Principal Commissioner of Income-tax (Central) V. Padma Kumar Jain

The instant appeal is directed against the order dated 08.07.2022 passed by learned Income Tax Appellate Tribunal, Ranchi Bench, Ranchi (hereinafter to be referred as ITAT) in appeal being I.T.A No. 289/Ran/2019 for the A.Y. 2012-13, preferred by the respondent herein whereby the learned ITAT has allowed the appeal of the respondent-Assessee and quashed the entire proceeding initiated under Section 263 of the Income Tax Act, 1961 (hereinafter to be referred as the Act)

2. The brief facts of the case are that a search and seizure operation was carried out in the business and residential premises of respondentAssessee on 03.07.2014. After completion of search and seizure, a notice under Section 153A of the Act was issued to the Assessee on 09.02.2015. In response to the notice, the Assessee filed his return of income for the assessment year 2012-13 on 02.10.2016 declaring total income of Rs.15,34,97,400/-. On 28.12.2016, Assessment Order under Section 153(A) read with Section 143(3) of the Act was passed. Subsequently, the Principal Commissioner of Income Tax (Central), Patna (hereinafter referred to as PCIT) initiated a proceedings u/s 263 of the Act and passed an order on 29.12.2017 directing the Assessing Officer to pass a fresh order. Thereafter, on 3.12.2018, the A.O in compliance to the aforesaid order passed by the PCIT issued notice under Section 142(1) with letter of query and the Assessee filed a detailed reply on 18.12.2018 before the A.O. Subsequently, the second Assessment Order under Section 143(3) read with Section 263 was passed on 31.12.2018 by the A.O.

On 28.3.2019, though the 1st Assessment Order dated 28.12.2016 was already cancelled by PCIT vide order dated 29.12.2017, a proceeding u/s 263 of the Act was again initiated for the second time and 2 nd order under Section 263 was passed by PCIT again cancelling the non-existent 1st Assessment Order with a direction to the Assessing Officer (AO) to pass a fresh order; however, the 2nd Assessment order dated 31.12.2018 was never cancelled and as such, it remained as a valid assessment order.

On 28.12.2019 an Email was sent by the respondent-Assessee to the A.O objecting to pass of fresh assessment order on the ground that aforesaid second assessment order dated 31.12.2018 has not been cancelled and therefore for one assessment year there cannot be two parallel assessment order and requested to drop the assessment proceeding but instead of dropping, the A.O passed 3rd Assessment Order under Section 263 r.w.s 143(3) of the Act.

On 30.12.2019, as the 3rd assessment proceeding was not dropped by the Assessing Officer, the respondent-Assessee filed an appeal before ITAT against the order dated 28.03.2019 passed under Section 263 of the Act for the 2nd time. On 08.07.2020, learned ITAT quashed the aforesaid 2nd order under Section 263 dated 28.03.2019 and allowed the appeal of the respondent, which is impugned in the instant Appeal.

3. Ms. Amrita Sinha, learned counsel appearing for the revenue submits that pursuant to the second round of proceeding under Section 263 of the Act, an Assessment Order dated 28.12.2019 has already been passed on an assessed income of Rs.32,13,19,780/- and the said Assessment Order has not been challenged by the respondent Assessee. On the contrary, the respondent has challenged the order dated 28.3.2019 passed by the PCIT under Section 263 of the Act. She further submits that the Assessee duly participated in second round of proceeding under Section 263 as well as in an assessment proceeding which took place subsequent to second round of proceeding under Section 263. She contended that the Assessee never raised a plea of jurisdiction of authority with regard to invoking of revisional jurisdiction of PCIT u/s
263 of the Act for the second time. Learned counsel referred to the judgment passed in the case of Union of India Vs. Susaka Pvt. Ltd. & Ors. reported in (2018) 2 SCC 182 wherein the Hon’ble Apex Court has held that “if plea is available, whether on facts or law, it has to be raised by the party at an appropriate stage in accordance with law”. Since the plea of jurisdiction under Section 263 of the Act was not raised at an appropriate stage by the respondent-Assessee, the respondent was debarred from raising the said question of jurisdiction before the ITAT. The learned ITAT failed to consider while allowing the appeal filed by the Assessee that the said appeal challenging the order dated 28.03.2019 passed under Section 263  of the Act was preferred beyond limitation. She lastly submits that Section 263 deals with calling for and examine the records of any proceeding under this Act. Thus, nonrecording of the first round of proceeding under Section 263, in the second round of order under Section 263 is merely a technical error. The Hon’ble Apex Court time and again held that the entire assessment proceeding cannot be vitiated only on technical ground. She concluded
her argument by submitting that during the first round proceeding under Section 263 of the Act, the issues raised therein are entirely different with the issue rose in second round of proceeding under Section 263 of the Act.

Relying upon the aforesaid submissions, she prayed that the instant application may be admitted on substantial questions of law and finally be allowed in favour of Revenue. 

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