Case Note & Summary
The petitioner, Ashoka Buildcon Ltd., challenged a notice dated 30 April 2009 issued by the Commissioner of Income Tax-I, Nashik under Section 263 of the Income Tax Act, 1961 seeking to revise an assessment order. The facts are that the petitioner filed a return for assessment year 2004-2005 on 1 November 2004 declaring income of Rs.2.81 crores. An order of amalgamation was passed by the High Court on 28 February 2005 under Sections 391-394 of the Companies Act, 1956 amalgamating six companies with the assessee with effect from 1 April 2006. A consolidated return was filed and revised on 30 October 2005. The Assessing Officer passed an original assessment order under Section 143(3) on 27 December 2006. Subsequently, the assessment was reopened on 6 March 2007 on the ground that the benefit of Section 72A (carry forward and set off of losses in amalgamation) was wrongly allowed. A reassessment order under Section 143(3) read with Section 147 was passed on 27 December 2007 disallowing the claim under Section 72A. On 30 April 2009, the Commissioner issued the impugned notice under Section 263 stating that the reassessment order was erroneous and prejudicial to the interests of the Revenue. The petitioner contended that the notice was barred by limitation as the period of two years from the original assessment order (27 December 2006) had expired on 31 March 2009, and the Commissioner could not revive the limitation by purporting to revise the reassessment order. The Court analyzed the provisions of Section 263 and held that the revisional jurisdiction can only be exercised within two years from the end of the financial year in which the order sought to be revised was passed. Since the original assessment order was passed on 27 December 2006, the limitation expired on 31 March 2009. The reassessment order dated 27 December 2007 did not extend the limitation for revising the original order. The Court found that the Commissioner's notice was an attempt to indirectly revise the original assessment order after the limitation period had expired, which was not permissible. The Court quashed the notice and allowed the petition.
Headnote
A) Income Tax - Revisional Jurisdiction - Section 263 of Income Tax Act, 1961 - Limitation - The Commissioner sought to revise a reassessment order dated 27 December 2007 under Section 263, but the notice was issued on 30 April 2009, beyond the two-year limitation period from the original assessment order dated 27 December 2006. The Court held that the revisional power cannot be exercised to indirectly revise the original assessment order after the limitation period has expired, as the reassessment order does not extend the limitation for revising the original order. (Paras 1-6) B) Income Tax - Reassessment - Section 147 of Income Tax Act, 1961 - Effect on Original Assessment - The reassessment order under Section 147 read with Section 143(3) only reopens the assessment on specific issues and does not revive the entire original assessment for purposes of revision under Section 263. The Court held that the Commissioner cannot use the reassessment order as a basis to revise the original assessment order beyond the limitation period. (Paras 3-6)
Issue of Consideration
Whether the Commissioner of Income Tax can exercise revisional jurisdiction under Section 263 of the Income Tax Act, 1961 to revise an original assessment order after the expiry of the limitation period by issuing a notice purporting to revise a subsequent reassessment order?
Final Decision
The Court allowed the writ petition and quashed the notice dated 30 April 2009 issued under Section 263 of the Income Tax Act, 1961.
Law Points
- Revisional jurisdiction under Section 263 of Income Tax Act
- 1961 cannot be exercised to revise an original assessment order after expiry of limitation period by purporting to revise a subsequent reassessment order
- Limitation for revision under Section 263 runs from the date of the order sought to be revised
- Reassessment order under Section 147 read with Section 143(3) does not revive the original assessment order for purposes of revision under Section 263
