Assessment Under Sections 143(3) and 263 Cannot Survive Quashed Revision Order: Bombay HC

PCIT-2 Vs Bombay Dyeing and Manufacturing Co. Ltd. (Bombay High Court)

SEO Title: Quashing Section 263 Order Ends Consequential Assessment: Bombay High Court Dismisses Revenue Appeal

Summary: The Bombay High Court considered the Revenue’s appeal under Section 260A of the Income-tax Act, 1961 against the ITAT Mumbai order dated 8 September 2023 concerning Assessment Year 2015-16. The underlying assessment order dated 31 October 2021 had been passed under Section 143(3) read with Section 263 after an earlier order dated 18 March 2020 passed by the Principal Commissioner of Income Tax under Section 263. The ITAT had subsequently quashed the Section 263 order on 13 September 2021 in Income Tax Appeal No. 30/Mum/2021.

The Commissioner of Income Tax (Appeals), by order dated 28 March 2023 under Section 250, held that once the Section 263 order had been quashed, the consequential assessment order could not survive and annulled it. The ITAT rejected the Revenue’s appeal. Before the High Court, the Revenue contended that its challenge to the ITAT’s order quashing the Section 263 order was pending before the High Court in Income Tax Appeal No. 938 of 2024 and that the present appeal should therefore be admitted and tagged with that matter. The assessee submitted that, once the Section 263 order had been set aside, the Assessing Officer had no jurisdiction to pass an assessment order under Section 143(3) read with Section 263.