The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it held that when assessment order itself turns to be null and void, the same cannot be a subject matter of revision under Section 263 of the Income Tax Act.
The aforesaid observation was made by the Ahmedabad ITAT when an appeal was preferred before it by the Assessee, as against the order of the Principal Commissioner of Income Tax, PCIT, Ahmedabad, in proceeding under Section 263, vide order dated 31/03/2021, passed for the assessment year 2015- 16.
The ground of the assessee’s appeal being that the assumption of jurisdiction to pass order u/s 263 of the Income Tax Act, by the PCIT, is bad & illegal, as the assessment order passed by the A.O. is void, illegal & non est, it was submitted by Shri M.S. Chhajed, the A.R. for the assessee that the reason for the same was that the notice under Section 143(2) of the Income Tax Act, was issued on 21-09-2017 by the ITO, ward-4, Palanpur.
Accordingly, the grievance of the assessee was that while the initial notice of assessment, was issued to the assessee by the ITO Ward 4, Palanpur, the assessment order was passed by ITO Ward 3(3)(2) Ahmedabad, in absence of valid order under Section 127 of the Income Tax Act. Therefore, the condition of the counsel for the assessee was that, in absence of valid order under Section 127 of the IT Act, the assessment order passed by ITO Ward 3(3)(2) Ahmedabad is illegal and void in the eyes of law.
Thus, the counsel for the assessee submitted that when the assessment order passed under section 143(3) of the Act itself is illegal and void, consequently the revisional order passed under Section 263 of the Income Tax Act is also null and void.
However, on the other hand, Shri Ritesh Parmar, the CIT-D. R, strongly supported the orders of the authorities below.
Hearing the opposing contentions of both sides and thereby perusing the materials available on record, the ITAT Panel observed:
“The issue for consideration before us is that once it is held that the assessment order itself is null and void, can such assessment order be the subject matter of revision under section 263 of the Act. In our view, it is a well-settled principle of law that once the assessment order passed itself is null and void, the same cannot be the subject matter revision under section 263 of the Act. In the case of Pioneer Distilleries Limited Vs Pr. CIT ITA No. 479/PUN/2017(ITAT Pune) the ITAT held that revisionary jurisdiction cannot be exercised against Void order. In this case, the ITAT held that when the said order is void and did not stand in eyes of law, it cannot be held to be erroneous and prejudicial to the interest of revenue by the Commissioner.”
“Again, in the case of Westlife Development Ltd. v. PCIT vide order dated 24.06.2016 (ITAT Mumbai), the ITAT held that when an Assessment order passed under section 147 of the Act was illegal the CIT cannot invoke the jurisdiction under section 263 of the Act against such void or non-est order. In the case of Inder Kumar Bachani (HUF) v. ITO (2006) 101 TTJ 450 (ITAT Lucknow), the ITAT held that as the order of the Assessing Officer passed under section 147 / 143(3) was itself void, the order of PCIT passed under section 263 for quashing this order was without jurisdiction.”, the ITAT Panel of Waseem Ahmed, the Accountant Member, along with Siddartha Nautiyal, the Judicial Member added.
Thus, allowing the assessee’s appeal, the ITAT held:
“In view of the above observations, we are of the considered view that since the assessment order passed by ITO Ward 3(3)(2), Ahmedabad itself was null and void, the same could not be the subject matter of revision under section 263 of the Act. In the result, we are allowing the appeal of the assessee on the ground of jurisdiction itself. We are accordingly not separately adjudicating into the merits of the case. In the result, appeal of the assessee is allowed.”
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