Question And Answer
Subject: Proceedings U/Sec. 263 in case of search assessment
Querist: Ruchi Bhansali
Answered by:
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Date: March 18, 2022
Query asked by Ruchi Bhansali

Assessee is company.  Consequent to search proceedings U/SEc. 132 of the Act  in the Year 2015-16, assessee co filed the Returns of income in response in response to Notice U/SEc. 153A for A.Y. 2010-11 to 2016-17. Assessment U/SEc. 153A r.w.s. 143(3) were completed on 28.12.2017 as per the income disclosed in the Return as no incriminating material was found.

Thereafter Audit objection was received by the assessee co for A.Y. 2013-14, where the diffrence in sale as per assessment order  and audit report under MVAT act was pointed out. The department has issued Notice U/Sec. 154 on 22.05.2018, to which assessee co has given elaborate reply to which there was no response  and thereafter on 12.02.2020, assessee co received the Notice u/Sec. 263 on the basis of only probability  and liikely hood error in the assessment for all years like in A.Y. 2013-14.

pl guide on following issues:

  1. whether proceedings U/Sec. 263 can be initiated in case of search assessment for all the years which have been completed on the basis of income disclosed by the asssessee co in the Return of Income filed in response to notice U/Sec. 153A on the ground that there is no incriminating material?
  2. whether proceedings U/Sec. 263 can be initiated on the basis of Audit objection?
  3. In the given case whether the time limit for 263 proceedings commence from the date of original assessement or the date of assessment order completed U/Sec.153A r.w.s 143(3) of the Act.
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In CIT v. Indian Overseas Bank (2021) 207 DTR 202 (Mad) (HC) the Court held that the issue which was not subject matter of reassessment limitation has to be computed from the original assessment . Revision was held to be barred by limitation . Referred CIT v. Alagendran Finance Ltd ( 2007)) 293 ITR 1(SC), Asoka Buildcon Ltd v. ACIT ( 2010 ) 325 ITR 574 ( Bom) (HC), CIT v. ICICI Bank Ltd ( 2012 ) 252 CTR 85 ( Bom)( HC ) . It seems the revision order is barred by limitation . Each case to be decided on facts . Whether the revision is valid or not one has to study the facts and has to be contest in appeal .
In CIT v. Max India Ltd. (2007) 295 ITR 282 / 213 CTR 266 / (2008) 166 Taxman 188 / 204 Taxation 1 (SC) the Court held that when the Assessing Officer takes one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law. Refer CIT v. Grasim Industries Ltd. (2014) 226 Taxman 165 (Bom.)(HC)

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