M P Trading Company Vs PCIT (ITAT Mumbai)
Mumbai ITAT: PCIT Cannot Invoke Section 263 on Issues Already Pending Before CIT(A)
The Mumbai ITAT quashed the revisionary order passed under section 263, holding that the Principal Commissioner cannot exercise revisionary jurisdiction on issues which are already the subject matter of an appeal before the CIT(A). The Tribunal held that clause (c) of Explanation 1 to section 263 creates a statutory bar against such revision.
The assessee’s assessment had originally resulted in an addition of 25% of alleged non-genuine purchases from two suppliers after the Assessing Officer conducted enquiries and estimated the profit element embedded in the purchases. Aggrieved by this addition, the assessee had already filed an appeal before the CIT(A). While that appeal was pending, the PCIT invoked section 263, holding that the entire purchases of ₹6.30 crore should have been disallowed under section 69C and that the outstanding liability of ₹3.53 crore should also have been taxed under section 41(1).
The Tribunal first condoned the 244-day delay in filing the appeal, accepting the assessee’s explanation that it was under a bona fide belief that the section 263 order could be challenged only after completion of the consequential assessment proceedings.
On merits, the Tribunal held that the very issue sought to be revised—namely, the tax treatment of the alleged bogus purchases—was already pending before the CIT(A). Therefore, in view of Explanation 1(c) to section 263, the PCIT lacked jurisdiction to revise the assessment on that issue. The Tribunal relied upon the decisions of the Madras High Court in Smt. Renuka Philip and the Allahabad High Court in CIT v. Vam Resorts and Hotels Pvt. Ltd., both of which held that revision under section 263 is impermissible where the same issue is pending in appeal.
The Tribunal also distinguished the Supreme Court decisions in Shri Arbuda Mills Ltd. and EIMCO K.C.P. Ltd., observing that those cases dealt with issues not forming part of the pending appeal or related to periods before the insertion of Explanation 1(c), and therefore did not support the Revenue’s case.
Accordingly, the ITAT held that the assumption of jurisdiction under section 263 was invalid and set aside the revisionary order, allowing the assessee’s appeal.
Cases Discussed
- Suneeta Sekri v. DCIT (Mumbai – Trib.), (2026) 183 taxmann.com 97
- Vaksons Metaplast (P.) Ltd. v. PCIT (Central) (Delhi – Trib.), (2025) 181 taxmann.com 410
- Cupid Diamonds Private Limited V. Principal Commissioner of Income Tax – 5 (Mumbai – Trib.), ITA No.478/MUM/2025
- Manju Rakesh Jain v. Principal Commissioner of Income-Tax (Mumbai – Trib.), [2025] 177 taxmann.com 361
- AZB AND PARTNERS V. PCIT, Mumbai-8 (Mumbai – Trib.), I.T.A No.4105/Mum/2025
- Mridul Shashikant Khandelwal v. PCIT (Central) (Mumbai – Trib.), [2025] 180 taxmann.com 788
- Surbhit Impex (P.) Ltd. v. Principal Commissioner of Income-tax-8 (Mumbai – Trib.), [2025] 180 taxmann.com 351
- Shree Siddhi Infrabuild (P.) Ltd. v. Principal Commissioner of Income-tax (Gujarat), [2025] 172 taxmann.com 232
- CIT v. Kanak Impex (India) Ltd. (Bombay High Court), [2025] 172 taxmann.com 283
- ACIT vs. Dhiraj Parbat Gothi, ITA No. 580/Mum/2025, order dated 30.05.2025
- Canara Bank Securities Ltd. (SC), [2020] 114 taxmann.com 545
- Renuka Philip v. Income-tax Officer, Business Ward-XV(2), Chennai (Madras High Court), [2019] 101 taxmann.com 119
- Renuka Philip (Smt.) v. ITO (Madras High Court), (2018) 409 ITR 567
- K. Proteins Ltd. v. DCIT (SC), [2017] 84 taxmann.com 195
- Nikunj Eximp Enterprises Pvt. Ltd. vs. CIT(A) (Bombay High Court), [2015] 372 ITR 619
- Smt. P.K. Vasanthi Rangarajan v. CIT (Madras High Court), [2012] 23 taxmann.com 299/209 Taxman 628
- CIT vs. Sunbeam Auto (Delhi High Court), 332 ITR 167
- CIT v. Vam Resorts and Hotels Pvt. Ltd. (Allahabad High Court), 418 ITR 723
- American Spring and Processing Works P. Ltd. (Bombay High Court), (2023) 295 Taxman 438
- T. Global Communications India Ltd. (Delhi High Court), (2024) 466 ITR 714
- Gabriel India Ltd. (Bombay High Court), [1993] 203 ITR 108
- Oil India Ltd vs CIT (Calcutta High Court), 138 ITR 836
- Jute Corporation Ltd, 187 ITR 688
- CIT v. Kanpur Coal Syndicate (SC), [1964] 53 ITR 225
- Malabar Industries Ltd. v. CIT
- CIT vs. Shri Arbuda Mills Ltd. (SC), (1998) 231 ITR 50
- EIMCO K.C.P. Ltd. vs. CIT (SC), (2000) 242 ITR 659
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the assessee against the order of the learned Principal Commissioner of Income Tax, Mumbai-20 [Ld. PCIT], dated 27-03-2025 passed u/s 263 of the Act for the assessment year 2021-22.
