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

ITA 1933/KOL/2026Status: DisposedITAT Hyderabad06 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 of the Income Tax Act. The reassessment order passed by the AO was not erroneous or prejudicial to the interest of the revenue. The AO had conducted necessary inquiries and applied their mind to the facts and material available, including seized materials and information from the ED. The Tribunal noted that a CBI Court order, which was brought to the PCIT's notice, had specifically found no evidence of short delivery of PDS atta or unaccounted sales by the assessee. This order confirmed full delivery based on signed documents and quality control reports, directly contradicting the allegations made by the ED and relied upon by the PCIT. The Tribunal also observed that GST proceedings against the assessee were dropped, and no significant unaccounted cash or assets were unearthed during the search, further supporting the assessee's position. The PCIT's findings were deemed to be based on surmises and conjectures, not cogent material. Therefore, the revisionary proceedings and the consequent order were quashed.

What were the facts?

The assessee, NPG Rice Mill Pvt. Ltd., engaged in milling wheat and rice, filed its return for AY 2017-18 declaring an income of 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 the 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) suggesting short delivery of PDS atta and unaccounted sales amounting to Rs. 33,54,97,028, citing statements recorded by the ED. The assessee contested this, providing evidence and relying on a CBI Court 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 the revenue? Assessee's Contentions: - The AO conducted necessary inquiries, including those related to cash transactions and milling charges, and applied their mind before accepting the returned income. The PCIT erred in deeming the assessment order erroneous for lack of inquiry, relying on the decision in CIT v. J.L. Morrison & Co. Ltd. [2014] 366 ITR 593. - The PCIT initiated revision proceedings solely based on ED action without considering that no adverse material was unearthed by the ED. The assessee referred to a CBI Court order dated 27.08.2024 which found no reason to believe for search and arrest, and no adverse statements linking the assessee to short supply or back-purchasing of PDS atta. - The CBI Court order, which was brought to the PCIT's notice, confirmed full delivery of PDS atta based on signed delivery orders and quality test reports, contradicting the ED's allegations. - GST proceedings against the assessee were dropped, further supporting the contention that no unaccounted sales occurred. - The PCIT's findings were based on surmises and conjectures, not cogent material. Revenue's Contentions: - The revenue, through the learned DR, selectively referred to a paragraph in the bail order, which the assessee contended was taken out of context and pertained to another accused.

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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