NPG RICE MILL PVT. LTD.,NORTH TWENTY FOUR PARGANAS vs. PCIT, CENTRAL, KOLKATA - 2, KOLKATA

ITA 1933/KOL/2026Status: DisposedITAT Kolkata06 October 2026AY 2017-201826 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT erred in exercising revisionary jurisdiction under Section 263. The assessee's argument that the AO had conducted necessary inquiries and taken a plausible view was accepted. The Tribunal noted that the CBI Court order, which was brought to the PCIT's notice, had specifically found no evidence of short delivery of PDS atta and that the atta delivered met quality standards. The Tribunal found that the PCIT disregarded this order and relied on information from the Enforcement Directorate without cogent material. The Tribunal also rejected the revenue's selective interpretation of the CBI Court's bail order. Furthermore, the dropping of GST proceedings and the absence of significant unearthing of unaccounted assets during the search supported the assessee's contention. Consequently, the Tribunal concluded that the assessment order was not erroneous or prejudicial to the revenue, quashed the revisionary proceedings under Section 263, and allowed the assessee's appeal.

What were the facts?

The assessee, NPG Rice Mill Pvt. Ltd., engaged in milling wheat into fortified atta and PDS atta, filed its return for AY 2017-18 declaring Rs. 1,85,17,911. Reassessment proceedings were initiated, and a search under Section 132 of the Income Tax Act was conducted on December 21, 2022. The case was centralized, and the Assessing Officer (AO) completed reassessment under Section 147 on May 30, 2023, accepting the returned income. Subsequently, the Principal Commissioner of Income Tax (PCIT) issued a notice under Section 263, alleging the assessment order was erroneous and prejudicial to revenue. The PCIT based this on information from the Enforcement Directorate (ED) regarding cash transactions and alleged short delivery of PDS atta, estimating unaccounted sales of Rs. 33,54,97,028. The PCIT set aside the assessment order.

What were the issues?

1. Whether the revisionary order passed by the PCIT under Section 263 of the Income Tax Act, 1961, is invalid due to lack of jurisdiction, as the reassessment order was neither erroneous nor prejudicial to the interest of revenue? (Question of law) Assessee's Contentions: - The AO conducted necessary inquiries, considered seized materials, and applied his mind before accepting the returned income, making the assessment order plausible and not erroneous. Reliance was placed on CIT v. J.L. Morrison & Co. Ltd. [2014] 366 ITR 593. - The PCIT initiated revision proceedings based solely on ED information without considering that the ED action yielded no adverse material against the assessee. The assessee cited a CBI Court order dated August 27, 2024, which found no reason to believe for search or arrest and noted no adverse statements linking the assessee to short supply of PDS atta. - The GST proceedings against the assessee were dropped, and no unaccounted cash or assets were unearthed during the search, corroborating the absence of undisclosed sales. Revenue's Contentions: - The revenue's contentions are not explicitly detailed in the provided judgment excerpt, but the PCIT's actions imply an argument that the AO's assessment was based on insufficient inquiry, particularly concerning the information provided by the Enforcement Directorate regarding alleged short delivery of PDS atta and unaccounted sales.

Which sections of the Income-tax Act were involved?

Section 263,Section 148A,Section 148,Section 132,Section 142(1),Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

For Appellant: Shri P. Jhunjhunwala, AR
For Respondent: Shri Ranu Biswas, DR
Hearing: 20.07.2026Pronounced: 06.10.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the Revisionary order passed by the ld. Pr. Commissioner of Income Tax [hereinafter referred to as the “Ld. PCIT”] dated 26.03.2026 for the AY 2017-18. 2. The only issue raised by the assessee in various grounds of appeal is against the invalid exercise of revisionary juri iction by the ld. PCIT under section 263 of the Income Tax Act and therefore the order passed under section 263 of the Act dated 26.03.2026 is invalid and ab initio void. NPG rice Mill Pvt. Ltd; A.Y. 2017-18

3.

The facts in brief are that, the assessee is engaged in the business of milling of atta and rice and conducts

The order continues below.

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