PCIT cannot invoke the revisionary jurisdiction u/s 263 on instance of Assessing Officer

PCIT cannot invoke the revisionary jurisdiction u/s 263 of the Income Tax Act upon a proposal from the Assessing Officer – ITAT

In a recent judgment, ITAT Kolkata has held that PCIT cannot invoke the revisionary jurisdiction u/s 263 of the Income Tax Act, 1961 upon a proposal from the Assessing Officer (AO).

ABCAUS Case Law Citation:
5113 (2026) (04) abacus.in ITAT

In the instant case, the assessee had challenged the revisionary order u/s 263 passed by the Pr. Commissioner of Income Tax (PCIT).

The assessment of the respondent bank was framed u/s 143(3) read with section 144B of the Income-tax Act, 1961 (the Act). The PCIT from the perusal of the assessment records observed that the assessee has debited a sum on account of provision and contingencies and also towards claim as CSR expenses under the head miscellaneous expenses which according to the PCIT were required to be added but had not been added while framing the assessment.

Therefore, the PCIT opined that the order of assessment framed by the AO was erroneous and prejudicial to the interest of the Revenue as the said provisions were not allowable under the Act.

Accordingly, a show cause notice was issued by the PCIT u/s 263 of the act and after taking into consideration the reply of the assessee the PCIT passed order u/s 263 of the Act by directing the AO to frame the assessment afresh after taking into account the issues as pointed out by in the order passed u/s 263 of the Act.

Before the Tribunal, the assessee argued that the order passed by the PCIT was invalid and nullity in the eyes of law as the proceeding u/s 263 of the Act were initiated by the PCIT upon a proposal moved by the JAO/ DCIT.

It was submitted that the proceedings had to be initiated by the PCIT on his own after examination of assessment records and if the order passed by the AO is found to be erroneous and prejudicial to the interest of the Revenue only then the revisionary jurisdiction u/s 263 of the Act is available to the Pr. Commissioner of Income Tax. However, this not being the case. Therefore, the revisionary order passed by the PCIT u/s 263 of the Act be quashed.

The assessee, in defense of his argument, relied on several decisions of High Court and Co-ordinate Benches of ITAT.

The Tribunal observed that apparently the jurisdiction under section 263 of the Act was invoked upon a proposal  from the AO that in assessment framed under section 143 (3) of the Act, there were certain mistakes and the PCIT acting on the said proposal initiated the proceedings under Section 263 of the Act.

The Tribunal further noted that even in the order framed under Section 263 of the Act,  the PCIT had not recorded his own satisfaction as to how the assessment order was erroneous and prejudicial to the interests of the revenue.

The Tribunal noted that the case of assessee was covered from the decision of Delhi High Court wherein the Hon’ble High Court had held that it is incumbent upon the PCIT to record an objective finding as to how the issues raised in the revisionary proceedings has rendered the assessment as erroneous. Besides, the case was  squarely covered by the decision of the Hon’ble Jurisdictional High Court wherein the Hon’ble Court had held that PCIT cannot invoke the jurisdiction at the instance of the AO.

Consequently, the Tribunal quashed the order of the PCIT by allowing the appeal of the assessee. 

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