Jain Enterprises Vs PCIT (ITAT Raipur)
ITAT Raipur Upholds Sec 263 Revision – Lack of AO Enquiry on Stock Anomaly Makes Reassessment Order Erroneous & Prejudicial
In Jain Enterprises vs Pr. CIT (AY 2018-19), the ITAT Raipur dismissed the assessee’s appeal and upheld revisionary action u/s 263. The PCIT had set aside reassessment completed u/s 147 r.w.s. 144B on the ground that the AO failed to examine an anomaly of 1940 MT in closing stock arising from transition from VAT to GST regime, where various coke items were regrouped under a single HSN code
The Tribunal observed that although notices u/s 142(1) were issued, there was no evidence that the AO conducted meaningful enquiry or verification on stock discrepancy. The assessee admitted that revised Annexure-I of Form 3CD explaining the reporting error was furnished only before PCIT and not during assessment, indicating lack of proper examination by AO.
Relying on Explanation-2(a) to sec 263 and Supreme Court ruling in Paville Project Pvt. Ltd., ITAT held that an order passed without necessary enquiries is deemed erroneous and prejudicial to revenue. Since AO failed to verify quantitative stock details and GST reporting issues, PCIT rightly invoked revisionary jurisdiction. Accordingly, the revision order was upheld and the assessee’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
This appeal for Assessment Year (‘AY’) 2018-19 filed by the assessee is directed against the order dated 24.03.2025 of the Principal Commissioner of Income Tax, Raipur-1 (‘PCIT’) passed under section 263 of the Income Tax Act, 1961 (‘Act’).
