IMPRESARIO ENTERTAINMENT & HOSPITALITY PVT LTD,MUMBAI, INDIA vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX PCIT, MUMBAI-5, AYAKAR BHAVAN MUMBAI

Facts

The assessee's income for AY 2018-19 was assessed u/s 143(3) r.w.s. 144B. Subsequently, the PCIT initiated revisionary proceedings u/s 263, contending that the assessment order was erroneous and prejudicial to the revenue because the Assessing Officer had failed to disallow "Delayed Payment of Statutory Dues" amounting to Rs. 1,16,02,879/-, which the PCIT deemed unallowable business expenditure.

Held

The Income Tax Appellate Tribunal (ITAT) set aside the PCIT's order, ruling that the PCIT's assumption of jurisdiction u/s 263 was invalid. The ITAT found that the Assessing Officer had conducted inquiries and the assessee had already suo moto disallowed the disputed expenditure (including penalties and fines) in its income computation. Citing the Supreme Court's Malabar Industrial Co. Ltd. precedent, the Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the revenue, as required for a valid revision under Section 263.

Key Issues

Whether the PCIT's revisionary order under Section 263 was valid when the Assessing Officer had made inquiries and the assessee had already self-disallowed the expenditure forming the basis of the revision.