CLAYMINE MICRONS LLP,WANKANER vs. PRINCIPAL CIT 1, RAJKOT

ITA 216/RJT/2024Status: DisposedITAT Rajkot11 March 2026AY 2018-19Bench: DR. ARJUN LAL SAINI (Accountant Member), DR. DINESH MOHAN SINHA (Judicial Member)1 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the creditworthiness of partners should be judged by their bank statements and balance sheets, not solely by their reported income. The Tribunal found that the Assessing Officer had conducted sufficient inquiries and the assessment order was neither erroneous nor prejudicial to the revenue.

What were the facts?

The assessee firm received capital from 28 partners, but the PCIT believed 14 partners lacked creditworthiness to introduce such large sums. The PCIT initiated revision proceedings under Section 263, stating the assessment order was erroneous and prejudicial to revenue.

What were the issues?

Whether the PCIT was justified in invoking Section 263 to revise an assessment order where the Assessing Officer had made inquiries regarding partner capital contributions. Whether the creditworthiness of partners can be solely determined by their declared income.

Which sections of the Income-tax Act were involved?

Section 263,Section 68,Section 143(3),Section 133(6),Section 142(1)

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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: DR. ARJUN LAL SAINI & DR. DINESH MOHAN SINHA

Hearing: 16/02/2026Pronounced: 11/03/2026

Per, Dr. A. L. Saini, AM:

By way of this appeal, the assessee has challenged the correctness of the order dated 31.03.2024 passed by the Learned Principal Commissioner of Income-tax (in short “Ld PCIT”) under section 263 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), for the assessment year 2018-19. Grievances raised by the assessee, which, being interconnected, will be taken up together, are as follows:

“1. On the facts and in the circumstances of the case as well in law, the Ld PCIT Ra

The order continues below.

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