The Hon'ble High Court of Madhya Pradesh in [Principal Commissioner of Income-tax v. Prakhar Developers (P.) Ltd.IT APPEAL NO. 182 OF 2023 Dated April 1, 2024] held that an order of assessment passed under section 153A read with section 143(3) after getting approval of Joint Commissioner under section 153D could not be revised under section 263. Further, where the tax effect in the instant appeal against the order of the Tribunal setting aside the order passed by Pr. Commissioner under section 263 was less than Rs. 1 crore, there was no ground to interfere with the order passed by the Tribunal.
Facts of the Case:
The Respondent, Prakhar Developers (P.) Ltd., was a company engaged in the business of real estate. It filed its return of income under Section 139(1) of the Income Tax Act, 1961 (the Act) on September 19, 2011, declaring nil income for the assessment year 2011-12.
A search and seizure operation under Section 132 of the Act was carried out on July 12, 2016, at various premises of the Jain & Dixit Group, Indore. The Respondent was also covered under Section 132 during this search operation. Consequently, notices under Section 153A were issued to the Respondent for the assessment years 2011-12 to 2016-17 on October 9, 2017, under Section 143(2) of the Act. An additional notice under Section 143(2) was also issued on August 2, 2018, for the assessment year 2017-18.
Since common issues and facts were involved for all the concerned assessment years, the Assessing Officer passed a common order for the assessment years 2011-12 to 2016-17 under Section 143(3) read with Section 153A, and for the assessment year 2017-18 under Section 143(3) of the Act. After hearing the Respondent, the assessment under Section 143(3) read with Section 153A was completed on December 19, 2018, by the Assessing Officer, accepting the Respondent's return of income as 'NIL' for the assessment year 2012-13.
The Pr. Commissioner observed that the Assessing Officer did not disallow the cash payment made by the Respondent for the purchase of land under Section 40A(3) of the Act for the assessment years 2011-12 and 2012-13. The Pr. Commissioner found this erroneous and prejudicial to the interest of the revenue. Accordingly, proceedings under Section 263 of the Act were initiated suo motu against the Respondent. After providing an opportunity of hearing to the Respondent, the Pr. Commissioner passed an order on December 19, 2018, setting aside the assessment orders for the assessment years 2011-12 to 2017-18 and remanded the matter to the Assessing Officer for fresh examination after giving due opportunity of hearing to the Respondent.
Aggrieved by the Pr. Commissioner's order, the Respondent filed an appeal before the Income Tax Appellate Tribunal (ITAT), Bench Indore. In the appeal, the Respondent challenged the authority of the Pr. Commissioner under Section 263 of the Act, arguing that the assessment order was passed under Section 143(3) read with Section 153A after obtaining prior approval from the Additional Commissioner, Income Tax (Central)-1, Indore, under Section 153D of the Act.
The ITAT, Indore, by placing reliance on a judgment passed by the Coordinate Bench of Pune in the case of Shri Ramamoorthy Vasudevan v. PCIT (ITA Nos.967 & 968/Pun/2016), held that the order passed by the Pr. Commissioner was unsustainable due to lack of jurisdiction in invoking Section 263 of the Act, and accordingly, set aside the order.
Aggrieved by the ITAT's order setting aside the order passed by the Pr. Commissioner under Section 263, the Petitioner (Revenue) filed an appeal before the Hon'ble High Court of Madhya Pradesh.
Issue:
Whether an order of assessment passed under section 153A read with section 143(3) after getting an approval of Joint Commissioner under section 153D could be revised under section 263.
Held by the Court:
The Hon'ble High Court of Madhya Pradesh, in IT Appeal No. 182 of 2023, held as follows:
i. In the case of Shri Ramamoorthy Vasudevan v. PCIT (ITA Nos.967 & 968/Pun/2016), the Tribunal had held that once the order under Section 143(3) read with Section 153A has been passed after taking prior approval of the Additional Commissioner under Section 153D, the jurisdiction under Section 263 cannot be invoked. The view taken by the Coordinate Bench of the Appellate Tribunal had attained finality. Therefore, the Tribunal did not commit any error of law by following the same view.
ii. As per Section 263 of the Act, the Principal Chief Commissioner, Principal Commissioner, or Commissioner may call for and examine the record of any proceeding under the Act. If they consider that any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, they may inquire and pass such an order as the circumstances of the case justify.
iii. For passing any order under Sections 143(3) and 153A of the Act, prior approval of the Joint Commissioner is required under Section 153D or the Principal Commissioner or Commissioner, as the case may be. Therefore, once prior approval had already been taken by the Assessing Officer and the return submitted by the assessee was accepted, the same authority cannot exercise the power under Section 263 to reverse the order of the Assessing Officer.
iv. Even otherwise, the total tax effect of this appeal was less than Rs. 1 crore. Therefore, there was no ground to interfere with the order passed by the Income Tax Appellate Tribunal, Indore.
Relevant Sections:
"Section 153A" of the Income-tax Act, 1961 - Assessment in case of search or requisition
"Section 143" of the Income-tax Act, 1961 - Assessment
"Section 153D" of the Income-tax Act, 1961 - Prior approval necessary for assessment in cases of search or requisition
"Section 263" of the Income-tax Act, 1961 - Revision of orders prejudicial to revenue
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