Pr. Commissioner Of Income Tax vs M/S Rishi Kiran Logistic P. Ltd.

J.B.Pardiwala, J

This tax appeal under Section­260A of the Income Tax Act, 1961 [for short "The Act, 1961"] is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Rajkot in the ITA 156/RJT/2017, dated 28/05/2019 for the A.Y. 2009­ 10.

The revenue has proposed the following questions of law:­

"Whether the Appellate Tribunal has erred in law and on facts in quashing the order u/s.263 of the Act passed by the Principal Commissioner of Income Tax who has validly assumed jurisdiction within two years from the end of the financial year in which the impugned order under reference was passed?"

We go straight to the Paragraph­6 of the impugned order passed by the Income Tax Appellate Tribunal. Paragraph­6 reads thus:­

"6. A perusal of sub­section (1) would indicate that Pr. Commissioner or Commissioner may call for and examine the record of any proceedings under this Act, and if he considers that any order passed thereon by the AO is erroneous which has caused prejudice to the interest of the Revenue, then, he may after giving the assessee an opportunity of hearing and after conducting an inquiry, as he deems necessary pass such order thereon, as circumstances justify, viz. he may direct for passing fresh assessment order; cancel assessment order and direct conducting fresh inquiry. He may pass the assessment order himself. The emphasis is that on examination of record, the Ld. Commissioner should satisfy that order passed by the AO is erroneous and prejudicial to the interest of the Revenue; meaning thereby, there should be a valid order in existence which can be termed as an erroneous, and which can be appreciated as causing prejudicial to the interest of Revenue. In the present case, cognizance was taken by the ld. Commissioner on the re­assessment order. This cognizance was taken in the month of March, 2017, but on 18.5.2016 this order stood quashed by the CIT(A). Order of the ld. CIT(A) has been accepted by the department which is final. This order has been extinguished. If it is no more in existence, then how it could be considered that this order is erroneous and it has caused prejudice to the interest of the Revenue. Similarly, if we peruse sub­section (2) of Section 263, then it contemplates that no order should be made under sub­section (1) after expiry of two years from the end of the financial year in which the orders sought to be revised was passed. Now action under Section 263 has been contemplated in March, 2017. The order passed under section 143(3) r.w.s.147 has already been quashed, no action can be taken against this order, because it is not in existence. In such situation, action could be taken against the assessment order passed under section 143(3) because in that case also this issue must not been examined. This order was passed on 15.10.2011. Two years would expire from the end of the financial year in which this order was passed on 31.3.2014. Action could be taken before 31.3.2014 and not in 2017. Thus, if the order of the Ld. Commissioner is looked into in the light of these facts, then it is not sustainable in the eye of law. It is accordingly quashed."

Thus, it appears from the finding recorded by the appellate tribunal that as the re­assessment proceedings came to be quashed and the same has been accepted by the department, according to the appellate tribunal, there is no scope now for the Commissioner to exercise any power under Section­263 of the Act, 1961.

Having heard the learned senior counsel Mr. Bhatt appearing for the revenue and having gone through the materials on record, we are of the view that there is no substantial question of law involved in this appeal. Although Mr. Bhatt tried to persuade us to take the view that the two issues on which the power is required to be exercised under Section 263 of the Act.

We are of the view that as the re­assessment proceedings came to be quashed and the same has been accepted, no useful purpose would now be served to permit the Commissioner to exercise power under Section­263 of the Act. We do not find any infirmity in the impugned order passed by the appellate tribunal.

In the result, this appeal fails and is hereby dismissed.