No section 263 revision by PCIT based on borrowed satisfaction

Grasim Industries Ltd. Vs PCIT (ITAT Mumbai)

Conclusion: Since the revision proceedings u/s 263 had been apparently triggered only based on borrowed satisfaction i.e Audit Objection and not based on independent application of mind by PCIT therefore, the revision order passed by PCIT u/s 263 was hereby directed to be quashed.

Held: Assessee had filed its original return of income which was later revised declaring total income of Rs. 283,15,81,630/- under normal provisions of the Act and Rs. 411,70,32,063/- u/s 115JB. AO completed the assessment u/s 143(3) determining total income at Rs 366,01,24,600/-under normal provisions of the Act and Rs 440,88,34,676/- u/s 115JB. In the said computation of income in the assessment order, AO had specifically mentioned that a sum of Rs 267,17,80,899/- for the Asst Year 2013-14 would be eligible to be carried forward for set off in subsequent years in bold letters. Assessee challenged the assessment by preferring an appeal before CIT(A) on the aggrieved issues. Later the assessment framed by AO was sought to be revised by PCIT on the ground that AO had allowed the claim of Long Term Capital Loss (LTCL) of Rs 267,17,80,899/- which ought not to have been allowed. PCIT setting aside the order of AO as erroneous and prejudicial to the interest of the revenue with regard to the issue of allowability of LTCL to be carried forward to subsequent years on the ground that AO had taken an incorrect view based on improper and incomplete appreciation and verification of facts and therefore unsustainable in law.  It was held that adequate enquiries were indeed carried out by AO in the original assessment proceedings and hence PCIT was not justified in invoking revisionary jurisdiction u/s 263. A possible view had been taken by AO on the issue of LTCL on the facts of the case and hence PCIT was not justified in invoking revisionary jurisdiction u/s 263 merely because he was of a completely different view and opinion on the issue of allowability of LTCL to be carried forward to subsequent years. Hence it could be safely concluded that the revision proceedings u/s 263 had been apparently triggered only based on borrowed satisfaction i.e Audit Objection and not based on independent application of mind by PCIT. Therefore, the revision order passed by PCIT u/s 263 was hereby directed to be quashed.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal in ITA No.1964/Mum/2019 for A.Y.2013-14 preferred by the order against the revision order of Pr. Commissioner of Income Tax, Central-1, Mumbai u/s.263 of the Act dated 27/03/2019 for the A.Y.2013-14.

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