PHOENIX INFOCITY PRIVATE LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE-2(3), HYDERABAD
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the PCIT erred by not conducting his own inquiry to determine if the assessment order was erroneous and prejudicial to the revenue. The Tribunal found that the AO had already conducted an inquiry and received explanations from the assessee.
What were the facts?
The PCIT invoked Section 263 to revise an assessment order, citing discrepancies between the assessee's books, ITR, and Form 26AS regarding interest income. The PCIT directed the AO to re-examine the taxability of this interest income.
What were the issues?
Whether the PCIT can direct the AO to conduct further inquiry without himself examining the material and concluding the assessment order was erroneous. Whether the PCIT satisfied the twin conditions of Section 263.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Malabar Industrial Co. Ltd. v. CIT2,943 citing109 Taxmann 66 · 2000 · SC · Read judgment
- ITO v. DG Housing Projects Ltd.78 citing20 Taxmann.com 587 · 2012 · HC · Read judgment
Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD
Before: SHRI MANJUNATHA G. & SHRI K.NARASIMHA CHARY
आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Assessment order in the case of Phoenix info city Pvt. Ltd for the assessment year 2018-19 under sec�on 143(3) of the Income Tax Act, 1961 (for short “the Act”) was passed on 20/3/2021. Subsequently learned PCIT on examina�on of records and par�cularly the reconcilia�on statement filed by the assessee, explaining the difference between the amount of interest income recorded in the books and that as per 26AS statement, found that the claimed interest income of Rs. 7,11,640/-reflected in the 26AS as received from the APCPDCL does not relate to the assessee, but to other par�es, and similarly with respect to the interest income received from M/s Avance Atlas Infratech Pvt. Ltd and FD interest also, the reconcilia�on statement was not obtained during the assessment proceedings and no verifica�on was made to ascertain the reason for the discrepancy between the figures reflected in the books and then 26AS statement. Learned PCIT, in exercise of jurisdic�on under sec�on 263 of the Act, by way of impugned order set aside the assessment order to the file of the learned Assessing Officer for the purpose of examining the taxability of interest income of Rs. 3,21,34,917/-which happens to be the difference between the interest income reflected in 26AS statement and interest income admi�ed in the ITR and assessed, a�er giving an opportunity to the assessee of being heard and also giving an opportunity to the assessee to furnish necessary evidence.
This order of PCIT is challenged before us broadly on two grounds. Firstly, that the PCIT cannot direct the learned Assessing Officer to conduct further enquiry to verify, without examining the aspect himself and giving a finding as to how the assessment order happens to be erroneous. learned AR submi�ed that all the details rela�ng to the AS-26 and also the reconcilia�on statement was submi�ed before the PCIT, but the PCIT did not look into the aspect by himself to determine the escapement of income with reference to such material, but directed the learned Assessing Officer to undertake such an exercise a�er giving an opportunity to the assessee, which is impermissible under the se�led law. He placed reliance on a decision of the Hon’ble Delhi High Court in the case of D.G. Housing Projects Ltd., (2012) 20 Taxmann.com 587 (Delhi). Second ground is that all the requisite enquiry was made by the learned Assessing Officer on this aspect during assessment proceedings and it is only a�er receiving the explana�on of the assessee, assessment was complete. On these two grounds learned AR stated that the order passed under sec�on 263 of the Act is not maintainable.
Per contra, learned DR placing heavy reliance on the orders of the learned PCIT and submi�ed that since the learned Assessing Officer did not verify the difference that emerged between the income reflected in the 26AS statement and the interest income admi�ed in the ITR, learned PCIT is jus�fied in invoking the jurisdic�on under sec�on 263 of the Act.
We have gone through the record in the light of the submissions made on either side. It could be seen from the no�ces dated 22/9/2019 and 7/12/2020 issued under sec�on 143(2) of the Act and sec�on 142 (1) of the Act that there was in fact an enquiry in respect of the details in form 26AS. The no�ce dated 7/12/2020 specifically says that the reason for selec�on for scru�ny was low receipt from the house property and ITR as compared to rental receipt in 26AS. Apart from this the PCIT no�ce of the details men�oned in 26AS of the assessee available in ITS data. Assessee also made available the details rela�ng to the reconcilia�on of income as per books in form 26AS and as a ma�er of fact learned PCIT referred to the same in his order. Instead of coming to a conclusion as to the erroneous nature of the assessment order basing on these details, learned PCIT le� such a ques�on open, without returning a finding as to the erroneous nature of the assessment order. On the other hand, while se�ng aside the ma�er to the learned Assessing Officer he directed the learned Assessing Officer to examine the taxability of interest income which is the difference between the interest income reflected in 26AS statement and the interest income admi�ed in the ITR. 5. To this set of facts, the decision of the Hon’ble Delhi High Court in the case of D.G. Housing Projects Ltd., (2012) 20 Taxmann.com 587 (Delhi), is applicable on all fours and when the learned PCIT entertained a doubt as to the difference between the interest income reflected in the 26AS statement and the interest income admi�ed in the ITR and assessed, he himself should have conducted enquiry on that aspect and recorded his sa�sfac�on as to the erroneous nature of the impugned order insofar as it is prejudicial to the interest of Revenue, and without recording the sa�sfac�on of the twin condi�ons under sec�on 263 of the Act as laid down by the Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd., vs. CIT [2000] 109 Taxman 66 (SC). On this score, the assessee succeeds. In DG Housing projects Ltd (supra) Hon’ble Delhi High Court held in unequivocal terms that in the context of the decision of the Hon’ble Apex Court in the case of Malabar industries Co Ltd (supra), the phrase “prejudicial to the interest of Revenue” has to be read in conjunc�on with the erroneous order passed by the learned Assessing Officer; and that every loss of Revenue as a consequence of an order of learned Assessing Officer cannot be treated as a prejudicial to the interest of Revenue. Apart from this we no�ced that there was an enquiry conducted by the learned Assessing Officer on the aspect of the discrepancies in respect of 26AS, assessee submi�ed the details and though the learned Assessing Officer did not discuss elaborately in the order passed under sec�on 143(3) of the Act, no adverse comments offered by him. Respec�ully following the decision referred to above, we find it difficult to sustain the order under sec�on 263 of the Act and accordingly crash the same.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on this the 12th day of July, 2024. Sd/- Sd/- (MANJUNATHA G.) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 12/07/2024 Pvv/SPS
More judgments on Section 263
- Gillette India Limited, Mumbai vs Principal Commissioner of Income Tax, JaipurITA 1316/JPR/2026[2018-19]Status: Disposed16 Oct 2026AY 2018-19
- Neo Structo Construction P. Ltd., Ahmedabad vs The Pr. CIT- 3, AhmedabadITA 1216/AHD/2026[2015-2016]Status: Disposed16 Oct 2026AY 2015-2016
- Vimal Harilal Baldania, Gandhidham vs The ITO Ward 2, GandhidhamITA 770/RJT/2025[2017-18]Status: Disposed15 Oct 2026AY 2017-18
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1493/KOL/2026[2015-2016]Status: Disposed15 Oct 2026AY 2015-2016
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1492/KOL/2026[2013-2014]Status: Disposed15 Oct 2026AY 2013-2014
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