Revision Invalid when Assessment Order u/s 153A passed with JCIT Approval u/s 153D: ITAT [Read Order]
The Tribunal also noted that the PCIT failed to find that the prior approval under Section 153D was vitiated and erroneous so far as it was prejudicial to the interest of the Revenue.
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) set aside an order passed under Section 263 of the Income Tax Act, 1961 and ruled that a revision of an assessment order made under Section 153A, which was passed with the prior approval of the Joint Commissioner of Income Tax (JCIT) under Section 153D, was not justified.
Tapadia Constructions Ltd. (assessee), a private limited company engaged in the business of builders, developers, housing projects, hotel and sports club, and investment in shares and securities, for the Assessment Year (AY) 2015-16. The assessee had initially filed its return of income on 30.09.2015, declaring a total loss of ₹26,06,750.
A search action under Section 132 of the Act was conducted on the Tapadia group on 21.08.2018, which covered the assessee. In response to a notice under Section 153A, the assessee filed a return on 01.06.2020, declaring a total loss of ₹23,50,420.
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The Assessing Officer (AO) completed the assessment under Section 153A on 02.06.2021, determining the total income at ₹23,43,850, having made an addition of ₹46,94,267 under Section 43CA of the Act for the difference between the actual consideration of land and the government valuation.
The assessment order was passed after obtaining prior approval of the JCIT/Additional CIT under Section 153D of the Act. The PCIT perused the record and found that the AO had not considered the difference in the valuation of buildings, plant, and machinery sold by the assessee.
The valuation report furnished by the Sub-Registrar indicated the valuation of buildings, godown, staff quarters, function hall, plant & machinery, etc., for AY 2015-16 at ₹18,55,98,058. The assessee had sold the plant & machinery at ₹13,74,63,267. The PCIT noted a difference of ₹4,81,34,791 between the fair market value of plant & machinery and the actual sale price.
The PCIT concluded that the AO's omission to examine and conduct an inquiry into this specific issue resulted in the under-assessment of income, making the assessment order erroneous and prejudicial to the interest of the Revenue.
The PCIT set aside the assessment order and directed the AO to make necessary inquiries, including referring the matter to the District Valuation Officer (DVO), if necessary, to ascertain the fair market value of the structure for the purpose of Section 43CA of the Act.
Aggrieved by the PCIT’s jurisdiction, the assessee appealed to the ITAT. The assessee argued that an assessment order passed under Section 153A read with Section 143(3) after getting an approval of the Jt. Commissioner under Section 153D could not be revised under Section 263 of the Act.
The two-member R. K. Panda (Vice President) and Astha Chandra (Judicial Member) relied on the decision of the High Court in PCIT vs. Prakhar Developers (P.) Ltd., which held that once prior approval had already been taken by the AO, the same authority cannot exercise the power under Section 263 of the Act to reverse the order of the AO.
The Tribunal also noted that the PCIT failed to find that the prior approval under Section 153D was vitiated and erroneous so far as it was prejudicial to the interest of the Revenue. The appeal of the assessee was allowed
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