Facts of the Case

The Revenue filed an appeal for Assessment Year 2011-12 against the order dated 20.08.2025 passed by the Commissioner of Income Tax (Appeals), Ahmedabad-13, wherein the CIT(A) deleted disallowance of deduction under Section 10A amounting to ₹31,74,80,850. The assessee filed a cross-objection contending that the very assessment framed under Section 143(3) read with Section 263 was invalid, as the revisionary order under Section 263 had already been quashed by the Income Tax Appellate Tribunal vide order dated 30.03.2022 in the assessee’s own case.

The assessment giving rise to the appeal and cross-objection was framed pursuant to the revisionary order passed under Section 263. The Revenue challenged the deletion of Section 10A deduction relying on Section 92C(4), while the assessee challenged the jurisdiction and validity of the assessment itself.

Issues Involved

Whether the assessment framed under Section 143(3) read with Section 263 could survive once the revisionary order under Section 263 had already been quashed by the Tribunal, and whether any appellate proceedings arising out of such assessment could be adjudicated on merits.

Petitioner’s Arguments

The assessee submitted that since the Tribunal had already quashed the revisionary order passed under Section 263, the consequential assessment framed under Section 143(3) read with Section 263 had no legal foundation and was void ab initio. It was contended that once the foundation of the assessment was removed, all subsequent appellate proceedings, including the order of the CIT(A) and the Revenue’s appeal, automatically became non est and infructuous.

Respondent’s Arguments

The Revenue argued that the CIT(A) erred in deleting the disallowance under Section 10A by ignoring the restriction contained in Section 92C(4), which prohibits deduction under Section 10A in respect of income enhanced due to transfer pricing adjustment.

Court Order / Findings

The ITAT Ahmedabad observed that it was an undisputed fact that the assessment order giving rise to the present appeal and cross-objection was framed under Section 143(3) read with Section 263. The Tribunal noted that the very foundation of such assessment, namely the revisionary order passed under Section 263, had already been set aside by the Tribunal in the assessee’s own case.

The Tribunal held that once the revisionary order under Section 263 was quashed, the consequential assessment order ceased to exist in the eyes of law and was void ab initio. As a natural corollary, the appellate order passed by the CIT(A) and the issues raised by the Revenue and the assessee could not survive for adjudication on merits.

Important Clarification

The Tribunal clarified that when the jurisdictional foundation of an assessment is removed by quashing the revisionary order under Section 263, the consequential assessment and all proceedings arising therefrom automatically collapse. In such circumstances, issues on merits do not survive and appeals are liable to be dismissed as infructuous.

Final Outcome

The appeal filed by the Revenue was dismissed, and the cross-objection filed by the assessee was also dismissed as infructuous. The assessment framed under Section 143(3) read with Section 263 was held to be void ab initio.

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