ACIT Vs Bombay Dyeing and Manufacturing Company Limited (ITAT Mumbai)
Summary: ITAT Mumbai dismissed the Revenue’s appeal and upheld the CIT(A)’s decision annulling the consequential assessment made pursuant to a revision order under Section 263 of the Income-tax Act, 1961. Bombay Dyeing and Manufacturing Company Limited, engaged in manufacturing and export of textiles and real estate development, had originally been assessed under Section 143(3) for AY 2015-16.
Subsequently, the Principal Commissioner invoked Section 263 of the Act, holding the assessment order to be erroneous and prejudicial to the interests of the Revenue and directing the AO to undertake fresh enquiries and verification. The assessee challenged the Section 263 order before the coordinate Bench, which quashed it. Meanwhile, the AO had already passed a consequential assessment order on 31.10.2021 pursuant to the revisionary directions. The CIT(A) held that once the foundational Section 263 order had been quashed, the consequential assessment could not continue to exist and accordingly annulled it.
The Tribunal found no infirmity in that conclusion. It observed that although the Revenue might not have accepted the coordinate Bench’s decision and might have challenged it before the High Court, that circumstance did not prevent disposal of the present appeal or preserve an assessment whose foundation had already been quashed. The Revenue did not point to any material independently supporting the consequential assessment. The CIT(A)’s order was therefore confirmed and the Revenue’s appeal dismissed. The order was pronounced on 08.09.2023. TaxGuru subsequently reported the Bombay High Court proceedings arising from this matter on the same principle.
Cases Discussed
- Bombay Dyeing and Manufacturing Company Limited Vs PCIT, ITA No. 30/Mum/2021, order dated 13.09.2021 (ITAT Mumbai) — the coordinate Bench order was relied upon as having quashed the foundational order passed under Section 263 of the Income-tax Act, 1961; consequently, the assessment subsequently made pursuant to that revision order could not survive.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
01. ITA No.1895/Mum/2023 is filed by the learned Asst. Commissioner of Income Tax, 2(1)(1), Mumbai (the learned AO) against the appellate order passed by National Faceless Appeal Centre, Delhi [ the ld. CIT (A)] for A.Y. 2015-16 dated 28th March, 2023, wherein the appeal filed by the assessee against the assessment order passed on 31st October, 2021 by NFAC, Delhi under Section 143(3) read with section 263 of the Income-tax Act, 1961 (the Act) was allowed holding that when the tribunal has quashed the order passed under Section 263 of the Act, consequent order passed by the learned 263 of the Act dated 31 Assessing Officer under Section 143(3) read with section st October, 2021, cannot exist and therefore, allowing the appeal of the assessee the assessment order was annulled.
02. The learned Assessing Officer is aggrieved with that is in appeal before us.
03. Briefly stated fact shows that Assessee Company engaged in the business of manufacturing and export of textile etc. and development of real estate. It income on 30 filed its return of th November, 2015 under Section 143(3) of the Act was made on 29 at ₹ nil. Assessment th December, 2017, assessing the total income of ₹59,09,64,070/-. Subsequently, against that assessment order assessee preferred an appeal before the learned CIT (A).
04. However, on another aspect the Pr. Commissioner of Income Tax issued notice under Section 263 of the Act Act dated 18 which culminated into an order under Section 263 of the th March, 2020, holding that assessment order passed by the learned Assessing Officer is erroneous and prejudicial to the interest of the Revenue. The learned CIT directed the learned Assessing Officer to pass a fresh assessment order after making due enquiries and verification.
05. Assessee challenged order u/s 263 of The Act before the co-ordinate Bench. The co- dated 13 ordinate Bench vide order the A.Y. 2015- 16 has held that order passed under Section 263 of the Act is not proper and therefore, quashed.
06. Meanwhile, the learned Assessing Officer passed an assessment or 263 of the Act on 31 der pursuant to that direction under Section st October, 2021.
07. Such Assessment order was challenged before the learned CIT (A), who held that when the order under Section 263 of the Act itself has been quashed, consequential order passed by the learned Assessing Officer cannot exist and therefore, the learned CIT (A) allowed the appeal of the assessee. Now ld. Ao is in appeal before us against that appellate order.
08. After hearing the parties, we find no merit in the appeal of the learned Assessing Officer since the assessment order which was passed pursuant to order of the learned PC IT under Section 263 of the Act has already been quashed, therefore, subsequent order made on that basis cannot survive. It may be true that Revenue might have not accepted the decision of the co- ordinate Bench and has challenged it before the Hon’ble High Court. But that cannot go into the way of disposal of this appeal. Merely, because the Revenue has not accepted the decision of the co- ordinate Bench, without pointing out any material on record or submitting that Assessment order is sustainable, we are not inclined to upset the order of ld. CIT (A). We find no infirmity with the order of the learned CIT (A) in allowing the appeal of the assessee.
09. Accordingly, we confirm the order of the learned CIT (A) and dismiss the appeal of the learned Assessing Officer.
Order pronounced in the open court on 08.09.2023.
