Utkal Automobiles Private Limited Vs ACIT (ITAT Ranchi)
Audit Objection can’t justify revision – Re-examination not allowed under 263
Assessee, appealed against the revisionary order passed by PCIT u/s 263 dated 31.03.2025. PCIT had set aside the assessment completed u/s 143(3) by AO, directing re-examination of certain issues on the basis that the order was “prejudicial to the interests of Revenue.”
Assessee contended that AO had already examined the issue in detail during scrutiny & even in 144A proceedings before the Additional CIT. The revision was merely triggered on the basis of a Revenue Audit Party objection, which cannot be the foundation for exercising jurisdiction u/s 263.
Tribunal noted that PCIT’s order itself acknowledged that the proceedings were initiated based on an audit objection. Jurisprudence is clear that audit objections cannot justify revision u/s 263. For invoking section 263, an order must be both erroneous & prejudicial to the interests of Revenue. However, PCIT only recorded that the order was prejudicial but did not hold it to be erroneous. Moreover, directing the AO to “re-examine” the issue implied that the matter had already been examined in the original assessment, making the revision a mere review, which is outside the scope of section 263. On these counts, Tribunal held that PCIT’s revisionary order was unsustainable & quashed it.
