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Facts
The assessee filed its return, which was completed by the AO with an addition for unexplained income. The PCIT initiated proceedings under Section 263, alleging the assessment order was erroneous and prejudicial to revenue, and set aside the order for fresh verification. The assessee appealed this revisional order.
Held
The Tribunal held that the PCIT did not provide sufficient opportunity to the assessee to respond to the notice under Section 263, violating the principle of natural justice. The notice was issued on 24.03.2025, and the revisional order was passed on 28.03.2025, a very short period.
Key Issues
Whether the PCIT afforded sufficient opportunity to the assessee before passing the revisional order under Section 263?
Sections Cited
263, 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
O R D E R Per: Anikesh Banerjee, JM The instant appeal of the assessee was filed against the order of the Learned Principal Commissioner of Income Tax, Kochi-1 [for brevity, ‘Ld. PCIT’] passed under section 263 of the Income-tax Act, 1961 (in short, the Act’) for Assessment Year 2020-21, date of order 28/03/2025. The impugned order is emanated from the order of the Assessment unit Income Tax Department (in short, ‘Ld. AO’) order passed under section 143(3) r.w.s. 144B of the Act, date of order 23/09/2022.
Pavana Manuel Xavier 2. The assessee filed its return of income, and the case was selected for scrutiny. The assessment was completed by the Ld. AO under Section 143(3) read with Section 144B of the Act, determining an addition of Rs.31,38,000/- as “unexplained income.” Subsequently, the Ld. PCIT, by invoking the provisions of Section 263, held that the assessment order was erroneous and prejudicial to the interests of the revenue. Accordingly, the Ld. PCIT set aside the said assessment order for fresh verification. Aggrieved by this revisional order, the assessee has preferred an appeal before us.
The Ld. AR argued that during passing the revisional order U/s 263 the Ld. PCIT denied the reasonable opportunity to the assessee. He invited our attention in paragraph 3 of the impugned revisional order which is reproduced as below:-
3. Accordingly, a show-cause notice dated 24/03/2025 was issued to the Assessee proposing for revision of assessment order u/ s. 143(3) r.w.s. 144B dated 23/09/2022 under Section 263 of the Act. The Assessee was informed to file their objection if any on 25/03/2025 in person/ authorized representative or on or before the date through written submission. Assesee's authorized representative Shri. Sreejith, CA attended the online hearing on 25/03/2025. The case was discussed and agreed to set aside the case to AO for re-examination. Assessee sought opportunity to present the case in detail before AO. The submissions were accepted and considered.
The Ld. DR argued and relied on the order of the Ld. PCIT.
Pavana Manuel Xavier 5. We have carefully considered the submissions and examined the records. It is observed that the notice under Section 263 of the Act was issued on 24.03.2025, whereas the revisional order was passed on 28.03.2025. In our considered view, the Ld. PCIT has not afforded sufficient opportunity to the assessee to respond effectively to the notice before passing the revisional order. The principle of natural justice requires that the assessee be given adequate time and opportunity to present its case before any adverse order is passed. Accordingly, in the interest of justice, we deem it appropriate to set aside the revisional order passed under Section 263 of the Act and remand the matter to the file of the Ld. PCIT for fresh consideration. The Ld. PCIT shall re-examine the issue afresh after providing the assessee a proper and reasonable opportunity of being heard and to furnish necessary evidences in support of its contentions. We make it clear that we have not expressed any opinion on the merits of the case, so as not to prejudice the proceedings before the Ld. PCIT.
Order pronounced in the open court on 30th October, 2025.