Lasa Supergenerics Limited Vs PCIT (ITAT Mumbai)
Mumbai ITAT: Revision under Section 263 Valid Where AO Invokes Wrong Charging Provision for Bogus Purchases
The Mumbai ITAT upheld the revisionary order passed under section 263, holding that the Assessing Officer’s application of section 68 to an addition on account of bogus purchases rendered the reassessment order erroneous and prejudicial to the interests of the Revenue. The Tribunal observed that section 68 applies to unexplained credits in the books, whereas alleged bogus purchases represent unexplained expenditure, which is prima facie governed by section 69C.
The Tribunal rejected the assessee’s contention that the PCIT had merely substituted one legal view for another. It distinguished the Ahmedabad ITAT decision in Alang Steel Recycling Pvt. Ltd., noting that in that case the Assessing Officer had invoked section 37(1), whereas the present case involved the application of section 68, an inapplicable charging provision. Since the Assessing Officer had invoked the wrong statutory provision, the error was capable of causing prejudice to the Revenue by permitting set-off of current year losses and avoiding the consequences of section 115BBE.
Accordingly, the Tribunal held that the twin conditions of section 263 stood satisfied and upheld the PCIT’s direction to the Assessing Officer to examine the addition under section 69C read with section 115BBE. The assessee’s appeal was dismissed.
Cases Discussed
- Alang Steel Recycling Pvt. Ltd. vs. PCIT (ITAT Ahmedabad), ITA No. 1605/Ahd/2025, dated 16.01.2026
- Harish Narang vs. PCIT (ITAT Delhi), ITA No. 3637/Del/2025, dated 31.12.2025
- Kwality Steel Suppliers v. CIT (SC), 395 ITR 1
- Malabar Industrial Co. Ltd. vs. CIT (SC), 243 ITR 83 (SC)
- Jubiliant Organosys vs. CIT (Allahabad HC), [2004] 265 ITR 420
- Jai Kumar Kankaria vs. CIT (Calcutta HC), 251 ITR 707
- Venkatakrishna Rice Co. v. CIT (Madras HC), (1987) 163 ITR 129 (Mad.)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the Ld. Principal Commissioner of Income Tax, Thane -1 [for brevity “Ld. PCIT”], order passed under Section 263 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2018-19, date of order 27.03.2025. The impugned order emanated from the order from the order of the Assessment Unit Income Tax Department (for brevity ‘Ld. AO’), order passed under Section 147 r.w.s. 148 of the Act, date of order 27.03.2023.
