PATAKA INDUSTRIES PVT. LTD.,,KOLKATA vs. ACIT, CENTRAL CIRCLE 1(2),, KOLKATA

ITA 1353/KOL/2026Status: DisposedITAT Kolkata28 September 2026AY 2023-202415 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the revisionary jurisdiction exercised by the PCIT under Section 263 of the Income Tax Act, 1961, was invalid. The Tribunal found that the AO had conducted a specific inquiry into the donation expenditure by issuing a notice under Section 142(1) and had accepted the assessee's detailed explanation. The assessee had explained that the donation of ₹12,35,00,000/- to GD Charitable Society was for the welfare of Home Bidi Rollers, which was considered a business expenditure for employee welfare, especially during the COVID period. The Tribunal noted that the AO had taken a possible view by allowing this expenditure after detailed inquiry. Relying on the decisions in CIT vs. Gabriel India Ltd., PCIT vs. Kesoram Industries Limited, PCIT vs. Britannia Industries Limited, and Malabar Industrial Co. Ltd. vs. CIT, the Tribunal held that where the AO has taken one of the possible views, the revisionary jurisdiction under Section 263 cannot be invoked. The Tribunal also noted that the assessee had offered no objection to disallowing the donation of ₹2,36,05,000/- during rectification proceedings. Consequently, the revisionary order passed by the PCIT was quashed, and the appeal of the assessee was allowed.

What were the facts?

The assessee, Pataka Industries Pvt. Ltd., is engaged in the business of manufacturing bidis. For AY 2023-24, the assessee filed its return of income declaring a total income of ₹2,31,61,14,240/-. The assessment was framed under Section 143(3) of the Income Tax Act, 1961, assessing the income at ₹2,43,18,11,265/-. The Principal Commissioner of Income Tax (PCIT) initiated revisionary proceedings under Section 263 of the Act, challenging the assessment order. The PCIT noted that the assessee claimed an expenditure of ₹14,71,05,000/- towards donations. While the assessee had previously added back similar donations in other assessment years, it claimed this expenditure as allowable under Section 37(1) for AY 2023-24. The PCIT observed that the donation of ₹12,35,00,000/- to GD Charitable Society was for the welfare of Home Bidi Rollers, and concluded that such expenditure was inadmissible. The PCIT issued a show cause notice and subsequently passed a revisionary order dated 24.03.2026, setting aside the AO's order with a direction to re-examine the issue.

What were the issues?

1. Whether the revisionary jurisdiction exercised by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, was valid, considering the Assessing Officer (AO) had made a specific inquiry into the donation expenditure and accepted the assessee's explanation. Assessee's Contention: The assessee argued that the AO had specifically enquired about the donation expenditure vide notice under Section 142(1) dated 22.07.2024 and accepted the assessee's detailed reply dated 09.09.2024, taking a possible view. Therefore, the assessment order was neither erroneous nor prejudicial to the interest of the revenue, and the invocation of Section 263 was invalid. The assessee relied on CIT vs. Gabriel India Ltd. (Bom), PCIT vs. Kesoram Industries Limited (Cal), PCIT vs. Britannia Industries Limited, and Malabar Industrial Co. Ltd. vs. CIT (SC). Revenue's Contention: The revenue relied on the PCIT's order, arguing that no prejudice would be caused to the assessee as it would be given an opportunity in the set-aside proceedings. The revenue also highlighted that the assessee had suo motu disallowed similar donations in preceding and succeeding years, implying an inconsistency for the current year. The revenue prayed for the dismissal of the appeal.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 37(1),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

For Appellant: Shri Anil Kochar &
For Respondent: Shri Sanat Kumar Raha, DR
Hearing: 20.08.2026Pronounced: 28.09.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the Revisionary order passed by the Pr. Commissioner of Income Tax, Kolkata-1 (hereinafter referred to as the “Ld. PCIT”] dated 24.03.2026 for the AY 2023-24. 2. The only issue raised by the assessee in the various grounds of appeal is against the invalid exercise of juri iction u/s 263 of the Act thereby setting aside the order passed by the ld. AO passed u/s 143(3) of the Act dated 29.03.2025. 3. The facts in brief are that the assessee filed the return of income on 27.10.2023, declaring total income at ₹231,50,55,510/-, which was also revised on 08.12.2023, Pataka Industries Pvt. ltd.; A.Y. 2023-24 declarin

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →