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Facts
The assessee's appeal challenges an order passed by the PCIT under Section 263 of the Income Tax Act, 1961. The PCIT's order was passed subsequent to an appellate order issued by the CIT(A)/NFAC, which dealt with the same assessment year and issues.
Held
The Tribunal held that the PCIT's jurisdiction under Section 263 is ousted for matters that have already been decided in appeal. Since the CIT(A)'s order preceded the PCIT's order and addressed the same issues, the PCIT acted without jurisdiction.
Key Issues
Whether the PCIT has the jurisdiction to pass a revisionary order under Section 263 when an appeal on the same subject matter has already been decided by the appellate authority.
Sections Cited
147, 144, 263, 69C, 144B, 92CA, 120
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI
Before: SHRI MAHAVIR SINGH
ORDER PER AMITABH SHUKLA, AM,
This appeal by the assessee is directed against the order of National Faceless Appeal Centre/Ld. Commissioner of Income Tax(Appeals), New Delhi [hereinafter referred to as ‘ld. CIT(A)] dated 10.01.2025 arising out of assessment order dated 08.03.2023 passed under section 147 r.w.s. 144 of the Income Tax Act, 1961, for the Assessment Year 2018-19. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal :-
1. That the Ld. Principal Commissioner of Income Tax, Rohtak (Ld. PCIT) grossly erred in law & on the facts & circumstances of the case in passing the order dated 11.03.2025 (Impugned Order ) under section 263 of the Income Tax Act, 1961 ("the Act) without jurisdiction.
2. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order without considering the provisions of section 263 of the Act.
3. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order without application of mind to the reply filed by the appellant submitting that the provisions of section 69C are not applicable on the facts of the case.
4. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order on the basis of incorrect reasons.
5. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order merely on the basis of suspicion.
6. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order without application of mind to the material on record 7. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order without following the principles of natural justice.
8. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order without considering that the Ld. Assessing Officer had not failed in conducting enquiry while passing the assessment order dated 08.03.2023 under section 147 read with section 144B of the Act.
9. That the Ld. PCIT grossly erred in law & on the facts & circumstances of the case in passing the impugned order without considering that the subject matter of the review order is pending in appeal against the assessment order dated 08.03.2023 under Page 2 of 7
section 147 read with section 144B of the Act before the appellate authority on similar issue.” 3. The principal issue emanating from the abovementioned grounds of appeal of the appellant are regarding the challenge to the exercise of revisionary authority under section 263, by the PCIT, Rohtak. The ld. Counsel for the assessee has vehemently contested that the ld. PCIT, Rohtak, did not had the jurisdiction to pass the impugned order under section 263 dated 11.03.2025.
We have heard rival submission in the light of material available on records. The short point raised by the ld. Counsel for the assessee is that within the meanings of clause –(c) of Explanation-1 of sub-section 1 of Section 263 of the Act, a PCIT is empowered to consider any matter germane to an order, for invocation of his/her revisionary authority which has not been considered and decided in an appeal. It was argued that the ld. PCIT had invoked her revisionary powers in respect of bogus bills/invoices and accommodation entries which assessee had allegedly entered while making bogus purchases of about Rs.65,34,600/-. The ld. Counsel argued that the ld. PCIT passed her order under section 263 dated 11.03.2025. The ld. Counsel drew our attention and placed on records order under section 250 of the CIT(A)/NFAC for AY 2018-19 dated 10.01.2025. It was submitted that within the meanings of clause –(c) of Explanation-1 of sub-section 1 of Section 263 of the Act, the ld. PCIT, Rohtak was ousted of her revisionary jurisdiction to take action under section 263.
Per contra, the ld. DR placed reliance upon the order of the ld. PCIT Rohtak.
We have noted the following statutory prescription of section 263, which is currently in dispute.
“….Revision of orders prejudicial to revenue. 263. (1) The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer or the Transfer Pricing Officer, as the case may be, is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including,— (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section. Explanation 1.—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer or the Transfer Pricing Officer, as the case may be, shall include— (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer or the Page 4 of 7
Transfer Pricing Officer, as the case may be, conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (iii) an order under section 92CA by the Transfer Pricing Officer; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be, had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.
A perusal of the above, adds credence to the arguments of the ld. counsel for the appellant that a PCIT is ousted of its jurisdiction under section 263 upon matters which have been decided in appeal. In the present case, we have noted the undisputed facts on records that an appellate order dated 10.01.2025 was passed in assessee’s case on the matter of bogus purchases by the First Appellate Authority prior to passing of the order under section 263 by the PCIT dated 11.03.2025. Accordingly, we are of the considered view that the order Page 5 of 7 under section 263 by the PCIT dated 11.03.2025 has been passed without jurisdiction. It is trite law that availability of valid jurisdiction is sine qua non for exercise of any quasi judicial authority. Accordingly, we set-aside and quash the order under section 263 by the PCIT dated 11.03.2025. The appeal of the assessee is therefore allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 11th March, 2026.