ATC TIRES PRIVATE LIMITED,MUMBAI vs. THE PRINCIPAL COMMISSIONER OF INCOME-TAX - 6, MUMBAI, MUMBAI

ITA 6468/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2020-2110 pages
AI SummaryAllowed

What were the facts?

The assessee, ATC Tires Private Limited, filed an appeal against the order of the Principal Commissioner of Income-tax (PCIT) - 6, Mumbai, dated March 20, 2026, for Assessment Year 2020-21. The PCIT had invoked Section 263 of the Income-tax Act, 1961, to revise an assessment order dated November 29, 2023, passed under Section 143(3) r.w.s. 144C(3). The original assessment order had allowed a deduction of ₹1,17,20,851/- under Section 80G. The PCIT initiated revision proceedings on the grounds that the assessment order was erroneous and prejudicial to the revenue, specifically questioning the allowability of the Section 80G deduction, as one donation receipt from United Way Mumbai indicated the contribution was for CSR activities. The assessee argued that due enquiry was made by the Assessing Officer (AO) and that the PCIT's action was bad in law.

What did the Tribunal hold?

The Tribunal held that the conditions necessary for invoking Section 263 of the Act were not satisfied. The Tribunal noted that the absence of elaborate discussion in the assessment order does not, by itself, lead to the conclusion that there was no application of mind, especially when the order expressly states that relevant details and supporting documentary evidence were perused. Citing the jurisdictional Bombay High Court's decisions in CIT v. Gabriel India Ltd. and CIT v. Fine Jewellery (India) Ltd., the Tribunal held that where the AO has made enquiries and considered the assessee's explanation, the order cannot be deemed erroneous merely because the Commissioner believes further enquiry was needed. The Tribunal found that the AO had asked for details and examined supporting material, indicating it was not a case of 'no enquiry'. The Tribunal also referred to co-ordinate bench decisions in Blue Cross Laboratories Pvt. Ltd. and Siddharth Colorchem Pvt. Ltd., which dealt with similar issues of Section 80G deduction on CSR expenditure and the invocation of Section 263. The Tribunal concluded that the AO had taken a possible view, and merely because the PCIT held a different view, the assessment order could not be considered erroneous. The impugned order of the PCIT under Section 263 was set aside, and the assessment order was restored. The appeal of the assessee was allowed.

What were the issues?

1. Whether the order passed by the PCIT under Section 263 of the Act is valid, considering the conditions of the assessment order being erroneous and prejudicial to the interests of the revenue are satisfied (Section 263). - Assessee's contention: The PCIT erred in initiating proceedings as the assessment order was not erroneous or prejudicial. The AO conducted due enquiry and applied his mind, and the PCIT's attempt to substitute the AO's view is bad in law. The PCIT also erred in relying on Explanation 2(a) and 2(b) to Section 263 without appreciating the adequate enquiry made by the AO. The PCIT also failed to appreciate that when two views are possible, the AO's view cannot be considered erroneous. - Revenue's contention: Not recorded. 2. Whether the PCIT erred in directing the AO to re-examine the allowability of deduction claimed under Section 80G of the Act amounting to ₹1,70,20,851/- (Ground 2 of appeal, though the amount mentioned in facts is ₹1,17,20,851/-) (Section 80G). - Assessee's contention: The PCIT erred by not appreciating that CSR expenditure disallowance provisions under Section 37(1) do not apply to Section 80G. Specific provisions of Section 80G only disallow deductions for contributions to Swachh Bharat Kosh and Clean Ganga Fund. The Memorandum to the Finance Bill, 2015, and FAQs from MCA clarify this. The PCIT also erred in not disputing that donations were made to approved institutions and all conditions for Section 80G were satisfied, and disregarded judicial precedents.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 144C(3),Section 80G,Section 37(1),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI SIDDHARTHA NAUTIYAL

For Respondent: Shri Manoj Kumar (CIT-DR)

PER SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. Principal Commissioner of Income-tax - 6, Mumbai vide DIN: ITBA/REV/F/REV5/2025- 26/1087675805(1) dated 20-03-2026 for the Assessment Year 2020-21. The Assessee has raised the following grounds of appeal:

Ground no. 1 - Validity of the order passed under section

The order continues below.

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