Mirum Digital Pvt. Ltd. Vs PCIT (Bombay High Court)
The Bombay High Court considered an appeal under Section 260A of the Income Tax Act, 1961 against the ITAT order dated 2 January 2023, which had upheld the PCIT’s revision under Section 263 for A.Y. 2017-18. The assessee, engaged in digital marketing and related services, received reimbursements for media costs paid to companies including Facebook, Twitter and Google, while recognising only its campaign management fee as revenue. It had filed its return declaring total income of Rs. 3,29,30,260/-. During scrutiny under Section 143(3), the AO issued notices requiring reconciliation of 26AS and other records with the books and ITR. The assessee submitted reconciliations on 29 November, 14 December and 17 December 2019, including details of Rs. 17,26,89,469/- treated as reimbursement of expenses. The AO thereafter completed assessment on 23 December 2019 without making a further addition concerning the revenue difference.
The PCIT subsequently invoked Section 263, holding that the AO had not adequately verified the reimbursement and related TDS aspects. The ITAT upheld the revision, principally noting that the assessee had not appeared before the PCIT. The assessee’s subsequent Section 254(2) application was also dismissed.
Before the High Court, the assessee submitted that specific queries had been raised and answered during assessment and that including the reimbursements as revenue would have had no impact on taxable income because corresponding media costs would qualify for deduction. The Revenue contended that the assessee’s failure to appear before the PCIT demonstrated lack of enquiry.
