B S R & ASSOCIATES LLP,MUMBAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX-8 , MUMBAI

ITA 2397/MUM/2025Status: DisposedITAT Mumbai31 October 2025AY 2018-1912 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal quashed the impugned revisionary order passed by the PCIT under Section 263 of the Act. The Tribunal noted that the factual and legal matrix of the present case was identical to that dealt with by a Coordinate Bench of the ITAT, Mumbai, in the case of KPMG Assurance and Consulting Services LLP for AY 2018-19 (ITA No. 2396/Mum/2025), which had also quashed the revisionary order. The Tribunal found that the PCIT had failed to consider the entire record, including previous assessment orders and reassessment proceedings, as contemplated by Explanation 1(b) to Section 263. The Tribunal also reiterated the principle that the PCIT cannot revise an assessment order merely because a different view could be taken, citing the judgment in CIT vs. Arvind Jewellers. Furthermore, the Tribunal observed that the AO had followed the decision of the Jurisdictional High Court in the assessee's own case for AY 2008-09, which is a valid basis for not making an addition. Therefore, the Tribunal held that no action under Section 263 was justifiable and allowed the grounds raised by the assessee. The operative direction was to quash the revisionary order.

What were the facts?

The assessee, BSR & Associates LLP, filed an appeal against the revisionary order passed by the Principal Commissioner of Income Tax (PCIT), Mumbai-8, under Section 263 of the Income Tax Act, 1961. This revisionary order challenged the assessment order passed by the Assessing Officer (AO) under Section 147 read with Section 144B for Assessment Year 2018-19. The PCIT observed that the assessee had made payments of Rs. 1,07,85,243/- for foreign technical services without deducting Tax Deducted at Source (TDS) under Section 40(a)(i). The AO had accepted the assessee's justification for non-deduction, relying on past litigation involving KPMG LLP for AY 2008-09, where the Bombay High Court ruled in favour of the assessee. The PCIT found the AO's acceptance of the assessee's submissions erroneous and prejudicial to the revenue.

What were the issues?

1. Whether the Principal Commissioner of Income Tax (PCIT) erred in invoking the provisions of Section 263 of the Income Tax Act, 1961, and passing the impugned revisionary order, considering the AO had taken one of the possible views and the order is bad in law. 2. Whether the PCIT had jurisdiction to invoke Section 263 against a reassessment order passed by a Faceless Assessing Officer (FAO), and if not, whether the revisionary order is bad in law. 3. Whether the PCIT exceeded his jurisdiction by concluding the AO's findings were incorrect merely due to past departmental litigation, stepping into the AO's shoes and challenging accepted documents. 4. Whether the PCIT erred in directing the AO to pass a fresh assessment order, given that the reassessment order was neither erroneous nor prejudicial to the revenue, and Explanation 2 to Section 263 was not attracted. 5. Whether the PCIT erred in concluding that the AO did not verify the details of services rendered by non-residents and simply agreed with the assessee's submissions. 6. Whether the PCIT erred in concluding that the AO incorrectly relied on the Bombay High Court's decision for AY 2008-09, ignoring the assessee's reliance on the tax treaty rather than domestic law. 7. Whether the PCIT erred in revising the reassessment order on payments made to non-residents on which tax was already deducted at source by the appellant. Assessee's Contentions: The assessee argued that the PCIT erred in invoking Section 263 as the AO had taken a possible view, and the revisionary order was bad in law. They contended that the PCIT lacked jurisdiction over a Faceless AO's order and exceeded his powers by re-examining evidence. The assessee also argued that the reassessment order was not erroneous or prejudicial to revenue and that the AO had adequately verified the details. They relied on the decision of the Coordinate Bench in the case of KPMG Assurance and Consulting Services LLP for AY 2018-19 (ITA No. 2396/Mum/2025) and the Supreme Court judgment in CIT vs. Arvind Jewellers, stating that the CIT cannot revise an order simply because a different view could be taken. They also highlighted that the issue was covered by the decision of the Jurisdictional High Court in their own case for AY 2008-09. Revenue's Contentions: The revenue, through the PCIT, contended that the AO had not conducted adequate inquiries and detailed verification regarding the non-deduction of TDS on payments for technical services, making the assessment order erroneous and prejudicial to the interest of revenue. The PCIT believed the services rendered by the entities involved high-end technical knowledge and fell under the ambit of fees for technical services.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 144B,Section 40(a)(i),Section 9(1)(vii),Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH MUMBAI

Before: SHRI PAWAN SINGH & SHRI GIRISH AGRAWAL

Hearing: 14.10.2025Pronounced: 31.10.2025

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the revisionary order of Ld. PCIT, Mumbai - 8, vide order no. ITBA/REV/F/REV5/2024- 25/1073478772(1), dated 19.02.2025 passed u/s. 263 against the assessment order by Circle 16(2), Mumbai, u/s. 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated

09.03.

2023 for Assessment Year 2018-19. 2. Grounds taken by the Assessee are reproduced as under:

1.

On the facts and circumstances of the case and in law, the Principal Commissi

The order continues below.

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