PCIT 1 Vs Britannia Industries Limited (Calcutta High Court)
The appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 challenged the order of the Income Tax Appellate Tribunal (ITAT) dated March 6, 2024 for Assessment Year 2018–19. The Tribunal had allowed the assessee’s appeal and set aside the revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Act. The Revenue raised multiple substantial questions of law relating to the validity of invoking Section 263, applicability of Section 56(2)(x) on property acquisition, and disallowance under Section 43B.
Read SC Judgment in this case: SC Upholds HC Ruling Due to Non-Application of Mind in Section 263 Revision Order
The High Court first examined whether the PCIT had validly exercised jurisdiction under Section 263. It reiterated that the provision can be invoked only when 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 noted that although multiple issues were raised in the show-cause notice, explanations given by the assessee on some issues were accepted by the PCIT. Importantly, the Court found that the PCIT had invoked jurisdiction under Section 263 at the instance of the Assessing Officer, which was improper. The Tribunal’s conclusion that such invocation lacked independent application of mind was upheld.
