PCIT Vs Mahavir Ashok Enterprises Pvt Ltd (Chhattisgarh High Court)
In a significant ruling, the Chhattisgarh High Court has held that the revisional authority, under Section 263 of the Income Tax Act, 1961, cannot invoke the provision if the Assessing Officer (AO) has followed one of the two possible views available in law. This judgment arose in the case of Principal Commissioner of Income Tax (PCIT) Vs. Mahavir Ashok Enterprises Pvt. Ltd., and the court underscored the principles governing the invocation of revisional powers under Section 263.
Background
Mahavir Ashok Enterprises Pvt. Ltd., engaged in the business of trading gold ornaments, bullion, diamonds, and other precious metals, was subject to a survey conducted under Section 133A of the Income Tax Act on March 6, 2017. During this survey, the company declared excess stock worth ₹2,25,75,951, which was later reflected in the income tax return for the assessment year 2017-18.
The return of income was scrutinized by the Assessing Officer (AO), who added a small amount to the disclosed income and taxed the entire income at a 30% rate under the general provisions of the Income Tax Act. However, the Principal Commissioner of Income Tax (PCIT), in exercising his revisional powers under Section 263, argued that the surrendered excess stock should have been treated as unexplained investment under Section 69 of the Income Tax Act and taxed at a higher rate of 60% plus surcharge and cess under Section 115BBE.
