JAI MATA DI OM,THANE vs. PR. COMM. OF INCOME TAX, THANE-1, THANE

ITA 3342/MUM/2025Status: DisposedITAT Mumbai27 October 2025AY 2021-2212 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT erred in invoking revisionary jurisdiction under Section 263. The Tribunal noted that the AO had discussed relevant facts, made detailed inquiries, and issued query memos to the assessee, who responded with evidence. The AO, after due inquiry, drew an adverse conclusion and made a part disallowance (50%) on an estimated basis, which is a plausible view. The Tribunal found that the PCIT's action disregarded Clause (c) of Explanation to Section 263(1), which places an embargo on revision when the assessment is already subject to appeal. The issue of disallowance was pending before the CIT(A), making it inappropriate for the PCIT to re-examine it under revisionary powers. The Tribunal also distinguished between 'lack of inquiry' and 'inadequate inquiry', citing the decision in CIT Vs. Sunbeam Auto, and stated that the PCIT cannot impose his own understanding of the extent of inquiry. Furthermore, where two views are possible and the AO has taken a plausible view, it cannot be treated as erroneous unless unsustainable in law or demonstrating non-application of mind. The Tribunal concluded that the PCIT erred in directing the AO to take a different course of action and set aside the PCIT's order, quashing it. The appeal of the assessee was allowed.

What were the facts?

The assessee, Jai Mata Di OM, filed an appeal against the revision order dated 27.03.2025 passed by the Principal Commissioner of Income Tax (PCIT), Thane-1, under Section 263 of the Income-tax Act, 1961. This revision order pertained to the assessment order passed under Section 143(3) r.w.s. 144B for Assessment Year 2021-22. The original assessment order had assessed the total income at Rs. 2,51,50,550/-, including an addition of Rs. 1,71,73,691/- under Section 69C as 'Unexplained Labour charges'. The PCIT, invoking Section 263, found the assessment order to be erroneous and prejudicial to the revenue, specifically noting that the Assessing Officer (AO) had made a 50% addition on labour charges of Rs. 3,43,47,382/- paid to two contractors, whereas if the expenditure was unexplained, it should have been disallowed 100%. The PCIT directed the AO to re-examine the applicability of Section 69C r.w.s. 115BBE.

What were the issues?

1. Whether the PCIT erred in holding the assessment order passed by the AO under Section 143(3) r.w.s. 144B to be erroneous and prejudicial to the interest of revenue, thereby wrongly assuming jurisdiction under Section 263 of the Income-tax Act, 1961. 2. Whether the PCIT erred in relying on Explanation 2 to Section 263 to set aside the assessment, when it was not invoked in the notice and the AO had made necessary inquiries. 3. Whether the PCIT erred in setting aside the assessment to examine the applicability of Section 69C r.w.s. 115BBE to labour charges of Rs. 3,43,47,382/-, despite the assessee providing explanations and documentary evidence. Assessee's contentions: The AO made all necessary inquiries and the PCIT cannot override the assessment order. The assessee provided details and documentary evidence, including invoices, bank statements, and PANs. TDS was made on payments routed through banking channels. The PCIT's assumption of jurisdiction was contested as the issue was already pending before the CIT(A). Revenue's contentions: The PCIT's revision order was strongly relied upon.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 144B,Section 69C,Section 115BBE,Section 133(6)

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Before: SHRI AMIT SHUKLA & SHRI PRABHASH SHANKAR

For Appellant: Shri Subodh Ratnaparkhi, AR
For Respondent: Shri Vivek Perampurna (CIT-DR)
Hearing: 28.08.2025Pronounced: 27.10.2025

PER PRABHASH SHANKAR [A.Μ.] :- The present appeal preferred by the assessee emanates from the Revision order dated 27.03.2025 passed u/s 263 of the Income-tax Act, 1961 by the Principal Commissioner of Income-tax, PCIT, Thane-1 [hereinafter referred to as “PCIT”] pertaining to assessment order passed u/s.143(3) r.w.s.144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2021-22. A.Y. 2021-22 Jai Mata Di O

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