Zari Silk (India) Pvt. Ltd. Vs. PCIT (ITAT Jaipur)
Facts
A search u/s 132 was conducted on 23.11.2021 at the premises of Zari Silk (India) Pvt. Ltd. & its director, Shri Arun Palawat. Assessees filed returns declaring losses. AO completed assessments u/s 143(3) r.w.s. 148B after detailed enquiry, making additions of ₹33.90 lakh (company) & ₹88.24 lakh (individual) as “income from other sources”. Orders were passed with prior approval of Addl. CIT u/s 148B. Later, PCIT (Central) invoked revisionary powers u/s 263 on the ground that AO should have assessed such amounts u/s 69A/69C r.w.s. 115BBE (at higher tax rate) instead of under normal provisions.
Assessees’ Contentions
- PCIT had no jurisdiction to revise assessments completed u/s 143(3) r.w.s. 148B in search cases, as they already require Addl. CIT’s approval.
- AO raised queries, examined seized documents, considered replies & applied his mind before passing the order.
- This was not a case of “no enquiry”, but a case of PCIT attempting to substitute his opinion with that of AO.
- Relied on SC ruling in Shree Gayatri Associates (2019) & Jaipur ITAT in Mukesh Kumar Saini (2024), holding that once AO takes a plausible view, revision u/s 263 cannot be exercised merely to apply penal provisions like 115BBE.
Tribunal’s Observations/Decision
- AO conducted detailed enquiry during assessment, considered seized papers, replies & documentary evidence.
- Orders were duly approved by Addl. CIT u/s 148B, showing higher-level application of mind.
- Merely because AO assessed under “income from other sources” instead of s.69A/69C does not render the order “erroneous & prejudicial”.
- Revision u/s 263 requires both conditions (erroneous + prejudicial) to be satisfied. Here, AO’s view was plausible & legally sustainable.
- PCIT cannot substitute AO’s view with his own interpretation to levy higher tax.
- ITAT Jaipur quashed the PCIT’s orders u/s 263 in both cases.
Search assessments completed u/s 143(3) r.w.s. 148B with prior Addl. CIT approval cannot be revised u/s 263 merely to substitute a different opinion or to impose higher tax under s.115BBE. When AO has made due enquiry & taken a plausible view, revisionary jurisdiction fails.
