M/S BIMBO BAKERIES INDIA PVT. LTD.,ALWAR vs. PCIT (CENTRAL), JAIPUR, JAIPUR

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ITA 1281/JPR/2026Status: DisposedITAT Jaipur26 October 2026AY 2021-228 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the revision under section 263 is to correct errors, not to re-examine a completed assessment. The twin conditions for revision – that the order is erroneous and prejudicial to revenue – were not satisfied. On the first issue (loans), the Tribunal found that the AO had indeed made inquiries, including a specific notice under section 142(1) dated 30.11.2023, which reproduced the auditor's note and called for documentary evidence. The assessee provided a reply, which the AO accepted. The PCIT's order failed to address this inquiry or demonstrate inadequacy. The Tribunal noted that the mode of receipt of loans is a matter for penalty under section 269SS, not necessarily an error in assessment. The ratio of Ganpat Ram Bishnoi (supra) was applied, stating that revision cannot be invoked merely because more inquiry *could* have been conducted. On the second issue (accounts variation), the Tribunal found that the PCIT's order and show cause notice did not specify which asset or liability differed, by how much, or for which year. The AO had examined amalgamation details, and the variation as of 31.03.2020 was a reclassification and set-off, not affecting the current year's income. The PCIT failed to show how this variation impacted the income or caused revenue loss. Therefore, the PCIT's order was quashed, and the AO's assessment order was restored.

What were the facts?

The assessee, M/s Bimbo Bakeries India Private Limited (formerly Ready Roti India Private Limited), filed its return of income for Assessment Year 2021-22 declaring a total income of Rs 14,22,15,640. The assessment was completed by the Assessing Officer (AO) under section 143(3) on 27.12.2023, accepting the returned income. The Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under section 263, issuing a show cause notice on three issues: share premium, acceptance of loans, and variation in consolidated vs. standalone accounts. The PCIT dropped the share premium issue but set aside the assessment order on the other two, directing the AO to verify the loans and the variation in accounts, holding the AO's order erroneous and prejudicial to revenue. The assessee appealed this order to the ITAT.

What were the issues?

1. Whether the order passed by the PCIT under section 263 is illegal and bad in law, and thus liable to be quashed, considering the facts and circumstances of the case? 2. Whether the PCIT erred in holding that the AO's order under section 143(3) is erroneous and prejudicial to the interest of revenue on the grounds of (i) non-verification of loans from 13 persons specified in clause 31(a) of Form 3CD, and (ii) non-verification of the variation between consolidated and standalone annual accounts, when the AO had made necessary inquiries and accepted the loans, and the variation in accounts did not pertain to the assessment year under consideration? Assessee's Contentions: The assessee argued that the AO had made necessary inquiries regarding the loans, providing documentary evidence and explanations, and that the variation in consolidated and standalone accounts related to a prior period (amalgamation effective 01.04.2020) and was a matter of presentation, not affecting the income of the current year. Reliance was placed on CIT v. Ganpat Ram Bishnoi [2008] 296 ITR 292 (Raj) and CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom). Revenue's Contentions: The revenue contended that the AO did not make the inquiries that should have been made, thus falling under clause (a) of Explanation 2 to section 263.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 68,Section 269SS

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, JAIPUR

Before: Shri Kuldip Singh & Shri Prakash

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, JAIPUR (PHYSICAL HEARING) Before: Shri Kuldip Singh, Judicial Member And Shri Prakash, Accountant Member

ITA No: 1281/JPR/2026 Assessment Year: 2021-22

M/s Bimbo Bakeries India PCIT (Central), Private Limited, Jaipur (Respondent) F-28, RIICO Industrial Area, Vs Sare Khurd, Alwar PAN: AAACT7134P (Appellant) Assessee Represented: Sh. P. C. Parwal, CA Revenue Represented: Sh. Ananad Swaroop, CIT Date of hearing : 05-10-2026 Date of pronouncement : 26-10-2026 आदेश/ORDER

PER : PRAKASH, ACCOUNTANT MEMBER:-

1.

This appeal by the Assessee is directed against the order of the learned Principal Commissioner of Income Tax (Central), Jaipur [hereinafter referred to as "the learned PCIT"] dated 26.03.2026 passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), by which the assessment order dated 27.12.2023 passed by the Assessing Officer (hereinafter referred to as "the AO") under section 143(3) of the Act has been set aside. The assessment order is in the earlier name of the assessee, Ready Roti India Private Limited. The PAN in both orders is the same.

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd. 2. The grounds of appeal raised by the Assessee before us in the memorandum of appeal in Form No. 36 read as under:

"1. Under the facts and circumstances of the case, order passed by the Ld. PCIT u/s 263 is illegal & bad in law and the same be quashed.

2.

The Ld. PCIT has erred on facts and in law in holding that the order passed by AO u/s 143(3) dt. 27.12.2023 is erroneous and prejudicial to the interest of revenue on ground of (i) non verification of loan accepted from 13 persons specified in para 31(a) of Form No.3CD and (ii) non verification of variation between the value of assets & liabilities in consolidated annual accounts as compared to standalone annual accounts by not appreciating that in respect of loan, AO has made necessary enquiry and after verification accepted the same and that variation in assets & liabilities in consolidated annual accounts and standalone annual accounts do not pertain to AY under consideration and thus order of AO cannot be held to erroneous in as much as prejudicial to the interest of revenue.

3.

The appellant craves to alter, amend and modify any ground of appeal.

4.

Necessary cost be awarded to the assessee."

3.

Briefly stated, the facts of the case are that the assessee company manufactures and sells bread and other bakery products under the brand name "Harvest Gold". It filed its return of income on 12.03.2022 declaring a total income of Rs 14,22,15,640. The case was selected for scrutiny through CASS. After the jurisdiction was transferred to the ACIT, Central Circle-3, Jaipur under section 127 of the Act, the AO completed the assessment on 27.12.2023 accepting the returned income. In paragraph 5 of the order, the AO recorded that the order was subject to revision if any adverse information was received on the share premium received from Grupo Bimbo S.A.B. de C.V., Mexico.

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd. 4. The learned PCIT issued a show cause notice dated 20.03.2025 on three issues: i) the share premium charged without a valuation report, ii) the acceptance of loans reported in the tax audit report, and iii) the difference in the value of assets and liabilities between the consolidated and the standalone annual accounts. After considering the reply of the assessee, the learned PCIT dropped the issue of share premium. On the other two issues, the learned PCIT held that the loans taken from 13 persons reported in clause 31(a) of Form No. 3CD were not certified by the auditor as received through banking channel, that "no specific query was raised on this issue" during the assessment, and that the variation between the consolidated and the standalone accounts was not verified. The assessment order was held to be erroneous in so far as it is prejudicial to the interests of the revenue, and also deemed to be so under clause (a) of Explanation 2 to section 263 of the Act. The AO was directed to verify these details and pass a fresh order. 5. The learned Authorised Representative (hereinafter referred to as "the learned AR") submitted that both issues were examined by the AO. Referring to the paper book, which is certified to contain documents that were before the learned PCIT, the learned AR pointed to the following enquiry made by the AO:

Document What it asked for or explained Paper book page 1 to 4 Notice under Source of the large introduction of capital; section 142(1) of compliance with section 68 of the Act for all the Act dated unsecured loans; details of assets and liabilities 15.12.2022 received from the transferor companies on amalgamation 5 to 10 Reply dated Deposits above Rs 20,000 reported in clause 24.12.2022 31(a) of Form 3CD were received by account payee cheque or electronic transfer; list of depositors with name, address and PAN; nature explained as security deposits from customers 11 to 13 Notice under Reproduces the auditor's note under clause

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd.

Document What it asked for or explained Paper book page section 142(1) of 31(a) of Form 3CD and calls for an explanation, the Act dated with documentary evidence, of loans and 30.11.2023 advances of Rs 33,84,000 taken from various persons in excess of Rs 20,000 14 to 16 Reply dated Amounts described as trade advances from 20.12.2023 customers against supplies; received through banking channel; bank statements stated to be enclosed

On the second issue, the learned AR submitted that three subsidiaries were amalgamated with the assessee with effect from 01.04.2020 under the order of the Regional Director dated 13.10.2021, that the AO called for and examined the amalgamation details [Paper Book (hereinafter referred to as “PB”) page no. 3 and 17 to 22], and that the variation in the figures as on 31.03.2020 is only a regrouping with no effect on the income of the year (PB 23). Reliance was placed on CIT v. Ganpat Ram Bishnoi [2008] 296 ITR 292 (Raj), CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom) and other decisions.

6.

The learned Departmental Representative (hereinafter referred to as "the learned DR") relied on the order of the learned PCIT and submitted that the AO did not make the enquiries which should have been made, so that the case falls within clause (a) of Explanation 2 to section 263 of the Act.

7.

We have heard both sides and perused the material on record. Revision under section 263 of the Act is a power to correct an error, not a licence to take a second look at a completed assessment. The twin conditions for its exercise were explained by the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) in the following words:

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd. "6. ... The Commissioner has to be satisfied with twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the ITO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1)."

Clause (a) of Explanation 2 deems an order to be erroneous where it is passed without making the inquiries or verification which should have been made. The deeming operates where such enquiry is absent. It does not permit the learned PCIT to brush aside an enquiry actually made merely because a deeper one was possible.

8.

On the first issue, the record does not support the finding that no specific query was raised. As seen from the table above, the notice dated 30.11.2023 reproduces the very note of the tax auditor under clause 31(a) of Form No. 3CD on which the revision is founded, and calls for an explanation with documentary evidence. The assessee answered it, and the AO accepted the answer. The impugned order does not refer to this notice or the reply. It does not say that the explanation or the documents were false or inadequate, and it does not identify the 13 persons, while the list on record contains a larger number of names. Further, whether a loan or deposit was accepted otherwise than through the modes specified in section 269SS of the Act is a matter for which the Act provides a separate penalty. The learned PCIT has not shown how the mode of receipt, by itself, results in any loss of tax in the assessment.

9.

The Hon'ble Rajasthan High Court dealt with almost identical facts in Ganpat Ram Bishnoi (supra). There too, the Commissioner had directed the AO to examine, among other things, "whether there is any acceptance or repayment of loan or deposit of Rs. 20,000 or more otherwise than by cheque/bank draft"

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd. (paragraph 3 of the judgment). The Hon'ble High Court upheld the order of the Tribunal cancelling the revision and observed as under:

"11. Undoubtedly, the jurisdiction under section 263 is wide and is meant to ensure that due revenue ought to reach the public treasury and if it does not reach on account of some mistake of law or fact committed by the Assessing Officer, the CIT can cancel that order and require the concerned Assessing Officer to pass a fresh order in accordance with law after holding a detailed enquiry. But when enquiry in fact has been conducted and the Assessing Officer has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings, in the present case, without anything to say how and why the enquiry conducted by the Assessing Officer was not in accordance with law, the invocation of jurisdiction by the CIT was unsustainable. As the exercise of jurisdiction by the CIT is founded on no material, it was liable to be set aside. Jurisdiction under section 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something."

The ratio applies squarely. The AO raised a pointed query, received an answer supported by documents, and accepted it. That is a case of enquiry made, not of enquiry omitted.

10.

On the second issue, neither the show cause notice nor the impugned order identifies which asset or liability differs, by how much, or for which year. The AO had called for the details of the assets and liabilities received on the amalgamation (PB 3). The comparison statement (PB 23) shows that, as on 31.03.2020, the difference is limited to two items: right to use assets reclassified as property, plant and equipment, and deferred tax asset set off against deferred tax liability in the merged accounts. Both are matters of presentation. The income of the assessee is computed on its own accounts, and the consolidated statements 6

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd. of a group are not the basis of its assessment. The learned PCIT has not shown that any item of income or expenditure for the year under consideration was affected by the variation. A mere observation of a difference, without more, establishes neither an error nor any prejudice to the revenue.

11.

In view of the above, we hold that the AO made enquiries on both issues and took a possible view. The learned PCIT has neither pointed out any defect in those enquiries nor demonstrated any loss of revenue. Clause (a) of Explanation 2 to section 263 of the Act is not attracted. The decision in CIT v. Paville Projects (P.) Ltd. [2023] 149 taxmann.com 115 (SC), referred to by the learned PCIT, concerned a claim allowed contrary to law, as noticed in the impugned order itself, and does not help the Revenue here. The twin conditions laid down in Malabar Industrial Co. Ltd. (supra) are not satisfied. The order of the learned PCIT under section 263 of the Act dated 26.03.2026 is quashed, and the assessment order dated 27.12.2023 is restored. Grounds No. 1 and 2 are allowed.

12.

Ground No. 3 is general in nature and requires no adjudication. In Ground No. 4, the assessee seeks costs. No material has been placed to show that the revision proceedings were frivolous or vexatious. Ground No. 4 is dismissed.

13.

In the result, the appeal filed by the Assessee is allowed.

Order pronounced in the open court on 26.10.2026

Sd/- Sd/- (KULDIP SINGH) (PRAKASH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 26/10/2026 *Ganesh Kr., Sr. PS आदेशक���त�ल�पअ�े�षत / Copy of Order Forwarded to:- 1. Assessee 7

ITA No. 1281/JPR/2026 M/s Bimbo Bakeries India Pvt. Ltd. Ganesh 2. Revenue Digitally signed 3. Concerned CIT by Ganesh Kumar 4. CIT (A) Kumar Date: 2026.11.02 5. DR, ITAT 11:37:20 +05'30' 6. Guard file. By order/आदेश से, सहायक पंजीकार आयकर अपील�य अ�धकरण, t;iqj

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