitate in any such reassessment proceedings matters forming part of the original assessment which are not required to be dealt with for the purpose of levying tax on that which had escaped tax earlier. Cases of underassessment are also treated as instances of escaped assessment. The order of reassessment is one which deals with the assessment already made in respect of items which are not required to be reopened, as also matters which are required to be dealt with in order to bring what had escaped in the earlier order of assessment, to assessment. An assessee who has failed to file an appeal against the original order of assessment cannot utilise the reassessment proceedings as an occasion for seeking revision or review of what had been assessed earlier. He may only question the....
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....the original re-assessment was done on the basis of Assessee accepting the position, the same issue cannot be reopened under Section 263 of the IT Act as it tantamounts to 'Change of Opinion'; and b) The impugned notice lacks jurisdiction as it is hit by limitation prescribed by sub-section (2) of Section 263. It was contended by the Assessee that under Section 263(2), the impugned notice ought to have been issued within two years from the end of the financial year in which the order sought to be revised was passed. 3(iii) In support of this first point i.e., 'Change of Opinion', Assessee pressed into service Commissioner of Income-Tax Vs. Sat Pal Aggarwal case reported in [2007] 293 ITR 90 (P&H). To be noted, this is a judgment of a Division Bench of the Punjab and Haryana High Court. To buttress the second point pertaining to Limitation under Section 263(2) of the IT Act, the Assessee pressed into service Commissioner of Income Tax, Chennai Vs. Alagendran Finance Ltd., case reported in [2007] 162 Taxman 465 (SC). 3(iv) We have heard Mr. R. Vijay Narayanan, learned senior counsel appearing for the counsel on record for the appellant/assessee and Mr. J. Nar....
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....essee is that the impugned notice is barred by limitation, to be precise, it is barred by Section 263(2) of the IT Act is the plea of the Assessee. In support of the second point, as mentioned supra, Assessee pressed into service Alagendran Finance case (citation given supra elsewhere in this judgment). 3(xii) Learned single Judge has noticed Alagendran Finance case and has also extracted Paragraph 7 of Alagendran Finance case. Learned Judge has held that Alagendran Finance case does not help the Asseessee, as the impugned notice has been issued within two years from the date of reassessment, i.e., within two years from 30.12.2016. 3(xiii) Learned senior counsel for the Assessee contended before us that the date of reassessment cannot be the reckoning date and that the date of original assessment in the instant case being 25.02.2015 alone should be the reckoning date. To buttress this submission, learned senior counsel stressed that the term occurring in sub-section (2) of Section 263 is 'order' and not 'notice'. We deem it appropriate to extract sub-section (2) of Section 263 of IT Act, which reads as follows: 263. Revision of orders prejudicial to Revenue....
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....t the date of re-assessment being 30.12.2016, but the date of scrutinizing the assessment i.e, 25.02.2015. 3(xix) As would be evident from the narration of facts and discussion supra, the impugned notice is dated 16.08.2017 and is therefore, clearly beyond two years when reckoned from 25.02.2015. 3(xx) Therefore, the Assessee before us was clearly entitled to succeed on the second point raised before the learned single Judge. To be noted, we have already negatived the first point regarding 'Change of Opinion'. 3(xxi) Learned Senior Standing Counsel for Revenue pressed into service MAK Data P. Ltd. Vs. Commissioner of Income Tax [(2013) 358 ITR 593 (SC)] to say that even agreed basis orders can be revisited and Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax [(2000) 243 ITR 83 (SC)] to say that Revenue in exercise of powers under Section 263 of IT Act can travel beyond the assessing officer in cases of non-application of mind. MAK Data Systems case deals with penalty under Section 271 (1) (c) of IT Act which operates in a different realm and Malabar Industrial Co. Ltd., does not rescue the Revenue as impugned notice is hit by the vice of lack of jurisdict....