PATSON FOODS INDIA PVT LTD.,NA vs. ARIVS.PRINCIPAL COMMISSIONER OF INCOME TAX, VALSAD

ITA 157/SRT/2026Status: DisposedITAT Surat30 September 2026AY 2022-2310 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT was not justified in invoking revisionary action under Section 263 for either of the two issues. Regarding Issue (i), concerning sundry creditors, the Tribunal found that the AO had made inquiries, and the assessee had sufficiently discharged its primary burden by filing replies supported by documentary evidence. The Tribunal noted that the assessee had not made any purchases from four of the six creditors during the current year, and in another case, full payment was made during the year, leaving no outstanding balance. Therefore, no addition under Section 68 was warranted. The Tribunal also held that the assessee is not responsible if creditors do not respond to notices under Section 133(6) when the primary documents are provided by the assessee. Regarding Issue (ii), concerning short-deduction of TDS under Section 194Q, the Tribunal found that the AO had made inquiries, and the assessee had filed relevant documents. The Tribunal observed that TDS was deducted as required by law from 01.07.2021, and the PCIT's inference of short-deduction based on the entire financial year's purchases was incorrect. The Tribunal concluded that the short-deduction of TDS was not established, and the AO could not be faulted for not making a disallowance under Section 40(a)(ia). Consequently, the Tribunal quashed the revision order and restored the original assessment order passed by the AO.

What were the facts?

The assessee, Patson Foods India Pvt. Ltd., filed its return of income for Assessment Year 2022-23. The Assessing Officer (AO) completed the assessment under Section 143(3) read with Section 144B of the Income-tax Act, 1961. Subsequently, the Principal Commissioner of Income-Tax (PCIT), Valsad, initiated revision proceedings under Section 263 of the Act, issuing a show-cause notice and passing a revision order dated 20.01.2026. The PCIT viewed the AO's assessment order as erroneous and prejudicial to the interest of revenue. Aggrieved by this revision order, the assessee has filed an appeal before the Income Tax Appellate Tribunal (ITAT), Surat Bench.

What were the issues?

The Tribunal had to decide whether the revision order passed by the PCIT under Section 263 was justified. The PCIT identified two issues for invoking revisionary jurisdiction: 1. **Question of Law:** Whether the AO failed to make an addition under Section 68 of the Income-tax Act, 1961, in respect of sundry creditors, making the assessment order erroneous and prejudicial to the revenue. * **Assessee's Contention:** The PCIT's observations were factually incorrect. The AO had made inquiries, and the assessee had provided documentary evidence, including ledger accounts and bank statements. The assessee argued that for four creditors, no purchases were made in the current year, and for another, full payment was made during the year, meaning no credit entry or outstanding balance existed for addition under Section 68. * **Revenue's Contention:** The PCIT passed the order ex-parte. The PCIT only directed the AO to re-examine the issue, causing no prejudice. The AO should have examined the matter further as notices under Section 133(6) to creditors were not responded to. 2. **Question of Law:** Whether the AO failed to make a disallowance under Section 40(a)(ia) of the Income-tax Act, 1961, on account of short-deduction of TDS under Section 194Q, making the assessment order erroneous and prejudicial to the revenue. * **Assessee's Contention:** The PCIT's observations were factually incorrect. The AO had made inquiries regarding purchases and TDS, and the assessee had provided purchase registers, sales registers, party-wise purchase details, and TDS return acknowledgments. The assessee contended that TDS under Section 194Q was introduced w.e.f. 01.07.2021, and TDS was deducted on all purchases made after that date, with no short-deduction. * **Revenue's Contention:** The PCIT passed the order ex-parte. The PCIT only directed the AO to re-examine the issue, causing no prejudice.

Which sections of the Income-tax Act were involved?

Section 68,Section 40(a)(ia),Section 194Q,Section 263,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Appellant: Shri Darshit J Naik, CA
For Respondent: Shri J.K. Chandnani, CIT(DR)
Hearing: 02.07.2026Pronounced: 30.09.2026

Per B.M. Biyani, A.M.:

Feeling aggrieved by the revision-order dated 20.01.2026 passed by learned Pr. Commissioner of Income-Tax, Valsad [“Ld. PCIT”] u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of the assessment-order dated 20.03.2024 passed by learned Assessment Unit of Income-tax Department [“Ld. AO”] u/s 143(3) r.w.s. 144B of the Act for Assessment-Year [“AY”]

Patson Foods India Pvt Ltd. ITA No. 157/Srt/2026 – AY 2022-23

2022-23, the assessee has filed this appeal on the grounds raise

The order continues below.

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