The assessment year involved in this case is AY 2009-10. The regular assessment u/ 143(3) r.w.s. 144C was completed on 16/01/2014 for the said assessment year. Subsequently, the Ld. Assessing Officer initiate the reassessment proceedings of very same assessment year during the FY 2016-17. Reasons were recorded with respect to disallowance of claim of the assessee u/s 80IA and 80IB on account of;
Thereafter the reassessment proceedings were finalized on 31/12/2016 u/s 143(3) r.w.s 147 of the Act.
Subsequently, the Ld. PCIT examined the records. On examination, he issued notice u/s 263 of the Act on 26/2/2019 asking assessee to show cause that why order passed u/s 143(3) on 30/12/2016 (reassessment order) passed by the learned assessing officer shall not be treated as erroneous and prejudicial to the interest of revenue.
The reasons for revisionary proceedings was that as per the volume II/A of the Justice M B Shah commission of enquiry, report on illegal mining of Iron Ore manganese dated June 13, page number 35, the production of the assessee for the financial year 2008-09 (relevant to assessment year 2009-10) has been 2205780 metric ton from TRB Iron Ore Mines. During assessment proceedings (reassessment proceedings), the AO did not make specific enquiries to ascertain whether the production as mentioned in the justice Shah commission of enquiry report from the TRB mines has been duly incorporated in the books of accounts of the assessee for the relevant assessment year as per the judgment of the honourable Punjab and Haryana High Court in Majinder Singh Kang V CIT 344 ITR 358. Thereafter, on 30 March 2019, the learned Principle Commissioner of Income Tax passed order under Section 263 of the Income Tax, 1961.
The assessee challenged the order u/s 263 of the Ld. PCIT before the Tribunal. The counsel of the assessee argued that;
Held by Tribunal
The Tribunal relied upon the following judgments;
And accordingly, the Tribunal held that;
“19 As in the present case before us, issues subject to revision were pertaining to original assessment and not the reopened assessment; the limitation should also start from the original assessment. In this case as original assessment order u/s 143(3) of the act was passed on 16.01.2014, the revision thereof could have been taken up to 31.3.2016. Impugned order u/s 263 of the act was passed on 26/2/2019, therefore it is clearly beyond the limitation prescribed u/s 263(2) of the Act. Thus, the impugned order is barred by limitation and hence quashed.”
The reasons recorded for reopening of the assessee are very foundation of the reassessment proceedings. However, same analogy can also be applied in ongoing ‘Limited Scrutiny’ in which the AO has been directed to examine the only specified limited issues and this stand of the assessee can ignite the litigation.