If order under section 263 quashed by ITAT, assessment done pursuant to section 263 doesn’t not survive. Filing of appeal by department at HC do not change the position
Often the tax professionals have a misconception that filing of appeal amounts to automatic grant of “stay”. One needs to know that an “outstanding demand” or “operation of any judgement” is stayed only when a stay is specifically granted by the higher authority or court and not on mere filing of appeal. This settled principle was reiterated by the Hon’ble ITAT in its recent case.
Let us have a Short Overview of the case:
In this case, order u/s. 263 was passed directing de-novo assessment.
Appeal filed before ITAT against order u/s. 263.
De-novo assessment order passed by AO.
Appeal filed before CIT(A) against de-novo assessment order.
Order u/s. 263 quashed by ITAT.
Department filed appeal before HC against ITAT’s order.
CIT(A) quashed de-novo assessment since order u/s. 263 was quashed by ITAT.
Department filed appeal before ITAT against CIT(A)’s order.
𝗖𝗼𝗻𝘁𝗲𝗻𝘁𝗶𝗼𝗻 𝗼𝗳 𝘁𝗵𝗲 𝗱𝗲𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁:
CIT(A) ought to have dealt with the merits of the case instead of quashing the de-novo assessment on account of quashing of order u/s. 263 since the department’s appeal against ITAT’s order is pending before the HC
𝗛𝗲𝗹𝗱:
The CIT(A)’s order quashing the de-novo assessment was upheld by ITAT holding that mere filing of appeal by the department before the HC does not change the legal position unless the order of ITAT quashing order u/s. 263 is stayed by the HC.
The copy of the order is as under:
