Power u/s 263 Can’t Be Used by CIT on Issues Pending Before CIT(A)

power u/s 263

Can Commissioner of Income Tax (CIT) use power u/s 263 of the Income Tax Act (the Act after this ) on an issue which is already agitated before CIT(Appeal) ? Reading section 263 of the Income Tax Act , there is a clear bar on use of powers under section 263 on issues considered or pending for consideration by CIT(A) .

Explanation (c) to Section 263

(c) where any order referred to in this sub-section and passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be,] had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.

Court & Tribunals on Power U/s 263

Allahabad High Court in case of CIT v. Vam Resorts and Hotels Private Limited 418 ITR 723 (Allahabad) recognised this provision of law . The relevant extract is below :

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25. As, Clause (c) of Explanation 1 to Section 263 of the Act provides that when an appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act by CIT is barred. Thus, in the present case, the CIT wrongly exercised jurisdiction under Section 263 of the Act by remanding back the matter to assessing authority on 25.3.2013, while the appeal was decided by CIT (A) on 5.6.2013. Thus, the order passed by the ITAT does not suffer from any irregularity and needs no interference.

Similarly , ITAT in case of R.M. Tradelink Vs PCIT (ITAT Rajkot) [ITA No. 68/Rjt/2022] vide order no 16/09/2022 , which relied on Allahabad High Court and another decision of ITAT (Madras ) in case of Renuka Philip vs ITO [409 ITR 567 ] held in favour of the assessee saying once the issue is pending before CIT(A) , power of revision u/s 263 of the Income Tax ends .

I believe commissioners must be adhering the law which includes Explanation (c) to u/s 263 of the Income tax Act and should not initiate any action on the issue which is pending or dcided by the CIT(Appeals) . If they do , make this ground of appeal before ITAT .