J.M. Housing Limited Vs PCIT (Central) (ITAT Delhi)
No Remission, No 41(1): Adequate Enquiry Means No 263: PCIT Can’t Rewrite Assessment on Change of View- PCIT Overreach Quashed
In J.M. Housing Ltd. Vs. Pr.CIT (Central), Kanpur (at Meerut), ITA No.8248/Del/2025, AY 2021-22, order dated 31.12.2025, Delhi ITAT quashed revision u/s 263 & restored original assessment.
Assessee had filed return declaring loss of ₹38.75 crore. Assessment was completed u/s 143(3) on 19.12.2022, wherein AO made addition of ₹12.48 crore u/s 68 r.w.s. 115BBE in respect of high-value trade creditors after issuing notices u/s 133(6), analysing replies of creditors & recording detailed findings on lack of creditworthiness & genuineness.
PCIT invoked section 263, alleging that AO failed to conduct proper enquiries & wrongly applied section 68 instead of section 41(1), and set aside the entire assessment order. Tribunal held that this was not a case of “no enquiry” but of adequate enquiry, merely because PCIT held a different opinion. Once AO had conducted detailed verification & applied section 68 r.w.s. 115BBE, clause (a) of Explanation-2 to section 263 could not be invoked. Tribunal further held that section 41(1) was wholly inapplicable in absence of any evidence of remission or cessation of liability.
ITAT also noted that addition u/s 68 attracted higher tax rate, hence there was no loss of revenue, which is a sine qua non for invoking section 263. Further, PCIT could not set aside the entire assessment when show-cause notice was confined only to one issue. Accordingly, revision order dated 27.03.2025 was held bad in law & quashed. Appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been preferred by the assessee against order dated 25.03.2025 of the Pr. Commissioner of Income Tax, Central, Kanpur, Meerut, [hereinafter referred to as ‘ld. PCIT] arising out of assessment order dated 19.12.2022 passed u/s 143(3) of the Income Tax Act, 1961 pertaining to Assessment Year 2021-22. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
