SHARAD KESHRI,HIRA PANNA JEWELLERS vs. PCIT(CENTRAL), PATNA

ITA 338/PAT/2026Status: DisposedITAT Patna22 October 2026AY 2022-2319 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the PCIT's order under Section 263 was not bad in law. Regarding the initiation of proceedings with duplicate show-cause notices, the Tribunal noted that the first page of the PCIT's order correctly referred to the assessment order under Section 143(3), and the mention of Section 147 was a typographical error. The Tribunal also found that the PCIT's conclusions were related to the assessee, and objections regarding unrelated transactions were not sustainable under Section 292B. The Tribunal upheld the PCIT's findings on the re-examination of property investment (Ground No. 7) and the alleged unaccounted income from repairing activities (Ground No. 8), stating that the PCIT had correctly identified deficiencies in the AO's inquiry. Citing the case of CIT v. Shree Manjunathesware Packing Products & Camphor Works [1998] 231 ITR 53 (SC), the Tribunal noted that the PCIT's powers under Section 263 are of wide amplitude and it is sufficient if the PCIT comes to a prima facie conclusion that the AO's order was erroneous and prejudicial to the Revenue, without necessarily recording a final conclusion on merits. Therefore, while Grounds 7 and 8 were allowed, the rest of the grounds were dismissed, and the PCIT's order was upheld. The appeal was partly allowed.

What were the facts?

The assessee, Sharad Keshri, filed an appeal against an order passed by the Principal Commissioner of Income Tax (PCIT), Patna, under Section 263 of the Income Tax Act, 1961, for Assessment Year 2022-23. The PCIT had set aside the assessment order passed by the Assessing Officer (AO) under Section 143(3) on March 31, 2024, which had assessed the total income at ₹99,51,030/-. The PCIT initiated revision proceedings citing that the assessment order was passed without proper verification of investment in immovable property, a repairing register, and unrecorded cash transactions, deeming it erroneous and prejudicial to the interests of the Revenue. The assessee contended that the AO had completed the assessment after due inquiry, including a search and seizure action on November 19, 2022, and had considered seized documents. The PCIT directed the AO to pass a fresh assessment order after detailed inquiries.

What were the issues?

1. Whether the impugned order under Section 263 is bad in law, without jurisdiction, and liable to be quashed due to improper application of mind and factually incorrect premises, as argued by the assessee. 2. Whether the initiation of Section 263 proceedings with duplicate show-cause notices for the same assessee, AY, and issues renders the proceedings procedurally invalid, as argued by the assessee. 3. Whether the PCIT erred in invoking Section 263 without satisfying the mandatory twin conditions that the assessment order is both erroneous and prejudicial to the interests of the Revenue, as argued by the assessee. 4. Whether the PCIT wrongly invoked Explanation 2(a) to Section 263, as the assessment was completed after due enquiry and application of mind, and not a case of lack of enquiry, as argued by the assessee. 5. Whether the impugned order is based on a mere change of opinion on the adequacy of enquiry conducted by the AO, which is impermissible, as argued by the assessee. 6. Whether the order passed under Section 263 is non-speaking, arbitrary, and passed without considering the submissions and evidence filed by the assessee, as argued by the assessee. 7. Whether the PCIT erred in directing re-examination of property investment in the hands of the assessee, despite it belonging to a separate legal entity, rendering the assumption of jurisdiction unsustainable, as argued by the assessee. 8. Whether the finding regarding alleged unaccounted income from repairing activities is without material basis or quantification, hence no prejudice to Revenue arises, as argued by the assessee. 9. Whether the PCIT misappreciated seized documents, treating reconciliation/business entries as unrecorded transactions without supporting evidence, as argued by the assessee. The Revenue did not record any specific arguments in the judgment, but its stance is implicit in the PCIT's order which found the assessment order erroneous and prejudicial to revenue.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 147,Section 263,Section 292B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA ‘DB’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

For Appellant: CA. प्रत्यर्थी के ओर से/

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Pr. Commissioner of Income Tax (Central), Patna [hereinafter referred to as Ld. 'PCIT'] passed u/s 263 of the Act for AY 2022-23 dated 31.03.2026. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: ITA No(s). 338/PAT/2026 Assessment Year(s) 2022-23 Sharad Keshri. "

1.

The impugned order u/s 263 dated

The order continues below.

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