Vikash Kumar Bohra Vs PCIT (ITAT Kolkata)
No Erroneous or Prejudicial Assessment Where Facts Misread by PCIT- ITAT Kolkata Quashes Section 263 Revision:
The Kolkata Bench of the Income Tax Appellate Tribunal allowed the appeal of Vikash Kumar Bohra for AY 2018–19, quashing the revisionary order passed by the PCIT under Section 263, holding that the mandatory twin conditions—“erroneous” and “prejudicial to the interests of the Revenue”—were not satisfied.
The PCIT had invoked Section 263 on two grounds:
(i) alleged wrongful allowance of car-related expenses of ₹1.12 lakh on the premise that the assessee had declared income under Section 44AD from car hiring; and
(ii) allowance of ₹2.34 lakh forfeiture of Earnest Money Deposit (EMD), which the PCIT treated as capital in nature.
On facts, the Tribunal found that the first ground was factually incorrect, as the assessee had never declared income under Section 44AD, nor had he claimed the alleged car-related deductions in either the original return under Section 139 or the return filed pursuant to Section 148. Consequently, there was no error at all in the assessment order on this issue.
With respect to EMD forfeiture, the Tribunal held that the amount was paid to Eastern Coalfields Limited in the ordinary course of the assessee’s coal trading business for participation in e-auctions. The forfeiture arose strictly in accordance with the E-Auction Scheme, and the invoices themselves described the transaction as “supply of services”. The Tribunal concluded that such forfeiture was revenue in nature, directly connected with business operations, and not a capital loss, rendering the PCIT’s contrary view unsustainable.
Relying on the Supreme Court decision in Malabar Industrial Co. Ltd. v. CIT (243 ITR 83), the Tribunal reiterated that Section 263 cannot be invoked merely because the PCIT holds a different opinion, especially when the Assessing Officer’s view is legally plausible and factually correct. Since the assessment was neither erroneous nor prejudicial, the assumption of revisionary jurisdiction was held to be invalid and the Section 263 order was quashed in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
