The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the revisional jurisdiction under section 263 of the Income Tax Act cannot be invoked by the Commissioner if the assessment in question is already held as bad in law.
The question before the Tribunal was that where the assessment order passed by the Assessing Officer is admittedly void, can there be any exercise of jurisdiction by the Commissioner under section 263 of the Act against such void order which in fact did not exist in law.
The assessment against the assessee was re-opened after a search on the ground that certain documents were found relating to the assessee. The assessee submitted that since the system was not allowing it to file the revised e-return then the return of the income originally filed be treated as filed in response to the notice under section 148 of the Act. The assessee sought the reasons for reopening the assessment from the Assessing Officer. The Assessing Officer did not take cognizance of the same and issued the notice under section 142(1) of the Act. On a later date, the assessee filed the return of income at Nil and the Assessing Officer issued a notice under section 143(2) of the Act in 2015. On 03-03-2015, the reasons recorded for reopening the assessment were communicated to the assessee against which the assessee filed the objections. It was claimed that while finalizing the assessment order, the objections were dealt with in the body of the assessment order itself and simultaneously the Assessing Officer completed the assessment in the hands of the assessee.
Later, the Commissioner of Income Tax, under section 263 of the Income Tax Act revised the said order.
The Tribunal observed that “when the assessment order is void and did not exist in law, the question which arises is whether the Commissioner can exercise his revisionary jurisdiction under section 263 of the Act against the same. The answer to the same is No. The Commissioner can exercise the jurisdiction under section 263 of the Act where the assessment order is live. In case the order is void, then the same cannot be held to be erroneous and prejudicial to the interest of revenue. We find no merit in the exercise of jurisdiction by the Commissioner in this regard, where he himself admits that the assessment order was void.”
Based on the judicial precedents, the Tribunal held that “where the Commissioner himself has given a finding that the re-assessment proceedings have not been correctly carried out against the assessee and the Assessing Officer has failed to fulfil his obligation, then under such circumstances where, he has also held that “since, the copy of reasons recorded for re-opening of the assessment were not furnished to assessee till date of completion of assessment, the order of the AO is void”, then revisionary jurisdiction cannot be exercised against such order. When the said order is void and did not stand in law, it cannot be held to be erroneous and prejudicial to the interest of revenue by the Commissioner. Consequently, the exercise of jurisdiction under section 263 of the Act in the present case, is not justified and is bad in law.”
Subscribe Taxscan Premium to view the Judgment
