INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Erroneous and prejudicial order - Reassessment proceedings already quashed

ITAT held that order of the CIT(A) has been accepted by the department which is final. This order has been extinguished. If it is no more in existence, then how it could be considered that this order is erroneous and it has caused prejudice to the interest of the revenue. Similarly, if we peruse sub-section (2) of section 263, then it contemplates that no order should be made under sub-section (1) after expiry of two years from the end of the financial year in which the orders sought to be revised was passed. Now action under section 263 has been contemplated in March, 2017. The order passed under section 143(3) read with section 147 has already been quashed, no action can be taken against this order, because it is not in existence. In such situation, action could be taken against the assessment order passed under section 143(3) because in that case also this issue must not been examined. This order was passed on 15-10-2011. Two years would expire from the end of the financial year in which this order was passed on 31-3-2014. Action could be taken before 31-3-2014 and not in 2017. Thus, if the order of the CIT(A) is looked into in the light of these facts, then it is not sustainable in the eye of law. Held: The reassessment proceedings came to be quashed and the same has been accepted, no useful purpose would now be served to permit the Commissioner to exercise power under section 263 of the Act.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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