M/S. ACCORD DISTILLERS & BREWERS PRIVATE LIMITED,CHENNAI vs. PCIT, CENTRAL -2, CHENNAI, CHENNAI

ITA 2273/CHNY/2026Status: DisposedITAT Chennai14 October 2026AY 2016-179 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Principal Commissioner of Income Tax (PCIT) was not justified in invoking jurisdiction under Section 263 of the Income Tax Act, 1961. The Tribunal noted that the assessee had filed a settlement application for Assessment Years 2011-12 to 2017-18, which was admitted by the Income Tax Settlement Commission (ITSC) on 05.03.2019. A consolidated final settlement order was passed by the ITSC on 14.12.2020. Subsequently, the Assessing Officer (AO) passed a giving effect order for AY 2016-17 determining total income at Nil on 09.07.2021. The reassessment proceedings were initiated thereafter. The Tribunal found that once the ITSC decides to proceed with a case under Section 245D(1), it assumes exclusive jurisdiction. The Act does not contemplate parallel proceedings before the ITSC and the AO. Following the ITAT's decision in Shri Bhanwarlal Jain, which held that giving effect proceedings under Section 263 are parallel and the AO must refer them to the settlement commission, the Tribunal concluded that the PCIT's exercise of jurisdiction under Section 263 was not justified. The reassessment order dated 29.03.2024 was deemed not erroneous and prejudicial to the revenue. The grounds raised by the assessee were allowed, and the PCIT's order was set aside.

What were the facts?

The assessee, M/s. Accord Distillers & Brewers Private Limited, filed an appeal against an order dated 29.03.2026 passed by the Principal Commissioner of Income Tax (Central), Chennai-2, for Assessment Year 2016-17. The appeal challenged the PCIT's invocation of jurisdiction under Section 263 of the Income Tax Act, 1961, deeming a reassessment order dated 29.03.2024 erroneous and prejudicial to the revenue. The assessee argued that the reassessment order was not erroneous or prejudicial, especially since the assessment year had already been settled by the Income Tax Settlement Commission (ITSC) via an order dated 14.12.2020 under Section 245D(4), which conferred statutory finality. Furthermore, the reassessment order itself was under appeal before the CIT(A), making simultaneous revision under Section 263 impermissible.

What were the issues?

1. Whether the Principal Commissioner of Income Tax (PCIT) was justified in invoking revisionary jurisdiction under Section 263 of the Income Tax Act, 1961, when the reassessment order dated 29.03.2024 was not erroneous insofar as it was prejudicial to the interest of the revenue? (Question of law and fact, concerning Section 263). Assessee's contentions: The PCIT erred in invoking Section 263 as the reassessment order was not erroneous or prejudicial. The assessment year had already been settled by the Income Tax Settlement Commission (ITSC) under Section 245D(4) on 14.12.2020, granting statutory finality under Section 245-I, thus precluding reopening or revision. The PCIT also erred in invoking Section 263 as the reassessment order was already under appeal before the CIT(A), and Explanation 1(c) to Section 263 prohibits simultaneous revision. Relied on Omaxe Ltd. vs. ACIT (2012) and Madhana Industries Ltd. (2019), and an ITAT order dated 08.03.2024. Revenue's contentions: The PCIT had jurisdiction to reopen matters not covered by the ITSC order under Section 245D(4). Relied on para 23 of Madhana Industries Ltd. and para 7.1 of the CIT(A) order.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 144,Section 245D(4),Section 245-I,Section 148,Section 143(3),Section 245C,Section 245D(1),Section 250

AI-generated summary — verify with the full judgment below

Before: SHRI. INTURI RAMA RAO & BEFORE SHRI S.S. VISWANETHRA RAVI

Hearing: 30.07.2026Pronounced: 14.10.2026

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 29.03.2026 passed by the Principal Commissioner of Income Tax (Central), Chennai-2, for the assessment year 2016-17. 2

2.

The assessee raised ground nos. 2 to 4 challenging action of the ld.PCIT in invoking the juri iction u/s. 263 of the Act in holding

The order continues below.

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