In a major relief to Tata Power, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that a reassessment order cannot be subject to revision under section 263 of the Income Tax Act, 1961.
the assessee, is engaged in the business of generation and distribution of electricity. For the relevant assessment year, the assessing officer observed that the deduction towards expenditure incurred of Rs.68,62,780/- for furniture and tools were wrongly allowed to the assessee while completing the original assessment and therefore, re-opened the assessment where he disallowed the claim. Later, the Principal Commissioner of Income Tax invoked his revisional powers by stating that the assessment order passed under section 143(3) r.w.s. 147 of the Act is erroneous and prejudicial to the interest of revenue since the assessing officer had not examined and disallowed the excess deduction claimed by the assessee under section 80IA of the Act.
While allowing the second appeal filed by the assessee-Company Judicial Member Rakesh Kumar and Accountant Member Saktjit Dey relied on the decision of the Supreme Court in the case of CIT vs Alagendran Finance Ltd wherein the issue was resolved in favor of the assessee.
“Further, a reading of the original assessment order would reveal that the issue relating to the deduction claimed under section 80IA was a subject matter therein. In fact, the draft assessment order passed by the assessing officer on the issue of deduction claimed under section 80IA of the Act was disputed before learned DRP and after passing of the final assessment order, the issue relating to claim of deduction under section 80IA of the Act is now pending in appeal before the Tribunal. Therefore, any attempt by the assessing officer to deal with such an issue in re-assessment proceedings would have amounted to a review of the original assessment order, which is impermissible. Thus, in the aforesaid scenario, the assessment order passed under section 143(3) r.w.s. 147 of the Act cannot be considered as erroneous and prejudicial to the interest of revenue to subject it to proceeding under section 263 of the Act. If, at all, any order of the subordinate authority which could have been considered as erroneous and prejudicial to the interest of revenue in allowing assessee’s claim of deduction under section 80IA of the Act, either due to lack of enquiry or otherwise, is the original assessment order passed under section 143(3) r.w.s. 144C of the Act and not the re-assessment order. Therefore, the period of limitation prescribed under section 263(2) of the Act would run from the original assessment order,” the bench said.
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