SHAGUN SINGHAL,LUDHIANA vs. PRINCIPAL COMMISSIONER OF INCOME TAX, (CENTRAL), LUDHIANA, LUDHIANA

ITA 899/CHANDI/2026Status: DisposedITAT Chandigarh01 October 2026AY 2022-236 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that for invoking Section 263, both conditions – that the AO's order is erroneous and prejudicial to the revenue – must be met. It distinguished between a lack of inquiry and an inadequate inquiry. The Tribunal noted that the AO had issued a notice under Section 142(1) and received detailed responses from the assessee, including documents and explanations regarding the nature of receipts as consultancy charges, not salary. The Tribunal found that the assessee's prior employment as a salaried individual with the same company did not, by itself, determine the character of receipts in the current year. The Pr. CIT had not provided material to demonstrate an employer-employee relationship persisted. The Tribunal concluded that the AO had made an inquiry and applied his mind, even if the order lacked elaborate discussion. The Pr. CIT's differing view, without substantiating material or showing the AO's view was unsustainable in law, did not warrant revision. Therefore, the Pr. CIT's order under Section 263 was set aside, and the AO's assessment order was restored.

What were the facts?

The assessee, Ms. Shagun Singhal, filed her return of income for Assessment Year 2022-23, declaring income from profession on a presumptive basis under Section 44ADA of the Income-tax Act, 1961. She reported gross professional receipts of Rs. 29,76,250/- from M/s Manikaran Power Ltd. and declared a net income of Rs. 15,00,000/-. The Assessing Officer (AO) completed the assessment under Section 143(3) on March 27, 2024, accepting the returned income. Subsequently, the Principal Commissioner of Income-tax (Pr. CIT) initiated revision proceedings under Section 263, viewing the assessment order as erroneous and prejudicial to the revenue. The Pr. CIT believed the assessee was ineligible for Section 44ADA, citing prior salary receipts from the same company and the nature of services (management and marketing strategy consultancy) not falling under Section 44AA(1). The Pr. CIT also felt the AO had not properly examined the claim.

What were the issues?

1. Whether the assessment order passed by the Assessing Officer under Section 143(3) is erroneous and prejudicial to the interests of the Revenue, thereby justifying the invocation of revisional jurisdiction under Section 263 of the Income-tax Act, 1961, concerning the assessee's eligibility to offer income under Section 44ADA for Assessment Year 2022-23? Assessee's contentions: The assessee argued that the issue was examined by the AO during scrutiny assessment. They provided notices under Section 142(1), replies, documents including income returns, income computation, reconciliation with Form 26AS, consultancy agreement, GST registration, and GST returns. The assessee clarified that the receipts were consultancy charges, not salary, and that the services rendered were technical consultancy falling under Section 44AA(1), making them eligible for Section 44ADA. They relied on the fact that receipts were subject to TDS under Section 194J and GST. Revenue's contentions: The Revenue, through the learned CIT-DR, supported the Pr. CIT's order, contending that the AO failed to properly examine the assessee's eligibility for the benefit of Section 44ADA.

Which sections of the Income-tax Act were involved?

Section 44ADA,Section 44AA(1),Section 143(3),Section 263,Section 142(1),Section 194J

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM

For Respondent: Smt. Vandana Vijay Mohite (CIT) – Ld. DR
Pronounced: 01.10.2026

RAJESH DAMODARLAL SHARMA (Judicial Member)

1.

This appeal by the assessee is directed against the revisionary order dated 25.02.2026 passed by the learned Principal Commissioner of Income- tax (Pr. CIT) u/s 263 of the Income-tax Act, 1961 proposing revisions of an assessment order as framed by Ld. AO u/s 143(3) on 27.03.2024. 2. The brief facts of the case are that the assessee filed her return of income declaring income from profession on presumptive basis

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 44ADA

All 98 judgments and leading authorities on Section 44ADA →

Recent GST High Court judgments

Search GST case law →