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Facts
The assessee filed its return of income for AY 2011-12, and the case was reopened under Section 148 based on information from the Investigation Wing regarding undisclosed commission income. The Assessing Officer completed the assessment under Section 143 read with Section 147, making an addition only for the TDS credit claimed by the assessee (Rs. 1,94,433/-) instead of the full difference in commission income (Rs. 19,94,328/-) between 26AS data and the books of account. The PCIT invoked Section 263, deeming the AO's order erroneous and prejudicial to the revenue for not taxing the entire undisclosed commission income.
Held
The Tribunal upheld the PCIT's order, stating that the AO made an apparent mistake on record by only adding the TDS benefit instead of the entire undisclosed commission income, despite having information about the full amount. The Tribunal emphasized that the assessee, being a company, must maintain accounts on a mercantile basis and should have recorded the commission fully, regardless of actual receipt. Therefore, the PCIT's initiation of proceedings under Section 263 was justified.
Key Issues
Whether the PCIT was justified in invoking Section 263 to set aside an assessment order where the AO, in a reassessment proceeding under Section 147/143(3), only added the TDS credit instead of the entire undeclared commission income found during the assessment.
Sections Cited
148, 143, 143(3), 147, 263, 244A, 271(1)(C), 119, 144B, 41(1), 14A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
(Assessment Year: 2011-12) Vikunj Real Estate Private Limited, vs. Income Tax Officer, B – 1, Bareja Sadan, New Delhi. Badarpur, Jaitper, Delhi – 110 044. (PAN :AACCV2351A) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Shyam Sunder Mangla, CA REVENUE BY : Shri Dayainder Singh Sidhu, CIT DR Date of Hearing : 23.09.2025 Date of Order : .12.2025 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The assessee has filed appeal against the order of the ld. Pr. Commissioner of Income Tax (Appeals) (PCIT), Delhi-7 [“Ld. PCIT”, for short] dated 30.03.2025 for the Assessment Year 2011-12.
Brief facts of the case are, assessee filed its return of income on 16.03.2012 and the case was taken up for scrutiny under section 148 of the Income-tax Act, 1961 (for short ‘the Act’) on 27.03.2018, based on the information received from Investigation Wing. Subsequently, the 143 r.w.s 147 of the Act on 29.12.2018. While reviewing the assessment order, ld. PCIT observed that the AO verified information submitted by the assessee and the assessee was specifically asked to submit reconciliation statement for commission disclosed by the assessee in its return of income and as per 26AS. Accordingly, assessee has submitted the same which is reproduced at page 2 of the assessment order, as per which the difference of commission which was not accounted for in the books of account by the assessee and also assessee has taken TDS credit of Rs.1,94,433/-. The AO proceeded to complete the assessment merely making the addition of TDS credit taken by the assessee instead of commission income which was not declared in the books of account. Accordingly, he issued a notice to the assessee and also after considering the submissions of the assessee treated the assessment order passed u/s 143(3) r.w.s. 147 as erroneous as well as prejudicial to the interest of Revenue by invoking the provisions of section 263 Explanation 2 of the Act and also relied on several decisions.
Aggrieved with the above order, the assessee is in appeal before us raising following grounds of appeal :- “Ground No.1 That having regards to the facts and circumstances of the case, the Ld. PCIT has erred in set-aside for re-adjudication by the AO Rs. Rs. 19,94,298/- by the assessing officer. Ground No.2 That having regards to the facts and circumstances of the case, the Ld. PCIT has erred in law by passing his order without making adequate inquiries regarding the facts of the case. Ground No.3 That having regards to the facts and circumstances of the case, the Ld. PCIT has erred in law in giving his decision without examining the relevant material on record and also in passing his order without rejecting those documents based on which, the assessing officer had given his order. Ground No.4 That having regards to the facts and circumstances of the case, the Ld. PCIT has erred in law in bringing a second opinion by modifying the order passed by the assessing officer in contravention to the provisions of section 263 of Income Tax Act Ground No.5 That the Ld. PCIT has not afforded proper opportunity to the appellant to explain the matter and the whole order is arbitrary and against the principle of natural justice. Ground No.6 That in any view of the matter and in any case the order under appeal is bad in law and against the circumstances of the case.”
At the time of hearing, ld. AR of the assessee brought to our notice findings of the ld. PCIT in 263 order and further submitted as under :-
(i) Pr. CIT vs. Usha Polychem India (P.) Ltd. – (2023) 149 taxmann.com 240 (Calcutta); (ii) Vinod Bhandari vs. Pr. CIT (1), Indore (2020) 116 taxmann.com 264 (Indore – Trib.)
INCOME TAX: Where Pro Commissioner invoked revision jurisdiction on ground that there was difference in amount of opening/closing balance of liabilities shown as compared to total liabilities which ought to Have been disallowed under section 41(1) and, thus, order passed by Assessing Officer was erroneous and prejudicial to interest of revenue, since Assessing Officer after applying his mind and making due enquiries had taken a plausible view and passed assessment order, Pr. Commissioner could not invoke revision jurisdiction under section 263 merely because view taken by Assessing Officer was not found acceptable to him. (i) Pr. CIT vs. S.N. Tradelink (P.) Ltd. (2022) 145 taxmann.com 73 (Gujarat)
(i) CIT, Kota vs. Deepak Real Estate Developers (I)(P.) :td/ (2014) 52 taxmann.com 75 (Rajasthan)
Ground No.4 That having regards to the facts and circumstances of the case, the Ld. PCIT has erred in law in bringing a second opinion by modifying the order passed by the assessing officer in contravention to the provisions of section 263 of Income Tax Act.
Ld. PCIT version (i) Axis Bank Ltd. vs. ACIT (2023) 149 taxmann.com 395 (Gujarat); (ii) ABB India Ltd. vs. JCIT (2023) 150 taxmann.com 522 (Karnataka); (iii) Administrator of Estate of Lt. Edulji Framroze Dinshaw vs. CIT, (IT)- 2, Mumbai (2019) 103 taxmann.com 452 (Mumbai-Trib.); INCOME TAX : Where during assessment proceedings assessee had tendered details of individuals to whom assessee had paid guarantee commission and also produced copy of agreement of guarantee commission executed with said entities and Assessing Officer passed assessment order without making any addition under head guarantee commission expenses, reopening of assessment on ground that assessee had paid guarantee commission to six entities which had escaped assessment was not justified INCOME TAX : Where assessment was sought to be reopened in case of assessee on ground that assessee had made payment of excess interest over 12 per cent on unsecured loans from certain parties, however, assessee had submitted audited balance sheet with its reply showing bifurcation of interest expenses during course of assessment proceedings and Assessing Officer made no additions on account of reason of higher rate of interest expense, reassessment being mere change of opinion of Assessing Officer on same set of facts was not justified . INCOME TAX: Where issue of section 14A disallowance was very much there before Assessing Officer during assessment proceedings and Assessing Officer made no addition on account of disallowance under section 14A, reopening of assessment on ground that disallowance under section 14A had escaped assessment was not justified INCOME TAX: Where assessee during course of assessment proceedings had produced statement showing project wise reconciliation between Form 26AS and books of account and also submitted copy of ledger accounts of work-in- progress and sales account and Assessing Officer made no addition on account of income difference between Form 26AS Statement and books of account, reopening of assessment on ground that there was income difference between Form 26AS Statement and books of account of assessee was not justified. (i) P.C. Snehal Engineers (P.) Ltd. vs. ACIT (2023) 147 taxmann.com 54 (Gujarat)”
On the other hand, ld. DR of the Revenue relied on the findings of the ld. PCIT.
Considered the rival submissions and material placed on record. We observed that the case of the assessee was reopened based on the information received from Investigation Wing that assessee has received commission income of Rs.54.93 lakhs from BPTP and TDS was accordingly deducted thereon. However, assessee had accounted for an Rs.35.31 lakhs and declared lesser receipts of Rs.19.61 lakhs. We observed that AO has duly verified the above aspects at para 3 of his order and assessee has accepted that assessee has not declared the commission income to the extent of Rs.19.94 lakhs and claimed only the TDS benefit. After observing the same, the AO proceeded to treat the TDS benefit claimed by the assessee as income of the assessee. In the 263 proceedings, ld. PCIT has highlighted the exact same issue that the AO should have brought to tax the undisclosed commission income instead of restricting the undisclosed income to the extent of TDS benefit. After considering the submissions of both the sides, we are of the considered view that the AO has made apparent mistake on record and it is not the case that AO has not verified but AO has passed the order without verification of the reasons for which assessment was reopened that is based on the information that assessee has not disclosed total commission income received from BPTP and not appreciated the fact properly. We observed that assessee is a company and as per the provisions of the Companies Act, assessee has to maintain books of account on the basis of mercantile system. Accordingly, they should have recorded the commission fully and it is not relevant in mercantile system of accounting that commission should have been received. It is not the case of the assessee that assessee is following books of account on receipt basis. Therefore, the AO has made a mistake which is apparent on record, hence, in our considered view, proceedings initiated by the ld. PCIT is justified. Therefore, we are inclined to dismiss the appeal filed by the assessee.
In the result, the appeal filed by the assessee is dismissed Order pronounced in the open court on this 22nd day of December, 2025.