Sabarmati Gas Limited Vs PCIT (ITAT Ahmedabad)
263 Overreach Checked: ITAT Quashes PCIT Revision on Additional Depreciation, CSR & Rent Issues
ITAT Ahmedabad “D” Bench, in Sabarmati Gas Ltd. vs Pr. CIT (ITA No.1219/Ahd/2025, AY 2020-21; order dated 24.12.2025), has allowed the assessee’s appeal and set aside the revision order passed u/s 263, holding that the PCIT travelled beyond the scope of the show-cause notice and merely substituted his opinion for that of the AO.
The PCIT invoked section 263 alleging lack of inquiry on three issues—additional depreciation u/s 32(1)(iia) of ₹29.54 crore, deduction u/s 80G claimed against CSR expenditure of ₹2 crore, and verification of rental expenses. ITAT noted that the show-cause notice u/s 263 was confined only to additional depreciation and CSR/80G, and did not even whisper about rental expenses. Hence, directions to verify rental expenses were held to be without jurisdiction and an outright overreach.
On merits as well, Tribunal recorded that during original scrutiny the AO had examined the claim of additional depreciation and in fact disallowed ₹2.08 crore, and had also verified CSR expenditure vis-à-vis section 80G. Once a view is taken after inquiry, section 263 cannot be invoked merely because the PCIT holds a different view. Absence of “no inquiry” was fatal to the revision.
ITAT held that the twin conditions of section 263—“erroneous” and “prejudicial to the interests of the Revenue”—were not satisfied. Since the PCIT’s directions were partly outside the notice and partly based on change of opinion, the revision order was quashed in entirety. The appeal of the assessee was accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
