THE INDIAN HUME PIPE CO LTD ,MUMBAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX -1, MUMBAI

& 3262/Mum/2025 A.Y. 2020-21 & 2021-22 The Indian Hume Pipe Co. Ltd. आदेश / O R D E R PER BENCH: - These appeals are filed by the assessee against the orders of the Learned Principal Commissioner of Income-tax (Appeals), Mumbai-1 [hereinafter referred to as “PCIT”] dated 31.03.2025 passed u/s. 263 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2020-21 & 2021-22.

1. That the impugned order is void-ab-initio as having been made without granting the mandatory opportunity of being heard to the appellant.

2. That on the facts and in the circumstances of the Appellant's case and in law learned Principal Commissioner of Income Tax has erred in holding that the assessment order made by the Assessing Officer for Assessment Year 2020-21 is to be revised on the limited issue of authenticity of construction expenses and in directing the Assessing Officer to complete the assessment as directed on this issue.

3. That without prejudice to the generality of the ground of appeal no. 2 above, on the facts and in the circumstances of the case and in law learned Principal Commissioner of Income Tax has erred in: - a) Holding that the assessment has been completed without a word on genuineness of construction expenses. b) Holding that the assessment order made under section 143(3) is erroneous as no inquiry or details were called for. c) In not appreciating that huge disallowances cannot be made on adhoc basis unless some discrepancy or deficiency is pointed out. The appellant company is an old and established company and is operating for about 90 years and in past no disallowances have been made though similar expenses were made in similar manner. There have not been any audit observations on the method of accounting or correctness of the construction expenses booked.

& 3262/Mum/2025 A.Y. 2020-21 & 2021-22 The Indian Hume Pipe Co. Ltd. d) In not appreciating that for assessment years 2022-23 & 2023-24 the Assessing Officer has made huge addition without reference to any document, without any evidence and merely stating that there was absence of details an argument not backed by any material or grossly inadequate material 4. That on the facts and in the circumstances of the appellant's case the order u/s. 263 passed by the Principal Commissioner of Income Tax is bad in law for having been made to protect the interest of revenue.

5. The learned Commissioner's order being contrary to law, evidence and facts of the case should be set aside, amended or modified in the light of the grounds deduced above.

6. The grounds of appeal

above are independent of and without prejudice to each other.

7. The appellant craves leave to reserve to himself, the right to add to, alter or amend any of the aforesaid grounds of appeal at or before the time of hearing and to produce such further evidence, documents and papers as may be considered necessary.” AY 2021-22

1. That the impugned order is void-ab-initio as having been made without granting the mandatory opportunity of being heard to the appellant.

2. That on the facts and in the circumstances of the Appellant's case and in law learned Principal Commissioner of Income Tax has erred in holding that the assessment order made by the Assessing Officer for Assessment Year 2021-22 is to be revised on the limited issue of authenticity of construction expenses and in directing the Assessing Officer to complete the assessment as directed on this issue.

3. That without prejudice to the generality of the ground of appeal no. 2 above, on the facts and in the circumstances of the case and in law learned Principal Commissioner of Income Tax has erred in: - a) Holding that the assessment has been completed without a word on genuineness of construction expenses. b) Holding that the assessment order made under section 143(3) is erroneous as no inquiry or details were called for. c) In not appreciating that huge disallowances cannot be made on adhoc basis unless some discrepancy or deficiency is pointed out. The appellant company is an old and established company and is operating for about 90 years ears and in past no disallowances have been made though similar expenses were & 3262/Mum/2025 A.Y. 2020-21 & 2021-22 The Indian Hume Pipe Co. Ltd. made in similar manner. There have not been any audit observations on the method of accounting or correctness of the construction expenses booked. d) In not appreciating that for assessment years 2022-23 & 2023-24 the Assessing Officer has made huge addition without reference to any document, without any evidence and merely stating that there was absence of details an argument not backed by any material or grossly inadequate material

4. That on the facts and in the circumstances of the appellant's case the order u/s. 263 passed by the Principal Commissioner of Income Tax is bad in law for having been made to protect the interest of revenue.

above are independent of and without prejudice to each other.

7. The appellant craves leave to reserve to himself, the right to add to, alter or amend any of the aforesaid grounds of appeal at or before the time of hearing and to produce such further evidence, documents and papers as may be considered necessary.”

3. Since common issues are involved in both these appeals, these are being disposed of by a common order. for AY 2021-22 is being taken up as the lead case. ITA No. 3261/Mum/2025 for AY 2021-22

4. Brief facts of the case are that the assessee filed its return declaring income Rs. 103,59,94,210/- for AY 2020-21 on 20.03.2021. The case was selected for scrutiny and assessment was completed at an income of Rs. 106,12,93,884/- after making various additions/disallowances. Subsequently, during the assessment proceedings of AY 2023-24, Ld. AO disallowed 25% of the construction expenses as the assessee was unable to furnish complete details & 3262/Mum/2025 A.Y. 2020-21 & 2021-22 The Indian Hume Pipe Co. Ltd. and supporting evidences with regard to these expenses. Accordingly, Ld. PCIT sought to revise the assessment order u/s 263 for verification of the genuineness of construction expenses claimed by the assessee. Accordingly, the order u/s 263 was passed on 31.03.2025 holding the assessment order to be erroneous and prejudicial to the revenue as the same had been completed without undertaking verification of genuineness of the construction expenses. Vide this order, Ld. PCIT directed the Ld. AO to examine the issue of authenticity of construction expenses and complete the assessment afresh after providing due opportunity to the assessee.

5. Aggrieved with the order of Ld. PCIT, the assessee has preferred an appeal before the Tribunal and has raised as many as seven grounds of appeal

6. In the first ground, the assessee has stated that the impugned addition is void ab initio as the same was made without granting the mandatory opportunity of being heard to the assessee.

7. Before us, Ld. AR argued that no mandatory notice u/s 263 was issued and the assessee was not allowed any opportunity to present his case before the Ld. PCIT and accordingly the order u/s 263 was bad in law. In view of the above, Ld. DR was directed to ascertain and apprise the bench about the issue of notice, if any, by the PCIT u/s 263 of the Act.

& 3262/Mum/2025 A.Y. 2020-21 & 2021-22 The Indian Hume Pipe Co. Ltd.

AY 2021-22 11. As the issue involved and facts and circumstances are identical to the AY 2020-21, the above decision will apply mutatis mutandis to AY 2021-22 also. 12. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 30.06.2025.