UMESH NAROTTAM UDESHI,MUMBAI,MAHARASHTRA vs. PRINCIPAL COMMISSIONER OF INCOME TAX-19,MUMBAI, MUMBAI, MAHARASHTRA

ITA 3946/MUM/2026Status: DisposedITAT Mumbai22 September 2026AY 2017-188 pages
AI SummaryRemanded

What were the facts?

The assessee, Umesh Narottam Udeshi, filed an appeal against the revisionary order passed by the Principal Commissioner of Income Tax (PCIT), Mumbai-19, under Section 263 of the Income Tax Act, 1961, for Assessment Year 2017-18. The PCIT's order dated 23.03.2026 set aside the Assessing Officer's (AO) reassessment order dated 26.05.2023. The reassessment was initiated under Section 147 based on information suggesting bogus purchases of Rs. 10,17,09,371/- from ONEWORLD Industries. The AO had added Rs. 5,05,29,482/-, representing the outstanding balance of purchases, while the PCIT believed the entire amount should have been added. The assessee had submitted various documents during the reassessment proceedings. The PCIT invoked revisionary powers based on a proposal from the ITO and Range Head, alleging the AO's order was erroneous and prejudicial to revenue. The PCIT's order was passed ex parte, stating the assessee did not respond or seek adjournment.

What did the Tribunal hold?

The Tribunal held that the PCIT's order was passed in gross violation of the principles of natural justice. The PCIT recorded that the assessee had not responded to the show cause notice nor sought an adjournment. However, the Tribunal found, based on the paper book, that the assessee had indeed responded on 04.03.2026, prior to the hearing date of 05.03.2026, and had specifically requested an adjournment due to illness and the need to compile written submissions. This factual position contradicted the PCIT's premise for passing an ex parte order. Consequently, the Tribunal set aside the PCIT's order and restored the matter to the file of the PCIT for fresh adjudication. The assessee was granted liberty to raise all contentions, including jurisdictional aspects, and was directed to cooperate in the de novo proceedings without seeking unnecessary adjournments. The Tribunal refrained from deciding on the contentions regarding the initiation of proceedings at the instance of the AO/Range Head and the merger of issues with the CIT(A)'s order, leaving them open to be urged before the PCIT.

What were the issues?

1. Whether the PCIT erred in invoking revisionary jurisdiction under Section 263 of the Income Tax Act, 1961, when the AO's order was not erroneous and not prejudicial to the interest of the revenue, as argued by the assessee. 2. Whether the PCIT erred in passing an ex parte order under Section 263 without affording the assessee a reasonable opportunity of being heard, despite the assessee having sought an adjournment on medical grounds, as contended by the assessee. 3. Whether the PCIT had the jurisdiction to revise the order when the issue had already been adjudicated by the CIT(A) and had merged with the CIT(A)'s order, as argued by the assessee. Assessee's Contentions: - The AO's order was not erroneous as it was based on a conscious and plausible view after examining all material, and the addition was restricted to outstanding liabilities, not bogus purchases. The CIT(A) had also upheld this view. - The PCIT's finding that the assessee did not respond or seek adjournment was factually incorrect, as an adjournment was sought prior to the hearing date due to ill-health. - The revisionary proceedings were initiated at the instance of the AO/Range Head, not on the independent application of mind by the PCIT. - The issue had merged with the CIT(A)'s order, thus ousting the PCIT's jurisdiction under Section 263. Reliance was placed on Malabar Industrial Co. Ltd. v. CIT. Revenue's Contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 148,Section 142(1),Section 144B,Section 33B,Section 254

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL

For Respondent: Smt. Sujatha Iyyanger, Sr. DR
Pronounced: 22.09.2026

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by assessee is against the revisionary order of the ld. PCIT, Mumbai-19, Order No. ITBA/REV/F/REV5/2025- 26/1087782449(1) dated 23.03.2026 passed u/s. 263 of the Income- tax Act, 1961 (‘the Act’) dated 26.05.2023, for Assessment Year 2017-

18.2.

Grounds of appeal raised by the assessee read as under: 1) Ld. PCIT, Mumbai-19 is erred in reviewing order of ld. A

The order continues below.

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