Facts of the Case

The assessee, Daltonganj Catholic Diocese, filed an appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, relating to Assessment Year 2016-17. The appeal arose out of an assessment order passed under Section 143(3) of the Income-tax Act, 1961 dated 18.12.2018. Subsequently, the said assessment order was subjected to revision proceedings by the Commissioner of Income Tax (Exemptions), Patna, who passed an order under Section 263 of the Act on 25.03.2021, setting aside the original assessment order. Consequential assessment proceedings were thereafter initiated by the Assessing Officer, against which the assessee had already preferred an appeal before the appropriate forum.

Issues Involved

Whether an appeal against an assessment order survives once the original assessment has been set aside by the Commissioner under Section 263 of the Income-tax Act, and whether the appellate proceedings before the ITAT can continue when the foundation assessment order no longer exists.

Petitioner’s Arguments

The assessee submitted that since the assessment order under Section 143(3) dated 18.12.2018 had already been set aside by the Commissioner of Income Tax (Exemptions), Patna under Section 263 of the Act, the assessment order no longer survived. Consequently, the appeal arising out of such assessment as well as the order of the CIT(A) passed thereon also ceased to exist. It was contended that the appeal before the Tribunal had become infructuous.

Respondent’s Arguments

The Revenue fairly conceded that once the primary assessment order had been set aside under Section 263 of the Act, the appeal against such assessment order did not survive. The Revenue further submitted that the assessee had already challenged the consequential assessment order before the appropriate appellate authority.

Court Order / Findings

The ITAT Ranchi observed that the primary assessment order passed under Section 143(3) dated 18.12.2018 had been set aside by the Commissioner of Income Tax (Exemptions), Patna by exercising revisional jurisdiction under Section 263 of the Act. The Tribunal noted that the consequential assessment order had already been passed and was under challenge before the appropriate forum. In view of the above, the Tribunal held that since the foundation assessment order no longer existed, the appellate proceedings arising therefrom had become infructuous and could not be adjudicated on merits.

Important Clarification

The Tribunal clarified that when an assessment order is set aside in revision under Section 263 of the Act, any appeal pending against such assessment or against the appellate order arising therefrom becomes infructuous. The appropriate remedy for the assessee lies in challenging the consequential assessment order passed pursuant to the revisional order.

Final Outcome

The appeal filed by the assessee was dismissed as infructuous, as the original assessment order under Section 143(3) of the Income-tax Act no longer survived after being set aside under Section 263 of the Act.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769079224_DALTONGANJCATHOLICDIOCESEMEDININAGARDALTONGANJVS.ITOEXEMPTIONSWARDRANCHI.pdf

 

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