Digital Risk Mortgage Services LLC Vs ACIT (ITAT Pune)
Pune ITAT Quashes Section 263 Revision – Once AO Has Conducted Enquiries and Taken a Plausible View, PCIT Cannot Order Fresh Investigation
The Pune ITAT quashed the revisionary order under section 263, holding that the Principal CIT cannot invoke section 263 merely because he believes the Assessing Officer should have conducted a more detailed enquiry. The assessee had claimed deductions under sections 10AA and 80JJAA, and the assessment was selected for complete scrutiny. During the assessment proceedings, the Assessing Officer issued specific questionnaires and a detailed show-cause notice, calling for information regarding the eligibility of the deductions. The assessee furnished comprehensive details, including employee-wise data, salary particulars, working days, transfer of employees to the SEZ unit, and other supporting documents, after which the Assessing Officer accepted the claims. The Tribunal found that the PCIT ignored these materials and merely alleged inadequate verification without identifying any defect in the evidence or demonstrating that the statutory conditions were not fulfilled.
Relying on the decisions of the Supreme Court in Malabar Industrial Co. Ltd. and V-Con Integrated Solutions (P.) Ltd., as well as several High Court rulings, the Tribunal reiterated that section 263 cannot be invoked to order a fishing or roving enquiry once the Assessing Officer has made enquiries and adopted a plausible view. It emphasised the distinction between “lack of enquiry” and “inadequate enquiry”, observing that once the Assessing Officer raises queries and considers the assessee’s replies, it is not necessary for the assessment order to discuss every issue in detail. Since the PCIT neither found any fault with the assessee’s submissions nor established that the assessment order was both erroneous and prejudicial to the interests of the Revenue, the revision under section 263 was held to be unsustainable and was quashed. The assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee against the order u/s 263 of the Income Tax Act, 1961 for AY 2020-21 passed on 28.03.2025 by Commissioner of Income Tax (IT&TP), Pune emanating from assessment order u/s 143(3) r.w.s. 144C dated 08.04.2022.
