Jalpa Uttapal Patel Vs PCIT (ITAT Ahmedabad)
No Addition, No Revision: ITAT Ahmedabad Quashes PCIT’s 263 Action in Alleged Bogus Purchase Case
ITAT Ahmedabad “D” Bench, in Jalpa Uttapal Patel vs Pr. CIT, Ahmedabad-1 (ITA No. 720/Ahd/2025, AY 2018-19, order dated 23-12-2025), set aside the revision order u/s 263, holding that the PCIT had wrongly assumed revisionary jurisdiction despite a proper and reasoned assessment by the AO.
The case was originally reopened u/s 147 based on Insight Portal information alleging bogus purchase/sale transactions of ₹1.84 crore with M/s Kapishwar Steels. During reassessment, the assessee explained that actual purchases were ₹6.61 crore, furnished confirmations, bank statements, purchase ledger, stock details and GST returns, and demonstrated that transactions were through banking channels with corresponding sales and profits offered to tax. After due enquiry, the AO accepted the returned income without any addition.
PCIT invoked s.263 on the sole ground that since total purchases were ₹6.61 crore, the AO ought to have treated the entire amount as bogus u/s 69C. Tribunal held this reasoning legally unsustainable, reiterating that section 263 requires twin conditions—the order must be erroneous and prejudicial to the interests of revenue—and both must co-exist.
ITAT observed that the AO had conducted adequate and reasonable enquiries and taken a possible, legally tenable view. Mere non-addition, or the PCIT’s view that more enquiry should have been done, cannot justify revision. Further, in the case of Kapishwar Steels (Rohit Mital HUF), bogus transactions were estimated at 60%, and the assessee’s name did not appear in the list of bogus parties, reinforcing that revision was unwarranted.
Accordingly, the s.263 order was quashed and the assessee’s appeal allowed in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been preferred by the assessee against the revision order passed by the Principal Commissioner of Income Tax, Ahmedabad-1 (hereinafter referred to as “PCIT”) dated 26/03/2025 u/s.263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year (AY) 2018-19.
