Once Section 263 Order Is Quashed, Fresh Assessment Cannot Survive: ITAT Delhi

DCIT Vs Asian Hotels [North] Limited (ITAT Delhi)

Once Section 263 Order Is Quashed, Fresh Assessment Cannot Survive: ITAT Dismisses Revenue Appeal as Infructuous

The Delhi ITAT dismissed the Revenue’s appeal in the case of Asian Hotels (North) Ltd. for AY 2016-17, holding that the reassessment framed under Section 143(3) read with Section 263 had become infructuous once the very foundation – the Section 263 revision order – was quashed by the Tribunal earlier.

The Tribunal noted that after the original assessment and partial relief by the CIT(A), the PCIT had invoked Section 263 and directed a fresh assessment, pursuant to which the AO made large additions on account of suppression of liquor sales, disallowance under Sections 43B and 69C, and short-term capital gains. However, the assessee had already succeeded before the ITAT in getting the Section 263 order itself quashed by order dated 26.11.2024.

In view of this, the Tribunal held that any assessment made in pursuance of a quashed Section 263 order automatically becomes non-existent and cannot be sustained. Since the very basis of the impugned assessment no longer survived, the Revenue’s appeal challenging deletion of additions by the CIT(A) was dismissed in limine. The appeal was thus dismissed in entirety as infructuous.

FULL TEXT OF THE ORDER OF ITAT DELHI