Case Law Details
Havells India Limited Vs PCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, recently issued a landmark ruling in the case of Havells India Limited Vs Principal Commissioner of Income Tax (PCIT). The Tribunal set aside and quashed a revisional order from the PCIT, citing a failure to fulfill the twin conditions necessary for invoking revisional powers under Section 263 of the Income Tax Act, 1961.
In this case, Havells India Limited argued that the dual prerequisites for applying Section 263 were not satisfied. Section 263 empowers the Principal Commissioner to revise an order passed by an Assessing Officer if it is considered both erroneous and prejudicial to the interest of the revenue. A proposed disallowance of Rs. 1,15,00,000, despite altering the taxable income under normal circumstances, led to no change in the book profit under Section 115JB of the Act. Consequently, Havells India Limited contended no prejudice had been caused to the Revenue. The Revenue, however, found this explanation unverifiable and insisted on maintaining the revisional order. Considering the arguments, ITAT Delhi sided with Havells, finding no revenue benefit gained from the alleged error, and thus no prejudice caused to the Revenue. The ITAT set aside and quashed the revisional order from the PCIT, citing a failure to fulfill the twin conditions necessary for invoking revisional powers under Section 263.
This ruling has significant implications, shedding light on the critical need to fulfill the necessary conditions for invoking revisional powers under Section 263 of the Income Tax Act. It emphasizes the necessity for verifiable evidence in tax assessments and underlines the responsibility of the Revenue Department when applying their revisional powers.
FULL TEXT OF THE ORDER OF ITAT DELHI
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