HANOVER INTERNATIONAL SUPPORT SERVICES PRIVATE LIMITED,AHMEDABAD vs. ASSESSING OFFICER, INCOMETAX OFFICE, VEJALPUR

ITA 1787/AHD/2026Status: DisposedITAT Ahmedabad12 October 2026AY 2021-228 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the PCIT lacked jurisdiction to exercise revisionary powers under Section 263. The primary issue was whether the PCIT was justified in invoking Section 263. The Tribunal noted that for revision, the AO's order must be both erroneous and prejudicial. Explanation 2(a) to Section 263(1) deems an order erroneous if passed without making required inquiries or verifications. The Tribunal found that the AO had actively inquired into the purchases of capital assets. The assessee had provided complete purchase details, including invoices, ledger accounts, bank statements showing payments through banking channels, and the fixed asset register. The AO had examined these and formed a plausible view on the genuineness of the transactions. The DGARM report was not available to the AO during assessment. Furthermore, the report was dated 22/07/2020 and covered GST data only up to 31/03/2020, while the assessee's purchases were made in FY 2020-21. The supplier was listed as a fake ITC availer (List B), not a fake invoice issuer (List A). The GST registration of the supplier was not cancelled. Therefore, the deeming fiction in Explanation 2(a) to Section 263(1) was not attracted, and the PCIT's order was quashed, restoring the original assessment order. The technical grounds were allowed, and merit grounds were rendered infructuous.

What were the facts?

The assessee, Hanover International Support Services Private Limited, filed its return for Assessment Year 2021-2022. The Assessing Officer (AO) passed an assessment order under Section 143(3) r.w.s. 144C(3) r.w.s. 144B on 26/12/2023, determining total income at INR.32,17,677/- after an addition of INR.10,92,454/-. The Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263 of the Income-Tax Act, 1961, issuing a Show Cause Notice on 10/09/2025. The PCIT alleged the AO failed to examine alleged bogus purchases from a supplier flagged in a Directorate General of Analytics and Risk Management (DGARM) report. The PCIT passed an order on 30/03/2026, setting aside the assessment order and directing the AO to pass a fresh assessment order. The assessee appealed this revision order.

What were the issues?

1. Whether the PCIT erred in passing an order under Section 263 based on a factually erroneous show cause notice regarding the party and value of purchases? (Mixed law and fact, turns on Section 263). 2. Whether the PCIT ought to have issued a fresh notice after the assessee highlighted errors in the show cause notice before proceeding? (Mixed law and fact, turns on Section 263). 3. Whether the PCIT erred in holding purchases of Rs.1,68,82,436 as bogus under Section 69C while passing an order under Section 263? (Mixed law and fact, turns on Section 263 and Section 69C). Assessee's Contentions: - The revision order under Section 263 was vitiated by a factually erroneous show cause notice. - The DGARM report, relied upon by the PCIT, was not part of the assessment record before the AO and therefore could not form the basis for revision under Section 263. - The DGARM report distinguished between 'fake invoice issuers' (List A) and 'fake ITC availers' (List B). The supplier, M/s Data Tech, was in List B, not List A, and the PCIT wrongly treated it as a fake invoice issuer. - The DGARM report covered transactions up to 31/03/2020, while the assessee's purchases were made in FY 2020-21 (AY 2021-22), making the report irrelevant. - The GST department had not cancelled the registration of M/s Data Tech, unlike in cases of fake invoice issuers. Revenue's Contentions: - The DGARM information constituted tangible, credible risk information that the AO failed to verify, rendering the assessment order erroneous and prejudicial to the revenue. - Under Explanation 2(a) to Section 263(1), an assessment order passed without necessary inquiries or verifications is deemed erroneous and prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 69C,Section 143(3),Section 144B,Section 144C(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, C” BENCH, AHMEDABAD

Per Rahul Chaudhary, Judicial Member:

1.

The present appeal has been preferred by the Assessee against the Order, dated 30/03/2026, passed by the Learned Principal Commissioner of Income Tax, Ahmedabad-1 [hereinafter referred to as the ‘PCIT’] under Section 263 of Income-Tax Act, 1961 (for short ‘the Act’) whereby the Assessment Order, dated 26/12/2023, of the Act for the Assessment Year 2021-2022 was set aside.

2.

The Assessee has raised following grounds of appeal: On Technical Grounds

1.

Ld. PCIT has grossly erred by passing an order u/s 263 whe

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →