DESIGNBOXED CREATIVES (INDIA) PRIVATE LIMITED,GUJARAT vs. RAJARSHI DWIVEDY, PCIT (CENTRAL), SURAT, SURAT

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ITA 464/SRT/2025Status: DisposedITAT Surat22 June 2026AY 2020-215 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional evidence filed by the assessee and remanded the matter back to the PCIT. The PCIT was directed to consider these details and decide the revisionary order after giving the assessee a proper opportunity of hearing, adhering to principles of natural justice.

What were the facts?

The assessee's assessment order was revised by the PCIT under Section 263, who found that the Assessing Officer (AO) had not adequately verified short TDS deductions, leading to a potential disallowance under Section 40(a)(ia). The assessee argued that they were not given sufficient opportunity to present their case before the PCIT.

What were the issues?

Whether the PCIT correctly invoked Section 263 when the assessee was not afforded sufficient opportunity to present their case and whether additional evidence should be considered.

Which sections of the Income-tax Act were involved?

Section 263,Section 40(a)(ia),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT ‘DB’ BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI BHAGIRATH MAL BIYANI&

For Appellant: Ms. Priyanshi Chokshi, Advocate
For Respondent: Shri Aashish Pophare, CIT -DR
Hearing: 16.06.2026Pronounced: 22.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT ‘DB’ BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER ITA No.463/SRT/2025 (Assessment Year: 2021-22) & ITA No.464/SRT/2025 (Assessment Year: 2020-21) M/s. Designboxed Creatives (India) Rajarshi Dwivedy, PCIT (Central), Room No.501, 5th Floor, Private Limited, 625 ITC Building, Aayakar Bhawan, Majura Gate Ring Road, Vs. Near Majura Gate, Surat Opp New Civil Hospital, Gujarat Surat PAN:AAECD5463H (Appellant) : (Respondent) : Shri Dinesh Kukreja, Advocate & Assessee by Ms. Priyanshi Chokshi, Advocate Respondent by : Shri Aashish Pophare, CIT -DR Date of Hearing : 16.06.2026 Date of Pronouncement : 22.06.2026 O R D E R PER : SUCHITRA KAMBLE, J M: These appeals filed by the assessee are against the orders passed by the Learned Principal Commissioner of Income (Central), (in short “PCIT”), Surat even dated 29.03.2025 for the Assessment Year (in short “A.Y.”) 2020-21 & 2021-22.

2.

For the sake of convenience, we are taking ITA No.463/SRT/2025 for A.Y. 2021-22.

3.

The assessee has raised the following grounds of appeal:

“1.In the facts and circumstances of the case and in law, the learned Principal Commissioner of Income Tax (Central), Surat has erred in reopening the assessment completed u/s. 143(3) of the Income Tax Act, 1961 by invoking section 263 of the Income Tax Act, 1961. 2. In the facts and circumstances of the case and in law, the learned PCIT (Central), Surat has erred in holding that the assessment order dated 29.03.2023 passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue, without appreciating that the Ld. AO had made detailed inquiries during the reassessment proceedings. 3. In the facts and circumstances of the case and in law, the learned PCIT has failed to appreciate that the Assessing Officer, during the course of reassessment proceedings, had considered all relevant details, including the nature and allowability of expenses and the applicability of provisions of section 40(a)(ia), and passed the order after due verification 4. In the facts and circumstances of the case the Ld. PCIT failed to establish that the AO's order suffered from any legal infirmity or non-application of mind, and has merely substituted his own opinion, which is not permissible under the scope of section 263 as laid down by various judicial precedents including that of the Hon'ble Supreme Court. 5. The learned PCIT has grossly erred in concluding that the Assessing Officer did not examine the issue of TDS short deduction and unexplained expenditure, merely based on a different interpretation of facts, which is not a valid ground to invoke jurisdiction u/s 263 of the Act. 6. The learned PCIT has erred in directing the AO to disallow 30% of Rs. 2,45,02,528/- under section 40(a)(ia) without giving the assessee a fair and reasonable opportunity to explain or rebut the findings during the proceedings. 7. The learned PCIT has erred in issuing directions to initiate penalty proceedings without any finding of concealment or furnishing of inaccurate particulars of income, in violation of settled principles of law. 8. The order passed u/s 263 of the Act is bad in law, without jurisdiction, and liable to be quashed.” 3. The assessee filed return of income for A.Y. 2021-22 on 10.02.2021 declaring a total income of Rs.12,83,496/-. Subsequently, the case was selected for compulsory scrutiny on the basis of CBDT instructions dated 03.06.2022. The assessment was completed vide assessment order dated 31.12.2022 determining total assessed income at Rs.22,26,94,241/-. The PCIT observed that the assessee has recorded several expenses in its profit & loss account which requires the deduction of tax at source. However, on comparison of the amount of expenses as per the profit & loss account with item No.34(a) of Form 3CD, the PCIT observed that the assessee has deducted tax at a lesser amount than the amount claimed in the profit & loss account. Thus, the PCIT observed that a short deduction of TDS consequently invokes the provision of section 40(a)(ia) of the Income Tax Act, 1961 (in short “the Act”) resulting in a disallowance of 30% of such an amount. In assessee’s case, disallowance of 30% of Rs.2,45,02,528/- should have been made by the Assessing Officer (in short “AO”). As per the PCIT, the AO did not conduct adequate inquiries or verification regarding the short deduction of tax and thus passed the assessment order. Show cause notice u/s 263 of the Act was issued on 07.03.2025 to the assessee. The assessee filed response on 15.03.2025 thereby seeking adjournment request. The PCIT, considering the date of limitation, has adjourned the mater to 24.03.2025 and on the said date since no response received from the assessee, the PCIT decided the matter u/s 263 of the Act and passed the order on 29.03.2025 thereby directing the AO to frame fresh assessment order.

4.

Being aggrieved by the order u/s 263 of the Act, the assessee filed appeal before the Tribunal.

5.

The Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the PCIT has not given opportunity to the assessee for contesting the show cause notice issued by the PCIT. At the time of hearing, the assessee has filed application under rule 29 of the Income Tax Appellate Tribunal Rules, 1963 for additional evidences which are necessary to decide the case. The Ld. AR requested that the matter may be remanded back to the file of the PCIT for taking on record these details and decide the revisionary order accordingly.

6.

The Ld. Departmental Representative (in short “Ld. DR”) for the Revenue relied upon the order u/s 263 of the Act passed by the PCIT.

7.

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee was not given sufficient opportunity by the PCIT and the documents filed by the assessee before us require proper verification and decide the fate of the revision u/s 263 in assessee’s case. Therefore, the additional evidence filed by the assessee before us are admitted and the matter is remanded back to the file of the PCIT to take into consideration these details and decide/adjudicate the issues accordingly as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, ITA No.463/SRT/2025 for A.Y. 2021-22 is partly allowed for statistical purpose.

8.

As regards ITA No.464/SRT/2025 for A.Y. 2020-21, the issue is identical and the directions given in the earlier appeal hereinabove should be followed in this appeal as well.

9.

In result, both the appeals filed by the assessee are partly allowed for statistical purpose.

Order pronounced in the open court on 22.06.2026

Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat; Dated: 22.06.2026 * Kishore, Sr. P.S.

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order,

Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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