Perfect Filaments Ltd. Vs PCIT (ITAT Mumbai)
Revision Invalid Where New Issues Added Beyond 263 Notice – ITAT Strikes Down PCIT’s Expansion of 263 Without Notice
Assessee, engaged in manufacturing dyed polyester yarn, filed return declaring ₹16.91 crores income. AO completed scrutiny assessment on 02.09.2022 accepting return. PCIT issued 263 notice on 03.03.2025 alleging three errors:
(a) wrong claim of ₹92.01 lakhs as deduction being interest on delayed TDS;
(b) omission to disallow ₹6.87 lakhs interest u/s 201(1A)/206C(7);
(c) ineligible 80G claim of ₹4.77 lakhs on CSR expenditure.
Later, in 263 order dated 26.03.2025, PCIT expanded scope by adding fresh issues – alleged foreign currency purchase of ₹9.71 crores, wrong depreciation claim on land/building, royalty of ₹5 crores to CFO, & donation of ₹6 lakhs with expired 80G certificate.
Tribunal held:
On new issues: Since these were not part of 263 notice, assessee had no opportunity to rebut. Following SC in CIT Vs. Amitabh Bachchan (384 ITR 200), such expansion violated natural justice. Hence, PCIT’s directions on additional issues were quashed.
On delayed TDS interest (₹92.01 lakhs): Tribunal noted AO never examined whether this was actual interest or allowable deduction linked to earlier disallowance u/s 40(a)(ia). As issue required fresh inquiry, PCIT rightly invoked 263. Matter remitted to AO for proper verification.
