Gujarat HC: Section 263 Orders Quashed as Section 14A Issue Was Already Examined in Original Assessment

Siddhi Infrabuild Private Limited Vs PCIT (Gujarat High Court)

The Gujarat High Court allowed two petitions filed under Article 227 of the Constitution of India challenging orders dated 30 March 2021 passed under Section 263 of the Income-tax Act, 1961 for Assessment Years 2012-13 and 2014-15.

For AY 2012-13, the petitioner had filed its return on 29 September 2012, declaring total income of Rs.2,82,34,740/-. The Assessing Officer completed scrutiny assessment under Section 143(3) on 26 March 2015, accepting the returned income. For AY 2014-15, the return was filed on 31 December 2015, declaring total income of Rs.5,37,42,938/-, and assessment under Section 143(3) was completed on 19 December 2016, again accepting the returned income.

Subsequently, following a search in the Venus Group, notices under Section 148 were issued. Reassessment orders under Sections 143(3) read with 147 were passed on 29 December 2017, making additions of Rs.7.50 crore for AY 2012-13 and Rs.3 crore for AY 2014-15 under Section 68. The petitioner appealed against those additions, and the CIT (Appeals), by order dated 22 August 2019, deleted the additions. Appeals filed before the Income Tax Appellate Tribunal were pending, but the petitioner subsequently withdrew those appeals and pursued the writ petitions.

On 19 March 2021, the Principal Commissioner of Income Tax issued show-cause notices proposing revision under Section 263, alleging that the reassessment orders were erroneous and prejudicial to the interests of the Revenue because the Assessing Officer had not made inquiries or verification concerning disallowance under Section 14A read with Rule 8D.