Case Law Details
Kolet Resort Club Pvt Ltd Vs ITO (ITAT Ahmedabad)
In the case of Kolet Resort Club Pvt Ltd v. ITO (ITAT Ahmedabad), the assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 06.03.2024, concerning the assessment year (AY) 2015-16. The assessee challenged several aspects of the CIT(A) order, including the validity of the revision order passed under Section 263 of the Income-tax Act, 1961, which had been made by the Principal Commissioner of Income Tax (PCIT) on 08.03.2021. The assessee contended that the revision order was invalid and time-barred, as the original assessment had been completed under Section 143(3) on 27.12.2017. The assessee further argued that the CIT(A) had erred in confirming certain additions, including an amount of Rs.19,75,39,092 under Section 56(2)(viib) of the Act, related to the issuance of shares at face value.
The ITAT found merit in the assessee’s arguments and ruled that the revision order under Section 263, which had been issued by the PCIT, was quashed on 01.10.2024. As a result, the subsequent proceedings, including the assessment order under Section 144 read with Section 263, were deemed invalid. The ITAT also annulled the CIT(A) order, as it was based on the now-quashed revision order. Consequently, the ITAT allowed the assessee’s appeal for statistical purposes, highlighting that the initial revision proceedings were invalid, which led to the annulment of the CIT(A) order. The case demonstrates the importance of adhering to procedural timelines and the consequences of invalid revision orders.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi (hereinafter referred to as “CIT(A)” for short), dated 06.03.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for Assessment Year (AY) 2015-16.
2. The Assessee has taken following grounds of appeal:-
“1. On the facts and in the circumstances of the case the order passed by the CIT(A) is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.
2. The Ld. CIT(A) erred in dismissing the appeal.
3. The Ld. CIT(A) ought to have appreciated that the assessment order passed u/s 144 r.w.s 263 of the Act dated 30-03-2022 as well as the revision order passed u/s 263 of the Act dated 08.03.2021 is invalid ab initio.
4. The Ld. CIT (A) ought to have appreciated that the revision order passed by the PCIT, Ahmedabad-1 dated 08-03-2021 itself is invalid ab initio.
5. The Ld. CIT(A) ought to have appreciated that the revision order passed by the PCIT Ahmedabad-1 dated 08-03-2021 is barred by limitation as per the provisions of sub section (2) of section 263 of the I.T Act, 1961 since the original order u/s 143(3) of the Act has been passed on 27-12-2017.
6. The Ld. CIT(A) erred in appreciating that the order passed u/s 144 r.w.s 263 of the Act dated 30-03-2022 has no legs to stand.
7.The Ld.CIT(A) grossly erred in not adjudicating ground nos.6, 6.1 and 6.2 taken before him.
8. The Ld.CIT(A) ought to have annulled the order passed u/s 144 r.w.s. 263 of the Act dated 30-03-2022.
9. The Ld.CIT(A) erred in confirming the addition made of Rs.19,75,39,092/-u/s 56(2)(viib) of the Act.
10. The Ld. CIT (A) ought to have appreciated that the assessee company has issued shares at face value of Rs. 10/- per share and not at any premium rate and that therefore the provisions of section 56(2)(viib) of the Act are not attracted.
11. The Ld. CIT(A) ought to have appreciated that shares were not issued by the appellant at premium but issued only at face value of Rs. 10/- during the year under consideration, and that the question of applicability of provisions u/s 56(2)(viib) of the Act and rule 11UA does not arise.
12. The Ld. CIT(A) ought to have appreciated that the provisions of Section 56(2)(viib) of the Act are inapplicable for transactions between a holding company and its subsidiary company.
13. The appellant may add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal. General ground Appellant.”
3. At the outset itself, both the parties fairly submitted that the order passed by the ld. PCIT u/s 263 stands quashed by the Tribunal vide order dated 01.10.2024. Since the 263 order itself has been quashed, the consequent proceedings are invalid. Thus, the impugned order passed by the ld. CIT(A) is hereby annulled.
4. In the result, the appeal of the Assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 22.11.2024
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