Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SANJAY GARG & SHRI BIJAYANANDA PRUSETH
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the Assessee against the order of the Ld. Principal Commissioner of Income Tax, [hereinafter referred to as ‘PCIT’], Surat-1, dated 04/03/2025 passed in exercise of his revision jurisdiction under Section 263 of the Income-Tax Act, 1961 [hereinafter referred to as “the Act”] for Assessment Year (AY) 2018-19.
The Assessee in this appeal has raised the following grounds of appeal:
1. That on the facts and in the circumstances of the case as well as in law, the order passed by ld. Principal Commissioner of Income Tax, Surat-1, Surat (PCIT) u/s. 263 of the I. T. Act, 1961 ("the Act") is wrong and unjustified because there has been no error so as to be prejudicial to the interest of revenue in the assessment order passed u/s 147 r.w.s. 144B of the Act and Id. PCIT has passed the said order u/s 263 just by taking a different possible view. Appellant prays for quashing the order so passed by Id. PCIT, which is contrary to the settled law.
2. That on the facts and in the circumstances of the case as well as in law. Id. PCIT has erred in taking the view that the Id. FAO must have disallowed the whole of amount of purchases from M/s. S.K. Enterprises as against the disallowance of 20% Srinu Venkataiah Margam Vs. PCIT Asst. Year – 2018-19 - 2– of such purchases made by ld. AO after considering the facts and circumstance of appellant's case, which view of Id. FAO is also supported by a number of judicial pronouncements. Different view now taken by Id. PCIT in the order u/s 263 is not only incorrect on facts and in law but is also beyond the scope of S. 263 of the Act. Appellant, therefore, prays for quashing the order so passed by Id. PCIT u/s. 263 of the Act.
3. Without prejudice to above grounds, that even otherwise also whole of the proceeding u/s 147/148/148A and consequent assessment order passed u/s 147 r.w.s. 144B of the Act is invalid, bad in law and contrary to the law. Therefore, order u/s 263 passed for revision of such invalid assessment order is also invalid and unsustainable in law.
4. The appellant craves leave to add, alter, delete or modify any grounds of appeal.
The Assessee in this appeal has agitated against the exercise of Revision Jurisdiction by the Ld. PCIT u/s 263 of the Act.
The brief facts of the case are that the Assessing Officer noted that certain purchase transactions of the assessee, amounting to Rs. 20,48,630 /- with M/s. S.K. Enterprises, Ahmedabad were not genuine. He therefore, estimated the gross profit on the corresponding sales of such purchases at the rate of 20% including GST applicable on these transactions and disallowed the same, amounting to Rs. 4,09,726 /-.
Thereafter, the Ld. PCIT exercised his Revision Jurisdiction u/s 263 of the Act and observed that the A.O. should have disallowed the entire purchases and not the only gross profit on such bogus purchases. He therefore, set aside the assessment order and directed the Assessing Officer to pass a fresh assessment order.
Being Aggrieved by the said Order of the Ld. PCIT, the assessee has come in appeal before us.
We note that the corresponding sales in this case have been admitted by the Assessing Officer. The Assessing Officer has doubted the genuineness of the purchase, thus he was of the view that the assessee might have made purchases at lower price from grey market and thereby has suppressed his profits. He therefore, estimated the suppressed profit at the rate of 20% of the corresponding sales and made the additions accordingly. The view taken by the Assessing Officer is a plausible view and, therefore, the assessment order cannot be said to be erroneous. As per the relevant provisions of section 263 of the Income Tax Act, for exercise of Revision Jurisdiction by the Ld. PCIT, the two mandatory conditions must be satisfied. Firstly, the order should be erroneous and secondly, it should be pre judicial to the interest of Revenue.
In this case, the Assessing Officer has taken one of the plausible views, while estimating the suppressed profits of the assessee and thereby making the addition accordingly and hence, the assessment order cannot be said to be erroneous. Therefore, the exercise of Revision Jurisdiction by the Ld. PCIT is not justified. Therefore, the impugned revision order passed by the Ld. PCIT u/s 263 of the Act, is not legally sustainable and same is accordingly, hereby, quashed.
In the result, the appeal of the assessee stands allowed. Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 01/01/2026