CREST STEEL AND POWER PRIVATE LIMITED,RAJNANDGAON vs. PCIT, CENTRAL CIRCLE, BHOPAL, BHOPAL

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ITA 308/RPR/2026Status: DisposedITAT Raipur31 July 2026AY 2022-2314 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the Assessing Officer had made specific enquiries regarding the brought forward losses and taken a plausible view. Therefore, the Principal Commissioner's invocation of revisionary jurisdiction under Section 263 was not justified.

What were the facts?

The Principal Commissioner of Income Tax invoked revisionary jurisdiction under Section 263, stating the Assessing Officer's assessment order was erroneous and prejudicial to revenue for not verifying brought forward losses. The assessee argued that the Assessing Officer had already made due enquiries and taken a plausible view.

What were the issues?

Whether the Principal Commissioner was justified in invoking revisionary powers under Section 263 when the Assessing Officer had already conducted enquiries and taken a plausible view on the allowability of brought forward losses.

Which sections of the Income-tax Act were involved?

Section 263,Section 139(3),Section 80

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, “DB” RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & DR. DIPAK P. RIPOTE

For Appellant: Shri R.B Doshi, CA
For Respondent: Shri Rituparna Namdeo, CIT-DR
Hearing: 27.07.2026Pronounced: 31.07.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM:

The present appeal preferred by the assessee emanates from the order of the Ld.Pr.CIT (Central), Bhopal dated 12.03.2026 for the assessment year 2022-23 as per the grounds of appeal on record.

2.

In this case, the assessee is aggrieved with the order passed by the Ld. Pr. CIT invoking revisionary jurisdiction u/s. 263 of the Income Tax Act, 1961 (for short ‘the Act’). That according to the Pr. CIT, assessment so framed by the A.O was erroneous so far as it was prejudicial to the interest of the Revenue since the A.O had not enquired and verified about the allowability of brought forward of losses to the tune of Rs.9,55,24,558/-. The relevant paras are extracted as follows: “4. On examination of assessment records, it was found that the assessee had filed its return of income on 31.12.2022 showing total income NIL for the A.Y. 2022-23. The assessee had brought forward the losses amounting to Rs.9,55,24,561/- to be set off against the current year income of profit and gains from business and profession. But as per section 139(3) r.w.s. 80, the losses are not allowed to be set off if the return is not filed within due time. In the present case, the return of income was filed on 31.12.2022 u/s 139(4) of the Act, which was beyond the due date of 07.11.2022 (extended by CBDT). 5. However, the AO completed the assessment by not inquiring and verifying the allowability of carry forward losses to the tune of Rs.9,55,24.561/- in view of the provision of sec. 139(3) r.w.s. 80 of the Income Tax Act, 1961. 6. It may be seen from the above that the AO has not conducted any inquiries / verifications on the above issue

3 Crest Steel and Power Private Limited Vs. DCIT, Central Circle-2, Bhopal ITA No. 308/RPR/2026

which he should have conducted before passing the assessment order making the order erroneous in so far as it is prejudicial to the interest of revenue, among other aspects, within meaning of Explanation 2(a) to section 263(1) of IT Act.”

3.

At the time of hearing, the Ld. Counsel for the assessee submitted that revisionary jurisdiction and order passed by the Ld. Pr. CIT is arbitrary, bad in law and liable to be quashed since the issue of brought forward loss had already been examined by the A.O at the time of framing assessment and due enquiry has been made on this aspect. The A.O, therefore, had taken a plausible view after due enquiry, hence, there arises no reason for the Pr. CIT to pass order u/s. 263 of the Act. It was further contended by the Ld. Counsel referring to Para 5 of the assessment order at Page 2 submitted that the assessee has already undergone corporate Insolvency Resolution process as per the Insolvency and Bankruptcy Code 2016 resulting in a change of management and that the resolution plan has been approved by the Ld. NCLT, Cuttack on 01.11.2021 and the change in management is effective from 04.04.2022. The relevant Para 5, Page 2 of the assessment order is extracted as follows: “5. The assessee in its submission has stated that the company has undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code 2016 (“IBC”) resulting in a change of management as a result of “sale as a going concern”. The Resolution Plan was approved by Ld. NCLT, Cuttack on 01.11.2021 and the change is management is effective from 04.04.2022.”

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Thereafter, the Pr. CIT had passed order u/s. 263 of the Act, dated 12.03.2026 which means such order pertains to new entity with the change of management and the revisionary order, therefore, does not pertain to the assessee. It is not open for the Pr. CIT to pass revisionary order u/s. 263 of the Act when Insolvency Resolution Process has been completed and it has been approved by NCLT, Cuttack and when the entire management is changed. In effect, it was submitted by the Ld. Counsel for the assessee that such order u/s. 263 of the Act is for different new entity.

3.1 The Ld. Counsel further demonstrates that in the returned filed as per Schedule CFL, the carry forward of losses has been set off during the year was already explained before the Department. The relevant Schedule CFL is extracted as follows:

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3.2 The Ld. Counsel further contended that therefore, entire issue of carry forward of losses has been explained before the A.O, for which, he has made specific enquiry and at the same time, as per return filed also, it has been explained to the Department.

4.

Per contra, the Ld. CIT-DR heavily placed reliance on the order of the Ld. Pr. CIT u/s. 263 of the Act.

6 Crest Steel and Power Private Limited Vs. DCIT, Central Circle-2, Bhopal ITA No. 308/RPR/2026

5.

We find substance in the contention raised by the Ld. Counsel for the assessee. That as evident from the notice u/s. 142(1) of the Act a/w. questionnaire dated 25.07.2023, there has been specific enquiry made by the A.O regarding carry forward of losses and the relevant annexure is extracted as follows:

In response to the said query, the assessee filed reply which is extracted as follows:

7 Crest Steel and Power Private Limited Vs. DCIT, Central Circle-2, Bhopal ITA No. 308/RPR/2026

8 Crest Steel and Power Private Limited Vs. DCIT, Central Circle-2, Bhopal ITA No. 308/RPR/2026

6.

We have heard the submissions of the parties herein and carefully considered all the documents/materials available on record. Admittedly,

9 Crest Steel and Power Private Limited Vs. DCIT, Central Circle-2, Bhopal ITA No. 308/RPR/2026

on the basis of the documents placed by the Ld. Counsel for the assessee, the A.O had taken a plausible view and accordingly, it was not open for the Pr. CIT to again invoke revisionary jurisdiction when the A.O had done enquiry and verification and arrived at a particular view.

7.

The Hon’ble High Court of Bombay in the case of Commissioner of Income Tax Vs. Gabrial India Ltd. (1993) 203 ITR 108 (Bom) explaining the nature and scope of power to be exercised by the Pr. CIT u/s. 263 of the Act has held and observed as follows:

“The power of suo motu revision under sub-s. (1) of s. 263 is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interest of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. An order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and, left to the Commissioner, he would have estimated the income at a higher figure than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the

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Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interest of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. There must be material available on record called for by the Commissioner to satisfy him, prima facie, that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on records to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. Any other view in the matter will amount to giving unbridled and arbitrary power to revising authority to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law. It is quasi-judicial power hedged with limitation and has to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly it is an administrative act, but on examination, "to consider", or in other words, to form an opinion that the particular order is erroneous in so far as it is prejudicial to the interest of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of reexamination and reconsideration of an order of assessment, which has already been concluded and controversy about which has been set at rest, is again set in motion. It is an important decision and the same cannot be based on the whims or caprice of the revising authority. There must be materials available from records called for by the Commissioner.— Parashuram Pottery Works Co. Ltd. vs. ITO 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC), Sirpur Paper Mills Ltd. vs. ITO 1977 CTR (AP) 138 : (1978) 114 ITR 404 (AP), Dawjee Dadabhoy & Co. vs. S.P. Jain & Anr. (1957) 31 ITR 872 (Cal) and Russell Properties Pvt. Ltd. vs. A. Chowdhury, Addl. CIT (1977) 109 ITR 229 (Cal) relied on In order to

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exercise jurisdiction under s. 263, Commissioner must have material to prima facie come to a conclusion that order of ITO is erroneous as also prejudicial to interest of Revenue.”

8.

Reverting to the facts of the present case, there are no objective purposes existing before the Ld. Pr. CIT to resort to passing order u/s. 263 of the Act and that there are no materials therefore to suggest that the Pr. CIT had arrived at a satisfaction before passing order u/s. 263 of the Act. The very issue, for which, he invoked revisionary jurisdiction, had already been enquired by the A.O and thereafter, there are no new materials prima facie before the Commissioner that the assessment order is erroneous and prejudicial to the interest of the Revenue.

Further, the Hon’ble High Court of Delhi in the case of Income 9. Tax Officer Vs. DG Housing Projects Ltd. (2012) 343 ITR 329 (Del.) on the similar issue has held and observed as follows:

“18. It is in this context that the Supreme Court in Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax, (2000) 243 ITR 83 (SC), had observed that the phrase „prejudicial to the interest of Revenue‟ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law

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and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue. 19. In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the CIT is that "order passed by the Assessing Officer may be erroneous". The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent’s computation figures but he had reservations. The CIT in the order has recorded that the consideration receivable was examined by the Assessing Officer but was not properly examined and therefore the assessment order is "erroneous". The said finding will be correct, if the CIT had examined and verified the said transaction himself and given a finding on merits. As held above, a distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and prejudicial to the interest of the Revenue and cases where the Assessing Officer conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue. In latter cases, the CIT has to examine the order of the Assessing Officer on merits or the decision taken by the Assessing Officer on merits and then hold and form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not.”

10.

We find that even proceedings u/s. 263 of the Act is illegal as per provisions of IBC Law. The assessee has already undergone corporate Insolvency Resolution process as per the Insolvency and Bankruptcy Code 2016 resulting in a change of management and that the resolution plan has been approved by the Ld. NCLT, Cuttack on 01.11.2021 and the

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change in management is effective from 04.04.2022. In view of Section 238 of IBC, 2016, no wrong could be found in the claim of the assessee. Hence, there cannot be any occasion for the Pr. CIT to resort to revisionary jurisdiction. The aforesaid view is fortified by the following judicial pronouncements:

“• CIT, Central - 3, Mumbai vs. M/s. Mahindra Holidays & Resorts India Ltd. (Bombay High Court, 2020). • Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. (Supreme Court, 2021) • Pressmasters International Pvt. Ltd. vs. State Tax Officer & Ors. (Gujarat High Court, 2023) iii) Based on principles of "clean slate policy", any proceedings prior to the takeover of the corporate debtor cannot be initiated/continued and stands permanently abated. New management took over from 04.04.2022. New management taking over an entity under IBC cannot be saddled with any unexpected proceedings and should be allowed to continue the business on a clean slate basis. iv) Reliance on PC1T vs Patanjali Foods Ltd. (2025) 175 taxmann.com 621 (Bom.) wherein it was held that notice u/s 148 issued after approval of Resolution Plan by NCLT is invalid as it relates to the period prior to the date of implementation of Resolution Plan and takeover of corporate debtor.”

11.

In view of the aforesaid facts and circumstances and as per judicial pronouncements referred above, we do not find any merit in the order of the Ld. Pr. CIT which is therefore quashed.

14 Crest Steel and Power Private Limited Vs. DCIT, Central Circle-2, Bhopal ITA No. 308/RPR/2026 12. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 31st July, 2026.

Sd/- Sd/- DR.DIPAK P. RIPOTE PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 31st July, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� /The Appellant. 2. ��यथ� /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड� फ़ाइल / Guard File. Samiran आदेशानुसार / BY ORDER, Bera, Sr. PS, // True Copy // Senior Private Secretary ITAT, Raipur आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur. Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.07.31 13:40:46 +05'30'

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