When revisionary order u/s 263 was quashed, consequential assessment order passed by AO cannot survive – ITAT
In a recent judgment, ITAT Raipur has held when the order passed by the Pr. CIT u/s 263 was quashed by the Tribunal, the consequential assessment order passed by the A.O u/s 143(3) r.w.s. 263 cannot survive on a standalone basis and is liable to meet the same fate.
ABCAUS Case Law Citation:
4184 (2024) (08) abcaus.in ITAT
In the instant case, the assessee had challenged the revisionary order u/s 263 of the Income Tax Act, 1961 (the Act) passed by the Pr. CIT setting aside the assessment order for fresh enquiry.
The assessee was an individual engaged in the business of running Crusher Plant and trading of Gitti. The assessee filed his return of income opting presumptive taxation regime u/s. 44AD of the Act. The assessee’s case was selected under CASS for limited scrutiny u/s 143(2) of the Act to verify his claim for deduction of depreciation.
Original assessment was framed by the A.O vide his order passed u/s. 143(3) of the Act and the returned income of the assessee was accepted as such.
Thereafter, in order to settle the audit objection the original assessment was set aside by the Pr. CIT vide order u/s. 263 to examine claim of deduction on account of depreciation and the issue of presumptive income u/s 44AE on two vehicle which was not offered by the assessee.
The AO in pursuance to the revisionary order re-opened the case u/s 147 and passed an order u/s 143(3) r.w.s. 263 of the Act. The AO though accepted the claim of depreciation made an addition u/s 69A on account of cash deposits in bank accounts, which had never been raised either under limited scrutiny or by the PCIT in his revisionary order.
The assessee challenged the assessment order passed u/s u/s 143(3) r.w.s. 263 of the Act before CIT(A). However, this appeal was to be withdrawn because it became infructuous after the quashing of the original assessment order by the ITAT.
The assessee had also challenged the revision order and had simultaneously filed an appeal before the ITAT. The Assessee got relief from ITAT who set aside the above said revision order and upheld the original Assessment order passed u/s 143(3).
Again, the Pr. CIT treated the assessment order passed u/s u/s 143(3) r.w.s. 263 as erroneous and prejudicial to the interest of the revenue and vide his order passed u/s. 263 of the Act set-aside the original assessment framed for further verification.
The Tribunal opined that since the order passed by the Pr. CIT u/s. 263 of the Act had been quashed by the Tribunal, therefore, the consequential assessment order passed by the A.O u/s 143(3) r.w.s. 263 of the Act cannot survive on a standalone basis and is liable to meet the same fate.
Accordingly, the Tribunal held that as the order passed by the A.O u/s. 143(3) r.w.s. 263 of the Act does no more survive pursuant to quashing of the order passed u/s. 263 of the Act, therefore, the Pr. CIT could not have assumed jurisdiction to revise the same vide his order passed u/s 263 of the Act.
Further, the Tribunal opined that as the original assessment order u/s 143(3) was set-aside with a direction to look into certain specific issues, therefore, the consequential assessment order so passed by the A.O could not have been held to be erroneous for the reason that he had wrongly allowed the assessee’s claim for deduction of depreciation i.e. an issue which had not formed a basis for setting aside of the original assessment order. When the scope of jurisdiction of the A.O in the course of set-aside proceedings was circumscribed by the directions of the Pr. CIT u/s. 263 of the Act, therefore, he was divested from dealing with any such stray issue which did not flow from the aforementioned directions.
Accordingly, the appeal of the assessee was allowed.
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