Varun Srinivasan Vs CIT (ITAT Chennai)
Chennai ITAT Quashes Section 263 Revision of Penalty Order; PCIT Cannot Revise Order That Has Merged with CIT(A)’s Appellate Decision
The Chennai ITAT held that the Principal Commissioner of Income-tax (PCIT) could not invoke revisionary jurisdiction under section 263 to revise a penalty order under section 270A once that order had merged with the appellate order passed by the CIT(A). The Tribunal noted that, in the quantum appeal, the CIT(A) had deleted the addition of ₹80 lakh after holding that the amount stood explained and could not be treated as income from other sources. While deciding the penalty appeal, the CIT(A) specifically relied upon these findings and allowed the assessee’s appeal by holding that the assessee was entitled to the corresponding deduction. Thus, the Tribunal held that the penalty order had merged with the appellate order, leaving no scope for the PCIT to exercise revisionary powers under section 263 by treating the original penalty order as erroneous and prejudicial to the interests of the Revenue. Following the doctrine of merger and its earlier decision in Anotra Realtors Pvt. Ltd., the Tribunal set aside the section 263 order, holding that the assumption of revisionary jurisdiction was without authority of law.
