Revisional Jurisdiction can’t be exercised on an Issue not covered in Re-Assessment: ITAT [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the Commissioner of Income Tax cannot invoke revisional jurisdiction under Section 263 of the Income Tax Act in respect on an issue which was not addressed in the Re-assessment.

The assessee had furnished the original return of income on 16.08.2010. later, a search was conducted under section 132 of the Act on Suyojit Group in connection with which assessment was re-opened for specific reasons and addition on account of the said reasons was made in the hands of the assessee which is not disputed. Thereafter, the Commissioner of Income Tax exercised his jurisdiction under section 263 of the Act and issued show cause notice to the assessee. The Commissioner of Income Tax refers to the part of a transaction between the assessee and Shri Anant Keshav Rajegaonkar, whose residential premises was also searched under section 132 of the Act as part of Suyojit Group of cases on 17.09.2010.

The Tribunal noted that once the re-assessment proceedings are initiated on a specific issue and the addition is made in the hands of the assessee then the Commissioner of Income Tax is precluded from exercise of jurisdiction under section 263 of the Act on a ground which is not covered by the reasons during the reopening of the assessment since the time for completing the assessment u/s 143(3) of the Act had expired.

“Hence, we find no merit in the exercise of revisionary power by the Commissioner of Income Tax under section 263 of the Act in the present facts and circumstances,” the Tribunal said.

The Tribunal bench further relied on the decision of the Bombay High Court in M/s. Ashoka Buildcon Limited Vs. ACIT wherein it was held that the reassessment proceedings were in relation to a particular grounds and subsequent thereto of passing of the re-assessment and exercise of jurisdiction under section 263 of the Act with reference to the issues, which did not form subject of re-opening of assessment cannot be exercised.

Deleting the order, the Tribunal held that “Taking strength from the order of Hon’ble Bombay High Court in Ashoka Buildcon Limited (supra), we hold that the order of revision passed in the present case, on issues which did not form subject of re-opening of the assessment or order of reassessment, cannot be upheld. Therefore the revisionary proceedings exercised by the Commissioner of Income Tax is not correct.”