NAEEM SIRAJUDDIN TIRMIZI,AHMEDABAD vs. PCIT (CENTRAL), AHMEDABAD, AHMEDABAD

These are batch of 7 appeals. Each of the appeals involving same issue, therefore, the appeals were heard together and are being disposed by way of a common order. With the consent of both the sides we have ITA No.2108 to 2113/AHD/2026 Assessment Year 2014-2015 to 2019-2020 & 2021-2022

The Assessee has raised the following grounds of Appeal:

The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of appeal.

We have heard both the sides and have perused the material on record.

The solitary issue that arises for consideration is whether in the facts and circumstances of the present case the Learned PCIT had juri iction to exercise powers of revision under Section 263 of the Act.

It is admitted position that the Learned PCIT had exercised power of revision under Section 263 of the Act on account of the reason that the Assessing Officer had failed to record in the Assessment Order the satisfaction for initiating penalty proceedings under Section 271D read with Section 269SS of the Act. According to the Learned PCIT, the aforesaid failure on the part of the Assessing Officer made the Assessment Order erroneous in so far as prejudicial to the interest of Revenue.

When the appeal was taken up for hearing the Learned Authorised Representative for the Assessee placed on record the following judicial precedents (a) Judgment of the Hon'ble Gujarat High Court in the case of Dilip Patel Vs. Principal Commission of Income Tax (Central): 311 Taxman 250, (a) (Gujarat); Circular No.09/DV/2016 dated 26/04/2016 issued by the Central Board of Direct Taxes (CBDT) and the decision of the Ahmedabad Bench of the Tribunal in the case of Aamrakunj Realty Limited Vs. Principal Commissioner of Income Tax, Ahmedabad -1 [ITA No.111/AHD/2026, Assessment Year:2021-2022, Dated 18/08/2026. It was submitted by the Learned Authorized Representative for the Assessee that in identical facts and circumstances, the Hon’ble Gujarat High Court had quashed the order of revision passed under Section 263 of the Act. Assessment Year 2014-2015 to 2019-2020 & 2021-2022

Per Contra, Learned Departmental Representative placed reliance upon the order passed by the Learned PCIT.

We have given thoughtful consideration to the rival submissions.

On perusal of the judgment of the Hon’ble Gujarat High Court in the case of Dilip Patel Vs. Principal Commission of Income Tax (Central): [2026] 311 Taxman 250 (Gujarat) [01/05/2026], it emerges that Learned PCIT has issued show-cause notice under Section 263 of the Act seeking to set-aside the Assessment Order passed in that case, inter alia, on account of failure of the Assessing Officer to record satisfaction and/or to initiate penalty proceedings under Section 271D for alleged violation of the provisions of Section 269SS (accepting cash loans/payments) of the Act. The stand taken by the Revenue was that the failure to initiate penalty proceeding under Section 271D of the Act had rendered the assessment order erroneous in so far as prejudicial to the interest of the Revenue. On the other hand, it was contended on behalf of the Assessee that the Assessing Officer had no juri iction under the provisions of Section 271D of the Act to initiate proceedings since the assessment order was passed before 01/04/2025. Accepting the contention of the Assessee, the Hon’ble Gujarat High Court held that the Assessing Officer had juri iction to impose the penalty with effect from 01/04/2025. Prior to this, the penalty under Section 271D of the Act could have been levied by the Joint/Additional Commissioner of Income Tax only. The relevant extract of the decision of the Hon’ble Gujarat High Court reads as under:

6 A perusal of the provision of Section 271D of the Act reveals that the Assessing Officer is authorized or has the juri iction to impose the penalty only on or after 1st Day of April, 2025 and hence, when the Assessment Order was passed on 19.06.2023, the Assessing Officer could not have passed any order or to even initiate proceedings against the assessee for violation of provision of Section 269SS of the Act and thereby imposing the penalty under Section 271D of the Act. Thus, the respondent has manifestly erred in not examining the provision of Section 269SS read with Section 271D of the Act and, hence, the issuance of the notice for alleged inaction of the Assessing Officer to initiate and impose the penalty under Section 271D of the Act is erroneous and illegal. Hence, the revision proceedings under Section 263 of the Act become vulnerable.”

In the present case also it is admitted position that the Assessment Order has been passed prior to 01/04/2025. Therefore, the Learned PCIT proceeded on incorrect understanding of legal position. Accordingly, we hold that the finding returned by the Learned PCIT that the Assessing Officer had erred in not recording requisite satisfaction for initiating penalty proceedings under Section 271D of the Act cannot be sustained.

Further, even bare perusal of Section 271D of the Act would show that the said section does not provide for recording of satisfaction by the Assessment Year 2014-2015 to 2019-2020 & 2021-2022