Lakhotia Diagnostic Service Pvt. Ltd Vs PCIT (ITAT Kolkata)
ITAT Kolkata allowed appeals filed by Lakhotia Diagnostic Service Pvt. Ltd. against orders passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, for assessment years 2018-19, 2019-20, and 2020-21. The dispute arose from an assessment order dated March 30, 2022, where the Assessing Officer (AO) had relied on the then-prevalent decision of the Calcutta High Court in CIT vs. Vijay Shree Ltd. However, the PCIT subsequently revised the order based on the Supreme Court’s ruling in Checkmate Services P. Ltd., which was issued after the assessment date. The ITAT found that at the time of the assessment, the AO had followed the binding jurisdictional High Court ruling, and thus the order could not be deemed erroneous or prejudicial to the Revenue’s interest under Section 263. The tribunal also considered the Calcutta High Court’s ruling in SPPL Property Management Pvt. Ltd., which reaffirmed that revisions under Section 263 cannot apply retrospectively based on later court decisions. Consequently, the ITAT set aside the PCIT’s orders, allowing the appeals in favor of the assessee. The judgment highlights the importance of adhering to legal precedents applicable at the time of assessment.
