Mere non response to show cause notice u/s 263 not sufficient to justify revisionary order

Mere non response by assessee to show cause notice u/s 263 is not sufficient to justify revisionary order – ITAT

In a recent judgment, ITAT Agra has held that mere non response by the assessee to show cause notice u/s 263 is not sufficient to justify revisionary order in absence of any finding to the prejudice caused to the interest of the Revenue

ABCAUS Case Law Citation:
4472 (2025) (03) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the PCIT in revisionary proceedings u/s 263 of the Income Tax Act, 1961 (the Act).

The Tribunal observed that as contended by the assessee there was no indication in the PCIT’s revision direction specifically finding that the section 143(3) assessment was erroneous causing prejudice to the interest of the Revenue.

The Revenue contended that once the assessee had been issued the corresponding section 263 show-cause notice which remained non-complied at his end, even if there is no specific finding in the impugned orders, the same deserve to be upheld for want of rebuttal by the assessee side before the revisional authority(es).

The Tribunal opined that there was no reason to sustain any of the impugned revision direction forming subject matter of the adjudication in the instant case. This was for the precise reason that apart from reproducing the corresponding show-cause notices which went un-responded by the assessee, there was not even a single instance wherein the revisional authority had arrived at any categorical finding on merits after having discussed the relevant error as well as prejudice caused to the interest of the Revenue.

The Tribunal pointed out that the law on exercise of the revision jurisdiction stands very well settled since long in light of decision of the Hon’ble Supreme Court in Malabar Industries Ltd. that before the same is invoked, the assessment has to be simultaneously erroneous as well as causing prejudice to the interest of the Revenue. Meaning thereby that till the time such a conclusion is not arrived at by the revision authority, an assessment could not be held as liable to be revised merely because of the fact that the corresponding show-cause notice(s) issued to the taxpayer had gone un-responded.

The Tribunal further observed that the Hon’ble Allahabad High Court had already decided the very issue involving a similar revision direction, as not sustainable.

The Tribunal accepted submissions of the assessee and reversed the PCIT order under section 263

Accordingly, the assessee’s appeal was allowed.

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