IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, LUCKNOW BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 39/LKW/2022 Assessment Years: 2012-13 Sahara Credit Cooperative Society Limited. Sahara India Bhawan, 1- Kapoorthala Complex, Aliganj, Lucknow, Uttarpradesh - 226024. (PAN: AAEAS7174E) Vs. The Principal Commissioner of Income-tax, Lucknow-1. (Appellant) (Respondent) Present for: Appellant by : Shri P. K. Bansal, Advocate Respondent by : Sh. S. H. Usmani, CIT, DR Date of Hearing : 30.11.2022 Date of Pronouncement : 20.02.2023 O R D E R PER BENCH: This appeal by the assessee is against the revision order by Ld. Pr.CIT, Lucknow-1 passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) in Order No. ITBA/REV/F/REV5/2021-22/1039901436(1) dated 18.02.2022 against assessment order passed by DCIT, Range-3, Lucknow u/s. 147 rws 143(3) of the Act, dated 13.12.2019. 2. Grounds raised by the assessee are ten in numbers, all of which relate to assumption of jurisdiction by the Ld. Pr. CIT for invoking revisionary jurisdiction u/s. 263 of the Act and passing the impugned order thereon. For the sake of brevity, grounds are not reproduced. 2 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 2.1. Vide specific ground no. 3, assessee has challenged the exercising of jurisdiction by Ld. Pr. CIT u/s. 263 of the Act by contending that power to issue notice u/s. 263 of the Act had become barred by limitation since the issue raised by ld. Pr. CIT in the revisionary proceedings of disallowance of interest was the subject matter in the assessment order passed u/s. 143(3), dated 31.03.2015 and not in the assessment order passed u/s. 147, dated 13.12.2019. 3. Assessee had moved an application for preponing the hearing in the present case vide its application dated 20.10.2022 which was admitted and allowed vide order dated 09.11.2022, passed by the Hon’ble Vice President, Lucknow Zone. 4. Brief facts of the case are that assessee is a Cooperative Society formed on 05.03.2010 as a Multi-state Cooperative Society, registered u/s. 7 of the Multi-state Cooperative Society Act, 2002 with registration no. MSCS/CR/333/2010. Assessee filed its return of income on 29.09.2012, reporting nil total income. Return was subsequently revised on 31.03.2014, reporting total loss of Rs.73,15,61,279/-. Case of assessee was selected for scrutiny assessment u/s 143(3), through CASS. Statutory notices were issued and served on the assessee. In the course of assessment proceedings, inter alia, Ld. AO required the assessee to provide digitized list of all the members whose contribution is disclosed at Rs.1314,90,795,994/- in the Balance Sheet. Ld. AO noted that assessee has received this amount as collection from members of the cooperative society for which details of the members containing their names, complete addresses, PAN, amount, date of deposit, mode and date of maturity, interest paid etc. were called for. Assessee made partial compliance which did not satisfy the requirements called for by the Ld. AO. Accordingly, he held this amount as unexplained since nature and source of this was not satisfactorily explained by the assessee. The same 3 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 was added to the total income of the assessee as unexplained income u/s. 68 of the Act. 4.1. Subsequently, notice u/s. 148 of the Act was issued dated 31.03.2019. Basis of reason to believe for the reassessment u/s. 147, as noted in the reassessment order passed u/s. 147 rws section 143(3), dated 13.12.2019, is STR No. 10104078, according to which the assessee received high value cash transaction of Rs.13,21,36,613/- during the year under consideration. In the reasons to believe recorded for initiating the proceeding u/s. 148/147 of the Act, Ld. AO noted as under: “A STR No. 10104078 in the case of M/s. Sahara Credit Cooperative Society Limited was sent by DDIT (Inv.)-1, Udaipur on 06.03.2019 to the O/o the DGIT (Inv.), Lucknow. Further, this STR was forwarded through proper channel and received through e-mail to the undersigned. As per the STR received, it contained some information for high value cash transactions of Rs.13,21,36,613/-. Transaction pattern shows that account get credits through by cash and debits through transfers. The information received has been examined and other available material like ITR etc. has been seen and based on all available material on record I have reason to believe that the assessee has escaped income to the tune of Rs.13,21,36,613/-.” 4.2. In the reassessment proceedings, assessee was asked to furnish the details of source of cash credit of Rs.13,21,36,613/- for which details of the transactions in these amounts were made available to the assessee vide letter dated 23.10.2019 as reproduced in the reassessment order. In response to the said notice, assessee submitted that cash deposited in bank account represented, deposits received from its members except for one amount of Rs.50,000/- which did not pertain to the assessee. Submissions made by the assessee did not find favour with the Ld. AO who observed that no documentary evidence regarding source of cash deposit has been filed nor any details relating to name and address of the members have been furnished. Accordingly, the amount of Rs.13,20,86,613/- (Rs.13,21,36,613 – Rs.50,000) was treated as unexplained cash credit and was added to the total income in the 4 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 reassessment proceeding. While completing the reassessment u/s. 147 of the Act, Ld. AO noted that addition of Rs.13,20,86,613/- is added to the total income assessed as per order passed u/s. 143(3) of the Act at Rs.144,365,517,886/-. Thus, total income in the reassessment proceeding was computed at Rs.144,497,604,499/- which comprised of total income already assessed u/s 143(3) and latest addition made in the reassessment proceedings u/s 147. Relevant extracts from the reassessment order, passed u/s. 147 rws 143(3) of the Act, dated 13.12.2019, are reproduced as under: “4. Basis of reason of the reassessment scrutiny u/s. 147 of the Income Tax Act, 1961 as per STR no. 10104078 the assessee received high value cash transaction of Rs.13,21,36,613/- during the year under consideration. 5. During the course of assessment proceedings the assessee was asked to furnish the details and source of cash credit of Rs.13,21,36,613/- vide notice u/s. 142(1) of Income Tax Act as per table mentioned below. Meanwhile in response to assessee’s letter dated 19.07.2019, details of transactions of Rs.13,21,36,613/- have been provided to the assessee vide this office letter dated 23.10.2019. ..... ..... In response to the notice the assessee has sought adjournment on 30.10.2019 and thereafter vide the reply dated 06/11/2019 submitted that assessee society is collecting deposits from its members under various deposit scheme floated by it. Assessee further submitted that cash deposited in bank a/cs represents deposit received from members. It also pointed out by the assessee that following bank a/c does not pertain to the assessee society. Report ID Report Date Account Number Month of Report Cash deposits reported 20000651769620 12.01.2012 00000053027020525 Dec 2011 0 200006550436423 16.01.2012 0016002100040419 Dec 2011 50,000 Hence, in the relevant year assessee cooperative society submitted the reply but no any documentary evidence regarding source of cash has been filed. Neither, it submitted names and address of members nor specified cash amount member- wise. Thus the amount of Rs.13,20,86,613/- (Rs.132135513-Rs.50,000) is treated as unexplained cash credit and is being added to the total income o the assessee. Penalty proceeding u/s. 271(1)(c) initiated separately. Addition of Rs.13,20,86,613/- 5 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 The addition amount of Rs.13,20,86,613/- will be added in addition to the latest assessed income of the assessee for AY 12-13. In view of the above discussion total income is computed as under; Assessed income as per order u/s. 143(3) Rs.144,365,517,886/- Add: Addition as discussed in para. 5 Rs. 13,20,86,613/- Total Income Rs.144,497,604,499/-“ 4.3. From the above facts, it is noted that original assessment was made u/s. 143(3) of the Act vide order dated 31.03.2015, by making the following additions/disallowances to the returned loss of Rs.73,15,61,279: i) Share capital received by the assessee society Rs.12,72,76,03,600/- ii) Credits received by the assessee cooperative society from members Rs.131,49,07,95,994/- iii) Disallowance of business gathering expense as unexplained expenditure Rs.82,89,84,574/- iv) Disallowance u/s. 14A Rs.5,06,94,997/- 4.4. In the reassessment order passed u/s. 147 rws section 143(3), dated 13.12.2019, addition has been made of Rs.13,20,86,613/- in respect of cash deposited in bank account received from members, by treating it as unexplained cash credit. 5. Subsequently, in the impugned order passed u/s. 263 of the Act, Ld. Pr. CIT has noted that case of the assessee was examined by the revenue audit party who had noticed that assessee had claimed and was allowed a sum of Rs.31,110.49 lakhs as interest paid on deposits received from the members who were held unexplained cash credit by the AO. Hence, corresponding expenditure i.e. interest on these deposits should have been disallowed and added back to the income of the assessee. On these observations of the revenue audit party, Ld. AO examined the case records and proposed to the ld. Pr. CIT for revision of the assessment u/s. 263 of the Act. On the aforesaid proposal of Ld. AO, 6 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 ld. Pr. CIT called for the records and examined the same for the purpose of issuing of show cause notice u/s. 263 of the Act. Ld. Pr. CIGT issued a show cause notice u/s. 263 dated 18.01.2022 by noting that the case records were called for and examined to arrive at a consideration that assessment concluded u/s. 147 read with sec. 143(3) of the Act vide order dated 13.12.2019 is erroneous in so far as it is prejudicial to the interest of the revenue. The issue raised by the Ld. Pr. CIT in the said show cause notice is reproduced as under: “2...... i) The AO had made an addition of Rs. 131,490,795,994/- as collection from members of the society as unexplained since the nature and sources thereof could not be satisfactorily explained by the assessee during the assessment proceedings therefore the AO has erred in not adding the corresponding interest expenditure of Rs. 31,110.49 lakh to the total income of the assessee. From perusal of schedule 11 of the Profit & Loss A/c it is noted that the assessee has claimed a sum of Rs. 31,110.49 lakh as interest paid on deposits received from members which was held as unexplained cash credit by the AO, hence the corresponding expenditure i.e. interest on deposit should have been disallowed and added back to the income of the assessee. The omission resulted in irregular allowance of business expenditure of Rs.31,110.461akh which resulted in short charge of tax and interest. 3. Thus, during the course of assessment proceedings, the Assessing Officer has not examined /enquired into the details of facts of the case by making the assessment order u/s 148 of the IT Act as erroneous in so far as prejudicial to the interest of the revenue as per explanation 2 to section 263 of the I T Act, 1961.” 5.1. From the perusal of the issue raised by the Ld. Pr. CIT, it is noted that reference is made to the addition made by Ld. AO of Rs.131,490,795,994/- towards collection from members of the society as unexplained and, therefore, corresponding interest expenditure in respect of this amount should have been added to the total income by the Ld. AO while making the reassessment. In this respect, Ld. Pr. CIT referred to the Note from Schedule – 11 of the P&L Account and stated that assessee has claimed a sum of Rs.31,110.49 lakh as interest paid on deposits received from members. According to him, since the deposits 7 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 from members have been held as unexplained cash credits, the corresponding expenditure of interest on the said deposits should have been disallowed and added back to the income of the assessee which the Ld. AO failed to do so. Such an omission has resulted in irregular allowance of interest expenditure, rendering the reassessment order as erroneous and prejudicial to the interest of revenue. 5.2. Assessee submitted its reply to the show cause notice and stated that there are two assessments, one u/s. 143(3), dated 31.03.2015 and the other as reassessment u/s. 147 rws 143(3), dated 13.12.2019. The subject matter in the two assessments is different. Assessee submitted that the subject matter of reassessment proceeding was enquiry relating to deposit of cash in the bank account as per STR No. 10104078 sent by DDIT (Inv.)-I, Udaipur on 06.03.2019 to the office of DGIT (Inv.), Lucknow. This STR contained information for high value cash transactions of Rs.13,21,36,613/- which showed a transaction pattern that accounts get credited by cash and debited through transfers. Assessee thus, contended that reassessment proceedings u/s. 147 were taken up only for a limited purpose of taxing the amount of cash deposited in the bank account by the assessee in the months of November and December, 2011. 5.3. According to the assessee, the reopening for the purpose of reassessment was not undertaken for examination of interest paid by the assessee claimed as an expenditure by debit in the P&L Account, which in fact was duly examined by the Ld. AO in the course of original assessment proceeding and was allowed. According to the assessee, issue of allowance of interest expenditure does not form part of the reasons to believe recorded for the purpose of reopening the assessment. Based on these facts, assessee contended that period of limitation provided for u/s. 263(2) of the Act will begin from the date of order of 8 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 assessment as the issue of interest paid is applicable to the said assessment order and not from the order of reassessment. According to the assessee, revisionary jurisdiction invoked by Ld. Pr. CIT is beyond the period of limitation which renders the entire proceeding as a nullity. 5.4. Assessee placed strong reliance on the decision of Hon’ble Supreme Court in the case of CIT vs. Alegendra Finance Ltd. (2007) 293 ITR 1 (SC) which has dealt with the issue in similar facts and circumstances. Reliance was also placed on the order of the Hon’ble jurisdictional High Court of Allahbad in the case of L G Electronics India Pvt. Ltd. vs. PCIT (2016) 388 ITR 135 (All) which had followed the decision of Hon’ble Supreme Court while giving decision in favour of the assessee on the similar issue. Reliance was also placed on the decision of Hon’ble Bombay High Court in the case of CIT vs. ICICI Bank Ltd. 344 ITR 74 and in the case of Asoka Buildcon Ltd. vs. ACIT 325 ITR 574. 5.5. It was also submitted that it is not a case where enquiry was not made by the Ld. AO during the course of original assessment proceeding with reference to the interest paid by the assessee. 6. Ld. Pr. CIT concluded the revisionary proceedings by setting aside the reassessment order passed u/s 147 rws 143(3), dated 13.12.2019, directing the ld. AO to make the assessment de novo by disallowing the interest of Rs.31,110.46 lakhs, by noting his observations as under: “4. I have considered the facts of the case and reply of assessee. It can be seen from the records that vide order dated 13.12.2019 u/s 147/143(3) of IT Act, the AO computed the income of assessee at Rs.144,497,604,499/- which included unexplained cash credits of Rs. 13,20 86 613/- and Rs. 144 365 517 886/- (Addition of Rs.145,098,079,165/- as unexplained deposits) against the returned loss of Rs. 73,15,61.279/-. Thus, the amounts of Rs. 13,20,86,613/- and Rs.145,098,079,165/- were held by AO has unexplained cash credits u/s 68 of IT Act. Since these principal amounts have been treated unexplained, the natural corollary would be that the corresponding expenditure incurred in the form of interest paid on these deposits also has to be treated as unexplained expenditure. Since these interest expenditures are not allowable, AO should have added back it to the income of assessee. Non disallowance of these interest 9 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 expenses has resulted in irregular allowance of business expenditure of Rs. 31,110.46 lacs by making the assessment order dated 13.12.2019 as erroneous in so far as prejudicial to the interest of revenue as per section 263 of IT Act. 5. During the revision proceedings, the assessee has argued that the initiation of proceedings u/s 263 of IT Act are barred by limitation as the issue of disallowance of cash deposits u/s 68 of IT Act was dealt with by AO during the original assessment proceedings which was completed on 31.03.2015. As per assessee, the time limit of revision proceedings cannot be measured from the date of assessment order passed on 13.12.2019 u/s 147/143(3) of the IT Act. However, the contention of the assessee is misplaced. As can be seen from the assessment order dated 13.12.2019, AO has computed the income of assessee at Rs. 144,497,604,499/- which included the amount of Rs. 144,365,517,886/- and Rs. 13,20,86,613/-. It has to specifically mentioned here that the amount of Rs. 144,365,517,886/- includes the addition of Rs.145,098,079,165/- made by AO u/s 68 of IT Act as unexplained deposits. Since both the amounts added u/s 68 as unexplained cash credits have been taken into account by AO while passing the order on 13.12.2019, he should have disallowed the corresponding interest expenditure also but the same was not done by him. Thus, on his account, the assessment order framed by AO is erroneous in so far prejudicial to be interest of revenue as per section 263 of IT Act.” 7. Aggrieved, assessee is in appeal before the Tribunal. 8. Before us, Shri P. K. Bansal, Advocate represented the assessee and Shri S. H. Usmani, CIT, DR represented the revenue. 9. Before us, Ld. Counsel for the assessee reiterated the submissions made before the Ld. Pr. CIT as narrated above which are not repeated for the sake of brevity. Ld. Counsel summarily stated his contention that interest expenditure was not the issue for reopening of the assessment. Assessment was reopened only in respect of cash deposited in the bank account. Payment of interest to the depositors was the issue raised and enquired by the Ld. AO during the original assessment by issuing notice u/s. 142(1) of the Act dated 09.12.2014 vide point no. 15, copy of which is placed in the paper book at page 42. The same was duly replied by the assessee by its submission dated 18.02.2015 placed at page 38 of the paper book. Ld. Counsel thus stated that this issue relates to the original assessment completed u/s. 143(3) of the Act on 31.03.2015. According to him, since the issue raised in show cause notice by the ld. Pr. CIT relates to original assessment completed on 31.03.2015 and not with 10 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 reference to the reassessment completed u/s. 147/143(3), dated 13.12.2019, therefore, the show cause notice so issued u/s. 263(2) of the Act is barred by limitation and consequently the impugned order passed u/s. 263 of the Act dated 18.02.2022 is barred by limitation which ought to be quashed as nullity. Before us also, Ld. Counsel placed reliance on the decision already referred above. 10. Per contra, Ld. CIT, DR strongly supported the order of Ld. Pr. CIT and reiterated the observation made by Ld. Pr. CIT that the reassessment order u/s. 147 computed the income of the assessee at Rs.144,497,604,499/- which included both, the unexplained cash credits of Rs.13,20,86,613/- and the already assessed total income as per order u/s. 143(3) of Rs.144,365,517,886/- against the returned loss of Rs.73,15,61,279/-. According to Ld. CIT, DR, since both the amounts were added u/s. 68 as unexplained cash credit which have been taken into account by Ld. AO while passing the order u/s. 147 of the Act on 13.12.2019, the revisionary order passed by the Ld. Pr. CIT with reference to reassessment order, dated 13.12.2019, is well within the prescribed limitation of section 263 of the Act. 11. We have heard the rival contentions and perused the material available on record and given our thoughtful consideration to the material placed before us. The facts of the case as stated above clearly show that the subject matter of addition made in the original assessment passed u/s. 143(3) of the Act is different from the subject matter of reopening the assessment by recording reason to believe for income escaping assessment and issuing notice u/s. 148 which is on the basis of information received from the Investigation Wing relating to high value cash transactions of deposit of cash in the bank accounts of the assessee. It is also a fact on record that Ld. AO in the original 11 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 assessment proceedings has enquired in respect of expenses on account of interest claimed by the assessee, seeking the details as mentioned at Sl. No. 15 of notice u/s. 142(1) of the Act. Assessee had replied and made its submission vide its letter dated 18.02.2015. 11.1. Further, from the show cause notice issued by Ld. Pr. CIT for invoking revisionary proceeding u/s. 263 of the Act, the issue raised by him relates to claim of interest expenditure on the deposits received from members which according to him should have been disallowed and added back to the income of the assessee. For this issue, ld. Pr. CIT has made reference to the addition of Rs.131,490,795,994/- towards collection from members of the society, made by the AO in the original assessment completed on 13.03.2015 u/s. 143(3). However, while giving direction to the Ld. AO in para 5, reference is made to the reassessment order passed u/s. 147 on 13.12.2019 wherein the Ld. AO is directed to disallow the claim of interest and make the assessment de novo. 11.2. Before embarking upon the rival contention of the parties raised before us, we may notice the relevant part of section 263 of the Act which is as under: "263. Revision of orders prejudicial to revenue.-(I) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (a) & (b) ** ** (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the Ist 12 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 day of June, 1988, the powers of the 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. (2) No order shall be made under sub-section (l) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, the High Court or the Supreme Court. Explanation – in computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded.” 11.3. From the perusal of sub-section (2) of section 263 above, it is noted that limitation of two years is provided from the end of the financial year in which the order sought to be revised was passed. In the present case before us, the order sought to be revised by the ld. Pr. CIT is the reassessment order passed u/s 147 rws 143(3) dated 13.12.2019 but referring to the issued which pertains to the assessment completed u/s 143(3) dated 31.03.2015. 11.4. Perusal of the order passed by the Ld. Pr. CIT demonstrates that only that part of the assessment which relates to claim of interest expenses of Rs.31,110.49 lakhs was found to be prejudicial to the interest of revenue. The proceeding for re-examination in reference to the reasons to believe recorded in respect of cash deposited in the bank account of the assessee, has nothing to do with the same. We are, therefore, of the opinion that the impugned order passed by Ld. Pr. CIT exercising his revisionary jurisdiction on the assessment order in relation to claim of interest expenditure which is not the subject matter of the reassessment proceeding, hence, the period of limitation as provided u/s. 263(2) of the Act would begin from the date of order of assessment i.e. 13 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 31.03.2015. Thus, the revisionary jurisdiction invoked by the Ld. Pr. CIT is beyond the period of limitation as prescribed u/s 263(2), rendering the entire proceeding, a nullity. 12. While giving our finding as noted above, we draw force from the decision of the Hon’ble Supreme Court in the case of Algendra Finance Ltd. (supra) which has dealt with the identical issue as in the present appeal. The substantial question of law which was before the Hon’ble Supreme Court reads as under: “Whether for the purpose of computing the period of limitation envisaged u/s. 263(2) of the Act, the date of order of assessment or that of reassessment is to be taken into consideration?” 12.1. While answering the above substantial question of law, Hon’ble Court held in para 15, in favour of the assessee that Commissioner exercising its revisional jurisdiction reopened the order of assessment only in realisation to lease equalisation fund, which was not the subject of assessment proceeding, the period of limitation provided for under sub-section (2) of section 263 would begin to run from the date of the order of original assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner beyond the period of limitation, it was wholly without jurisdiction, rendering the entire proceeding a nullity. 12.2. The said judicial precedent has made out a difference in a case where the entire assessment is reopened and a fresh reassessment order is passed and in a case where one or two items of assessment order are reassessed and reconsidered and in other respect, initial assessment order is maintained. In a case where except one or a few items, original assessment order is maintained, it has been held that assessment order continues to remain subject to addition or modification by reassessment 14 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 order and if a notice under section 263(1) has been issued with reference to an item of assessment order and not reassessment order, for the purpose of limitation, it has to be seen whether it involves an issue of escaped assessment under the original assessment order or reassessment order. Where notice under section 263(1) has been issued with reference to a discrepancy occurred in the assessment order and it has nothing to do with the reassessment order, limitation would run from date of regular order of assessment and not from date of reassessment order. 13. Subsequently, Hon’ble jurisdictional High Court of Allahabad dealt with the identical matter in the case of L. G. Electronics India Pvt. Ltd. (supra) and held in favour of the assessee by adopting and following the decision of Hon’ble Supreme Court in the case of Alegendra Finance Ltd. (supra). The observations and findings given by the Hon’ble jurisdictional High Court of Allahabad carry force of binding nature. Hon’ble Court, by elaborately referring to the decision of Hon’ble Supreme Court (supra) as well as other decisions of Hon’ble High Court of Bombay in the case of Ashoka Buildcon Ltd. (supra) dealt with the matter as under: 26. We find that this issue is clinched by a Supreme Court judgment in Alagendran Finance Ltd. (supra). The question formulated by court in the above case reads as under (page 3 of 293 ITR): "Whether for the purpose of computing the period of limitation envisaged under sub-section (2) of section 263 of the Income-tax Act, 1961 (for short "the Act"), the date of order of assessment or that of the reassessment, is to be taken into consideration ?" (emphasis added) 27. Therein also for the assessment years 1994-95, 1995-96 and 1996-97, assessment was completed on February 27, 1997 ; March 12, 1997 ; and March 30, 1998, respectively. In all the assessment years, the assessee's return under the head "Lease equalisation fund" was accepted. The Assessing Officer initiated reassessment proceedings under section 148 in respect of the following three items : 15 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 "(i) the expenses claimed for share issue, (ii) bad and doubtful debts and (iii) excess depreciation on gas cylinders and goods containers." 28. Reassessment has nothing to do on items relating to "lease equalization fund". The Commissioner of Income-tax invoked revisional jurisdiction under section 263(3) vide notice dated March 29, 2004 stating that depreciation of leased assets claimed as goods depreciation and disallowed in computation income was not correct and order of the Assessing Officer is prejudicial to the interests of the Revenue as the lease rentals had not been properly brought to tax. The assessee contended that the said order of the Commissioner under section 263 was barred by limitation, and in appeal, preferred before the Tribunal, he succeeded. The Tribunal held that error pointed out in the revisional order under section 263 was in the order of the assessing authority passed in regular assessment and not reassessment, therefore, barred by limitation under section 263(2). Appeal preferred by the Revenue also failed before the Madras High Court, who following its decision in CWT v. A. K. Thanga Pillai [2001] 252 ITR 260/[2002] 125 Taxman 708, dismissed the appeal. Before the Supreme Court, the Revenue sought to argue that the order of assessment would merge with the order of reassessment and, therefore, for the purpose of notice under section 263, limitation would commence from the date when "reassessment order" was passed. After referring to section 263, the court held (page 7 of 293 ITR) : "A bare perusal of the order passed by the Commissioner of Income-tax would clearly demonstrate that only that part of the order of assessment which related to lease equalization fund was found to be prejudicial to the interests of the Revenue. The proceedings for reassessment have nothing to do with the said head of income. Doctrine of merger, therefore, would not apply in a case of this nature." (emphasis added) 29. The court referred to section 263(1), Explanation (C) providing that the doctrine of merger would apply only in respect of such items which were subject matter of appeal and not which were not to fortify its view. 30. Distinction in the words "assess" and "reassess" was considered in CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297/64 Taxman 442 (SC). Therein issue was raised by the assessee contending that once jurisdiction under section 147 is invoked, whole assessment proceedings become reopened. It was negatived by the court holding as under (page 310) : "Thus, under section 147, the Assessing Officer has been vested with the power to 'assess or reassess' the escaped income of an assessee. The use of the expression 'assess or reassess such income or recompute the loss or depreciation allowance' in section 147 after the conditions for reassessment are satisfied, is only relatable to the preceding expression in 16 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 clauses (a) and (b), viz., 'escaped assessment'. The term 'escaped assessment' includes both 'non-assessment' as well as 'under assessment'. Income is said to have 'escaped assessment' within the meaning of this section when it has not been charged in the hands of an assessee in the relevant year of assessment. The expression 'assess' refers to a situation where the assessment of the assessee for a particular year is, for the first time, made by resorting to the provisions of section 147 because the assessment had not been made in the regular manner under the Act. The expression 'reassess' refers to a situation where an assessment has already been made but the Income-tax Officer has, on the basis of information in his possession, reason to believe that there has been under assessment on account of the existence of any of the grounds contemplated by the provisions of section 147(b) read with Explanation (1) thereto." (emphasis added) 31. Referring to above exposition of law, court in Alagendran Finance Ltd. (supra) further held (page 9 of 293 ITR) : "There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of reassessment is distinct and different, the entire proceeding of assessment would be deemed to have been reopened....... We may at this juncture also take note of the fact that even the Tribunal found that all the subsequent events were in respect of the matters other than the allowance of 'lease equalization fund'. The said finding of fact is binding on us. Doctrine of merger, therefore, in the fact situation obtaining herein cannot be said to have any application whatsoever. It is not a case where the subject matter of reassessment and subject matter of assessment were the same. They were not." (emphasis added) 32. The court also upheld the judgment of the Madras High Court in A. K. Thanga Pillai (supra) and pointed out that same view was taken by the Calcutta High Court in CIT v. Kanubhai Engineers (P.) Ltd. [2000] 241 ITR 665/[2001] 118 Taxman 745. Operative part of judgment in Alagendran Finance Ltd. (supra) reads as under (page 12 of 293 ITR): "We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income-tax beyond the period of 17 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity." (emphasis added) 33. This decision in Alagendran Finance Ltd. (supra) has been followed by the Delhi High Court in Bharti Airtel Ltd. (supra) wherein also reassessment order dealt with the issue of non deduction of tax at source on payment of interest to ABN Amro Bank, Stockholm Branch. Second addition was made on account of ESOP expenses. Subsequently Commissioner of Income-tax issued order under section 263 for failure to deduct tax at source under section 194H on three air time provided to distributors and under section 194J on roaming charges paid to other network operators. These issues were different from the subject matter of reassessment order. The Delhi High Court held that the subject matter is different since the Commissioner has found error in regular assessment order, hence limitation shall commence for regular assessment order. 34. To the same effect is the Division Bench judgment of the Bombay High Court in Ashoka Buildcon Ltd. (supra) delivered by Dr. D. Y. Chandrachud, J., (as his Lordship then was). Therein, the Commissioner of Income-tax issued notice dated April 30, 2009 under section 263. The assessment order was passed on December 27, 2006 under section 143(3) for the assessment year 2004-05. It was sought to be reopened on March 6, 2007 in regard to benefit of section 72A which deals with carry forward and set off of accumulated losses and unabsorbed depreciation allowances in cases, inter alia, of amalgamation and merger was wrongly allowed. The Commissioner of Income-tax issued notice dated April 30, 2009 under section 263 though referring to reassessment order but in effect pointing out an error in regular assessment order dated December 27, 2006. Relying on Alagendran Finance Ltd. (supra), Bombay High Court said as under (578 of 325 ITR) : "Section 263 empowers the Commissioner to call for and examine the record of any proceedings under the Act and to pass such orders as the circumstances of the case justify, including an order enhancing, modifying or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. Sub-section (2) of section 263 stipulates that no order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. That period of two years from the end of the financial year in which the original order of assessment dated December 27, 2006 was passed, has expired on March 31, 2009. Hence the exercise of the revisional jurisdiction in respect of the original order of reassessment is barred by limitation........ The substantive part of section 147 as well as Explanation 3 enables the Assessing Officer to assess or reassess income chargeable to tax which he has reason to believe had escaped assessment and other income which has escaped assessment and which comes to his notice subsequently in 18 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 the course of the proceedings under the section. There is nothing on the record of the present case to indicate that there was any other income which had come to the notice of the Assessing Officer as having escaped assessment in the course of the proceedings under section 147 and when he passed the order of reassessment. The Commissioner, when he exercised his jurisdiction under section 263, in the facts of the present case, was under a bar of limitation since limitation would begin to run from the date on which the original order of assessment was passed. We must however clarify that the bar of limitation in this case arises because the revisional jurisdiction under section 263 is sought to be exercised in respect of issues which did not form the subject matter of the reassessment proceedings under section 143(3) read with 147. In respect of those issues, limitation would commence with reference to the original order of assessment. If the exercise of the revisional jurisdiction under section 263 was to be in respect of issues which formed the subject matter of the reassessment, after the original assessment was reopened, the commencement of limitation would be with reference to the order of reassessment. The present case does not fall in that category." (emphasis added) 35. The judgments in Shriram Engineering Construction Co. Ltd. (supra); Lark Chemicals Ltd. (supra) and ICICI Bank Ltd. (supra) are also in the same line. 36. In these facts and circumstances and considering the fact that impugned notice dated June 8, 2016 issued by the Principal Commissioner of Income-tax, NOIDA, Gautambudh Nagar is in reference to some discrepancy in original assessment order dated October 31, 2011 and not reassessment order dated March 26, 2015, therefore, limitation would run from the date of regular order of assessment and in that view of the matter, impugned notice, evidently is barred by limitation prescribed under section 263(2) of Act, 1961. 37. In the result, writ petition is allowed. Impugned notice dated June 8, 2016 is hereby quashed. The petitioner shall also be entitled to costs, which we quantify to Rs. 20,000. 14. On the above factual matrix, considering the applicable law and in the light of judicial precedents referred above, we are of the opinion that impugned order passed u/s. 263 on 18.02.2022 is barred by limitation in reference to the assessment order passed u/s. 143(3), dated 31.03.2015. Accordingly, ground no. 3 taken by the assessee is allowed. 19 ITA No. 39/LKW/2022 Sahara Credit Cooperative Society Ltd. AY 2012-13 14.1. Since the impugned order u/.s 263 has been held to a nullity being barred by limitation, other grounds taken by the assessee challenging the assumption of jurisdiction by the ld. Pr. CIT for the revisionary proceedings and passing the order thereon are rendered academic and therefore are not dealt with for adjudication. 15. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 20 th February, 2023 as per the rules framed under Rule 34(4) of the Income Tax Appellate Tribunal Rules, 1963. Sd/- Sd/- (Mahavir Singh) (Girish Agrawal) Vice President Accountant Member Dated: 20 th February, 2023 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent: 3. DCIT, Range-3, Lucknow 4. ITO, Ward-3(4), Lucknow , 5. DR, ITAT, Lucknow Bench, Lucknow 6. Guard file. //True Copy// By Order Assistant Registrar ITAT, Lucknow Benches, Lucknow