Nishan Inbuild Ltd. Vs PCIT (ITAT Delhi)
Section 263 Revision Quashed – Protective Assessment Valid When Substantive Addition Already Made in Key Person’s Case
The Delhi ITAT allowed the assessee’s appeal and quashed the revision order passed by the PCIT under Section 263, holding that the original assessment could not be treated as erroneous or prejudicial to the interests of the Revenue. The Tribunal noted that in search proceedings under Section 153C, the Assessing Officer had made additions of unexplained cash credits and commission income in the assessee’s hands only on a protective basis, while the same amounts had already been assessed substantively in the case of the key person, Shri Raj Kumar Modi, under Section 153A read with Section 143(3).
The Tribunal held that once substantive assessment had been made in the hands of the main person and remained unrebutted by the Revenue, the protective assessment in the assessee’s case was legally justified and could not be branded as erroneous. Applying the Supreme Court ruling in Malabar Industrial Co. Ltd. v. CIT, the Tribunal ruled that the twin conditions of “error” and “prejudice” were not satisfied. Accordingly, the PCIT’s direction to convert the protective additions into substantive ones was set aside and the revision order under Section 263 was quashed. The assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
