PCIT 1 Vs Britannia Industries Limited (Supreme Court of India)
The case concerns an appeal by the Revenue against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2018–19, where the Tribunal had set aside a revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961. The Calcutta High Court examined whether the PCIT had validly exercised jurisdiction under Section 263 and whether the Tribunal was justified in quashing the revision order.
Read HC Judgment in this case: Section 263 Invalid as PCIT Acted on AO’s Reference Without Independent Review: Calcutta HC
The Revenue raised questions on the legality of invoking Section 263, applicability of Section 56(2)(x) on acquisition of immovable property, and disallowance under Section 43B relating to reversal of provisions.
The High Court first addressed the scope of Section 263, noting that the provision can be invoked only if two conditions are satisfied: the assessment order must be erroneous and prejudicial to the interests of the Revenue. Additionally, the PCIT must independently examine the record and demonstrate satisfaction in the show-cause notice.
On facts, the Court found that the PCIT had invoked jurisdiction largely based on a reference from the Assessing Officer (AO), which was improper. The Tribunal had rightly concluded that such invocation was not based on independent application of mind. Further, the Court observed inconsistencies in the PCIT’s order, including incorrect statements that the AO had failed to conduct inquiries, despite evidence that all relevant details had been disclosed, examined, and considered during the original assessment.
