Kush Trading & Commerce Pvt. Ltd. Vs ITO (ITAT Kolkata)
ITAT Kolkata quashes 263 Revision – PCIT cannot act merely on AO’s Proposal without Independent Satisfaction
Assessee filed return on 30.09.2015, processed u/s 143(1). The case was selected under CASS & assessed u/s 143(3), accepting returned income. Subsequently, AO detected an “error” & moved proposal to PCIT for revision. PCIT, based solely on AO’s proposal, invoked revisionary jurisdiction u/s 263 holding the assessment “erroneous & prejudicial to Revenue” & directed de novo assessment.
Assessee argued that PCIT did not record independent satisfaction & merely acted on AO’s proposal. It was contended that revision u/s 263 requires objective finding by PCIT, not delegation of AO’s view. Reliance was placed on Sinhotia Metals & Minerals Pvt. Ltd. (ITAT Kolkata & Cal HC), Karabi Dealers Pvt. Ltd. (ITAT Kolkata & Cal HC) & Delhi HC in D.G. Housing Projects Ltd. (343 ITR 329)
Tribunal noted that PCIT failed to demonstrate how the order was erroneous & prejudicial to the interest of Revenue. No independent reasoning or satisfaction was recorded. Jurisdiction u/s 263 cannot be invoked mechanically at the instance of AO..
Tribunal found that apparently the jurisdiction u/s 263 was invoked upon a proposal was received from AO that in assessment frame u/s 143 (3), there are certain mistakes & PCIT acting on the said proposal initiated 263 proceedings . Tribunal noted that even in the 263 order, PCIT has not recorded his own satisfaction as to how the assessment order is erroneous and prejudicial to the interests of the revenue. By following Delhi HC in D.G. Housing & binding Calcutta HC rulings in Sinhotia Metals & Karabi Dealers, the revisionary order was quashed.
