City Union Bank Vs PCIT (ITAT Chennai)
Bank filed ROI declaring ₹807.24 Cr income. AO in scrutiny u/s 143(3) r.w.s. 144B (12.09.2022) made only two disallowances- ₹8.79 lakh u/s 14A & ₹20.07 Cr CSR expense.
PCIT, on record verification, held AO failed to examine three major claims- Non-rural bad debts written off u/s 36(1)(vii): ₹228.78 Cr, Employee Stock Option (ESOS) expenditure: ₹38.31 Cr.& Provision for bad debts u/s 36(1)(viia): ₹118.21 Cr. PCIT set aside assessment directing AO to redo enquiry.
Assessee’s Arguments
- AO had issued detailed notices u/s 142(1) & 143(2); queries & replies on all three issues were on record.
- PCIT himself recorded in impugned order that AO had raised queries & assessee responded.
- All three issues already decided in assessee’s favour by ITAT in earlier years (order dated 11.03.2024).
- Once AO adopts one possible view supported by Tribunal, order is neither “erroneous” nor “prejudicial.”
- Relied on Max India Ltd. (SC), V-Con Integrated Solutions (SC, 2025), A.R. Builders (Mad HC)
Tribunal’s Observations /Decision
- Clear distinction between lack of enquiry vs inadequate enquiry. Here AO had indeed enquired; PCIT cannot revise merely for deeper probe.
- PCIT did not find AO’s view unsustainable; merely remanded for re-verification. Such remand without error finding is not permitted u/s 263.
- Catena of rulings (Malabar Industrial Co. Ltd., Sunbeam Auto Ltd., Anil Kumar Sharma, Paville Projects, Vellore Institute of Technology) establish that when AO conducts enquiry & adopts a plausible view, revision is invalid.
- Since ITAT had already upheld assessee’s claim in earlier years, AO’s approach was a “possible view.”
- PCIT’s orders u/s 263 set aside for both AYs 2020-21 & 2021-22.
- Assessee’s appeals allowed in full
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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