JCIT Vs ACP Tollways Private Limited (ITAT Lucknow)
ITAT Quashes PCIT Order for Violating Natural Justice by Withholding Evidence; Genuine Purchases Ignored: ITAT Voids PCIT’s Revision for Misuse of Powers; PCIT’s 263 Order Quashed for Withholding Adverse Material & Ignoring Evidence on Genuine Purchases
In this case, assessment u/s 143(3) r.w.s. 144B was completed for A.Y. 2020-21 & a minor disallowance of Health & Education Cess was made. Later, PCIT invoked revisionary jurisdiction u/s 263 alleging that Assessee purchased iron ore fines of ₹3.94 crore from M/s B B Medicare Pvt. Ltd., which was allegedly a “shell company” as per a SEBI list & did not possess a valid licence for trading iron ore. PCIT concluded that AO failed to make proper enquiry & set aside the assessment.
Assessee strongly objected, arguing:
- All purchase details, bills, bank statements, transit passes, quantitative records, MCA master data & licence details were furnished both before AO & PCIT.
- PCIT relied on external information (SEBI list, licence suspension data, MCA website, location details, etc.) but never provided this material to the Assessee for rebuttal despite specific request.
- CIT wrongly assumed the company was from Kolkata whereas MCA records showed it was in Odisha.
- Assessee produced evidence that licence was valid during relevant period (06.08.2018 – 05.08.2023), contrary to PCIT’s observation of suspension.
- AO had examined purchases, accepted books, quantitative records & sales. No defect was found.
Tribunal observed:
- PCIT used external information behind Assessee’s back, violating principles of natural justice & doctrine of audi alteram partem.
- PCIT did not confront Assessee with alleged adverse material & did not consider evidences already filed.
- Reliance placed on SC in Amitabh Bachchan & Chhattisgarh High Court in Sun & Sun Inframetric (2024) 460 ITR 258 holding that any material used against Assessee must be shared, otherwise 263 fails.
- Even on merits, Assessee’s evidences (payments, invoices, transportation, licence validity) were ignored.
- PCIT’s conclusion was based only on presumption & external data, not proper enquiry.
Therefore, Tribunal held that 263 order suffered from violation of natural justice & misuse of powers, & quashed the revisionary order in entirety. Thus, the appeal of the Assessee was allowed, & the 263 order was set aside as bad in law.
