Revision Proceedings u/s 263 Not Maintainable After Assessment Order Declared Non Est: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ),ruled that revision proceedings under Section 263 of the Income Tax Act,1961 are not maintainable after an assessment order is declared non est .

Defsys Solutions P. Ltd.,appellant-assessee, challenged the Principal Commissioner of Income Tax ( PCIT )'s order dated 28.02.2024 under Section 263 of the Act. The PCIT had used revisional powers on the Final Assessment Order passed on 20.01.2023 under Section 153A r.w.s 144C(13) for AY 2019-20. This same assessment order was appealed before the Tribunal in ITA No. 758/Del/2023, where the assessee argued that the order was invalid because it violated Section 144C of the Act.

Section 263 of the Act, empowers the PCIT or CIT to revise any assessment order passed by a lower authority if it is found to be erroneous or prejudicial to the revenue. The PCIT or CIT can exercise this power if the order is incorrect, does not follow the law, or causes harm to the revenue. Before revising the order, the assessee must be given an opportunity to be heard. The revision can involve correcting errors such as underreporting income or improper tax deductions.

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If an error is found, the PCIT or CIT can either cancel the order or direct the lower authority to pass a fresh one. The assessee can appeal such a revision before the ITAT. Essentially, Section 263 ensures that assessment orders are correct and protect the interests of the revenue.

The two member bench comprising Vikas Awasthy (Judicial Member) and S Rifaur Rahman(Accountant Member) after reviewing the facts, relevant laws, and case precedents, concluded that the proceedings ended on 31.03.2022 when the demand and penalty notices were issued to the assessee, making all subsequent proceedings and orders invalid.

Since the assessment order was considered invalid, the basis for revision under section 263 was no longer valid, and the revision proceedings became inapplicable, rendering the appeal challenging those proceedings irrelevant.

In short, the appeal filed by the assessee dismissed as having become infructuous.

To Read the full text of the Order CLICK HERE

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