Vikunj Real Estate Private Limited Vs ITO (ITAT Delhi)
Wrong Tax Target Chosen: PCIT’s s.263 Action Upheld as AO Taxed Only TDS Credit Instead of Undisclosed Commission
Delhi ITAT, Bench ‘C’, in Vikunj Real Estate Pvt. Ltd. vs. ITO (ITA No. 3179/Del/2025, AY 2011-12, order dated 22.12.2025), dismissed the Assessee’s appeal and upheld revisionary jurisdiction exercised by PCIT u/s 263.
The case originated from reassessment u/s 147 based on Investigation Wing information that Assessee had received substantial commission income from BPTP Ltd., on which TDS was deducted. During reassessment, AO verified Form 26AS vis-à-vis books and found that commission income of ₹19.94 lakh was not credited in books, though Assessee had claimed corresponding TDS credit of ₹1.94 lakh. However, AO erroneously added only the TDS credit to income instead of taxing the entire undisclosed commission income, and completed assessment u/s 143(3) r.w.s. 147.
PCIT invoked s.263 (Explanation 2) holding that assessment order was erroneous & prejudicial to the interest of Revenue, as AO failed to bring to tax escaped commission income which was the very basis of reopening. Assessee argued that AO had examined the issue, taken a plausible view, and PCIT was merely substituting his opinion.
The Tribunal rejected Assessee’s contention and held that this was not a case of “inadequate enquiry” or “change of opinion”, but a clear and apparent mistake. AO, despite verifying reconciliation, misdirected himself by taxing only TDS benefit instead of undisclosed income. Since Assessee followed mercantile system, commission income had to be accounted on accrual basis irrespective of receipt. Failure to do so rendered assessment unsustainable.
Accordingly, ITAT held that PCIT was justified in invoking s.263, and dismissed the appeal, reaffirming that where AO fails to tax income which was the very reason for reopening, revision is valid.
FULL TEXT OF THE ORDER OF ITAT DELHI
