The Kerala High Court held that the principal commissioner has revisional power to interfere assessment order even if it is pending before CIT(A) and dismissed the Writ petition.
The petitioner, M/S Prestige Marketing Division is a partnership firm doing business in PVC pipes. It is an assessee under the Income Tax Act, 1961 (‘Act’). The petitioner had filed its return of income for the assessment year 2017-2018 declaring a total income of Rs.65,12,480/-. The return was taken up for scrutiny and the assessment was completed in order under Sec.143(3) of the Act. The petitioner has preferred a statutory appeal before the Commissioner of Income Tax (Appeals) (‘CIT(Appeals)’).
While so, the petitioner was served with notice by the first respondent stating that he was proposing to reopen the Assessment Order under Sec.263 of the Act. The petitioner had submitted a reply to the notice, inter alia, contending that the subject matter in the proposed revision is sub-judice in the appeal before the CIT(Appeals). Even though the petitioner was heard, the first respondent has passed the Ext P5 order.
The Standing Counsel appearing for the respondents has filed a statement refuting the allegations in the writ petition and, inter alia, contending that the assertion in the writ petition that clause (c) of Explanation I of Sec.263 (1) of the Act ousts the revisional power of the first respondent, while an appeal is pending, is untenable.
Where an issue in the assessment order is neither agitated before the CIT(Appeals) nor has been considered by him, that portion of the assessment order will not merge with the order of CIT(Appeals).
The first respondent has rightly and judicially exercised his powers, under Sec.263 of the Act, to correct an error committed by the Assessing Officer in applying the correct rate of tax applicable to the additions by way of income made in the assessment.
The petitioner has challenged only the additions made to the total income in the A.O. Therefore, the jurisdiction exercised by the first respondent aligns with the provisions of Sec.263 of the Act. The writ petition is devoid of any merits and is liable to be dismissed.
Sri. Anil D. Nair, the Counsel appeared for the petitioner and Sri. Christopher Abraham, the Standing Counsel appeared for the respondents.
The Single judge bench of Justice C.S. Dias held that “the first respondent has the revisional power to interfere with the assessment order as provided under Sec.263 of the Act, till the disposal of the appeal. Furthermore, I do not find any prejudice being caused to the petitioner because, if at all the petitioner is aggrieved by the order that is to be passed by the Assessing Officer, in compliance with the direction in Ext P5 order, the petitioner can very well challenge the said order also in an appeal, notwithstanding the pendency of the appeal filed against order.” The Court dismissed the writ petition, reserving the right of the petitioner to challenge the order by law.
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