Shamkant Keshav Kotkar (Prop. Nandan Builders) Vs PCIT (Central) (ITAT Pune)
153A Can’t Travel Without Incriminating Evidence; Dumb Document, No Date, No Name: PCIT Loses in s.263 Proceedings
Unabated Year, No Incriminating Material: Cash Loan Allegation Too Vague: ITAT Strikes Down PCIT Revision u/s 263
The Pune Bench “B” of the ITAT, vide order dated 31.12.2025 in Shamkant Keshav Kotkar (Prop. Nandan Builders) v. PCIT (Central), Pune (ITA No.1358/PUN/2025; AY 2017-18), allowed the assessee’s appeal and quashed the revisionary order passed u/s 263, holding that the assessment framed u/s 153A r.w.s. 143(3) was neither erroneous nor prejudicial to the interests of the Revenue.
The assessee’s original assessment for AY 2017-18 had attained finality prior to search and was therefore an unabated year. In the 153A assessment, the AO made only a minor disallowance of ₹1,189 u/s 40(a)(i). The PCIT invoked s.263 alleging that the AO failed to examine an alleged cash loan of ₹1 crore and cash interest of ₹12.18 lakh purportedly routed through one Sachin Nahar, based on documents seized in a third-party search.
The Tribunal found that the PCIT’s action rested on vague and unsubstantiated material. The so-called seized documents did not mention any date, assessment year or the assessee’s name, and were therefore “dumb documents”. Even the statement of Sachin Nahar recorded u/s 132(4) did not allege any cash loan to the assessee. Importantly, the PCIT failed to rebut the assessee’s categorical plea that no incriminating material pertaining to AY 2017-18 was found during search.
Relying on the Supreme Court decision in PCIT v. Abhisar Buildwell (P.) Ltd., the Tribunal reiterated that for unabated assessments, additions under s.153A can be made only on the basis of incriminating material found during search. In absence of such material, the AO had no jurisdiction to disturb the completed assessment, and consequently, the PCIT could not brand the assessment as erroneous for “lack of enquiry”.
The Tribunal further noted that the alleged information regarding Sachin Nahar was already available even at the time of the original assessment u/s 143(3); hence, if at all s.263 was to be invoked, it ought to have been against the original order and not the 153A order.
Accordingly, the ITAT quashed the s.263 order in entirety and allowed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT PUNE
