ITAT quashes S.263 Revision Order and Annuls CIT(A) Order due to Invalid Assessment [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the Section 263 revision order and annulled the Commissioner of Income Tax(Appeals) [CIT(A)] order due to the invalidity of the assessment.

Kolet Resort Club Pvt. Ltd., appellant-assessee, challenged the order dated 06.03.2024,for the Assessment Year(AY) 2015-2016 passed by CIT(A),National Faceless Appeal Centre ( NFAC ) under Section 250 of the  Act.

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The assessee raised several grounds of appeal, arguing that the CIT(A)'s order was incorrect and harmful to its interests. The assessee claimed that the assessment order under Section 144 read with Section 263, dated 30-03-2022, and the revision order under Section 263, dated 08.03.2021, were invalid from the start and barred by limitation, as the original order under Section 143(3) was passed on 27-12-2017.

It also contended that the CIT(A) failed to address certain points and wrongly upheld the addition of Rs. 19,75,39,092/- under Section 56(2)(viib), as the shares were issued at face value, not at a premium. The appellant further argued that Section 56(2)(viib) should not apply to transactions between a holding company and its subsidiary. Finally, the appellant reserved the right to modify or add to the grounds of appeal.

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At the beginning of the hearing, both parties acknowledged that the Tribunal had quashed the order passed by the Principal Commissioner of Income Tax(PCIT) under Section 263 on 01.10.2024. Since the Section 263 order was invalidated, the subsequent proceedings were also deemed invalid. As a result, the impugned order passed by the CIT(A) was annulled.

The two member bench comprising Suchitra Kamble ( Judicial Member ) and Dr.BRR Kumar ( Vice President ) allowed the appeal filed by the assessee for statistical purposes.

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