Mujmmeel Vs ACIT (ITAT Jaipur)
Income Tax Appellate Tribunal (ITAT) Jaipur, in the case of Mujmmeel vs. ACIT, quashed the Principal Commissioner of Income Tax’s (PCIT) order issued under Section 263 of the Income Tax Act. The case arose from a survey under Section 133A conducted on the assessee on March 2, 2020, where incriminating documents were discovered, involving transactions totaling ₹1.44 crore. During scrutiny, the Assessing Officer (AO) verified the transactions and made an addition based on commission income. However, the PCIT subsequently invoked Section 263, claiming the AO’s order was erroneous and prejudicial to the interests of revenue.
The ITAT examined the twin conditions necessary for invoking Section 263: that the AO’s order must be erroneous and prejudicial to the revenue. Referring to the Supreme Court judgment in Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC), the ITAT emphasized that an AO’s order cannot be deemed erroneous merely because the PCIT disagrees with it. If the AO adopts one of the permissible legal views or if there are two plausible interpretations, the PCIT cannot substitute their opinion for that of the AO.
The tribunal noted that the AO had conducted a thorough inquiry into the transactions flagged during the survey, examined the evidence, and applied their judgment. The PCIT’s order failed to demonstrate any specific error or lack of inquiry in the AO’s assessment. Consequently, the ITAT found no justification for the PCIT to invoke Section 263.
The tribunal’s decision underscores that the supervisory powers under Section 263 are not a tool for reviewing or overriding the AO’s legally valid conclusions. It further clarified that every revenue loss does not equate to an erroneous or prejudicial assessment unless legal unsustainability is evident. Based on these findings, the ITAT allowed the assessee’s appeal and quashed the PCIT’s order.
Petitioner was represented by Miss. Swatika Jha, Adv.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
