Mahasian Di Hatti (P) Ltd Vs CIT (ITAT Delhi)
ITAT Quashes 263 Order: PCIT Cannot Fish for Enquiries in Faceless Assessment- Tribunal Cancels PCIT’s Revision for Lack of Error & Prejudice
Delhi Tribunal dealt with the validity of revisionary powers exercised by PCIT u/s 263 against an assessment framed by NFAC u/s 143(3) r.w.s. 144B for A.Y. 2020-21.
Assessee, engaged in the business of processing & marketing spices under the famous MDH brand, had filed its return declaring income of ₹620.33 crores. The case was selected for complete scrutiny on three issues – stock valuation, loss from currency fluctuations & refund claim. After detailed verification, NFAC completed assessment accepting returned income.
PCIT invoked revision u/s 263 holding that AO failed to examine various issues like large advances to suppliers, commission paid to directors, donations claimed u/s 80G, centenary celebration expenses, related party transactions, outstanding creditors, etc. According to PCIT, the assessment was erroneous & prejudicial to the interest of Revenue.
Assessee challenged this, contending that NFAC followed the detailed SOP under faceless scheme, all queries were raised & replied, & assessment cannot be reopened merely for roving/fishing enquiries. It was further argued that NFAC functions under Principal CCIT, an authority superior to PCIT, & hence 263 cannot be invoked against NFAC orders. Reliance was placed on judicial precedents including Metacaps Engineering & Mahendra Construction Co. vs CIT (Mum ITAT), Sabarmati Capital One Ltd vs DCIT (2025 ITAT Mumbai), & PCIT vs Britannia Industries Ltd (2025 Kol HC).
