Hotel Sai Siddhi Pvt. Ltd. Vs PCIT (ITAT Pune)
PCIT Cannot Act on AO’s Proposal: ITAT Pune Quashes Section 263 Revision for Jurisdictional Defect
The Pune Bench of the ITAT quashed the revision order passed under Section 263, holding that the Principal Commissioner lacked jurisdiction as the proceedings were initiated solely on the basis of a proposal sent by the Assessing Officer.
In this case, the assessee’s reassessment was completed accepting the returned loss. Subsequently, the Assessing Officer sent a formal proposal to the PCIT recommending revision under Section 263. Acting on this proposal, the PCIT issued a show cause notice and set aside the assessment for fresh examination.
The Tribunal held that Section 263 mandates the Commissioner to suo motu call for and examine the assessment record and independently form satisfaction that the order is erroneous and prejudicial to the interests of revenue. Initiation of revision merely on the basis of an AO’s proposal, without independent examination of records by the PCIT, amounts to lack of jurisdiction.
Relying on earlier Pune Bench decisions in Alfa Laval Lund AB and Volkswagen India Pvt. Ltd., and distinguishing contrary High Court rulings, the Tribunal ruled that the AO’s recommendation has no statutory sanction and cannot trigger revisionary powers.
Accordingly, the Section 263 proceedings were quashed and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
