Revisionary order u/s 263 quashed as no discussion was made on assessee’s submission

Revisionary order u/s 263 quashed as PCIT made no discussion why he did not agree with the submissions of the assessee

In a recent judgment, the ITAT Lucknow has set aside revisionary order u/s 263 as PCIT made no discussion in the impugned order on the submissions made by the assessee and why PCIT did not agree with the submissions made from the assessee.

ABCAUS Case Law Citation:
4388 (2025) (01) abcaus.in ITAT

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

In the assessment order, the Assessing Officer (AO) recorded that in the scrutiny, the point which was identified with regards to real estate business with high closing stock, higher turnover reported in service tax return as compared to ITR, Higher turnover reported in service tax return as compared to ITR, and large increase in unsecured loans during the year. On these points categorical explained was called from the assessee and the same was submitted by him, which had been placed on record.

Vide impugned order the PCIT holding the assessment order to be erroneous and prejudicial to the interest of the revenue, set aside it to be framed denovo by the Assessing Officer. In the aforesaid order, the PCIT had stated that the assessee filed submissions during the proceedings under section 263 of the Act. However, there was no discussion in the aforesaid order about what submissions were made by the assessee, and why the PCIT did not agree with the submissions.

Before the Tribunal, the assessee contended that the Assessing Officer had conducted all relevant inquiries and detailed submissions were made by the assessee in the course of assessment proceedings.

It was further stated that the relevant queries were made by the Assessing Officer and the replies submitted by the assessee during the assessment proceedings were brought to the knowledge of the PCIT during the proceedings under section 263 of the Act, and detailed submissions were also submitted in writing as well as at the time of personal hearing. However, the PCIT passed the order under section 263 of the Act with pre-mediated and biased mind-set against the assessee, which was clearly evidenced by the fact that there was no discussion in the impugned order passed by the PCIT on the submissions made from the assessee’s side and there was no discussion in the aforesaid order under section 263 of the Act of PCIT, why the Ld. PCIT did not agree with the submissions made from the assessee’s side.

It was submitted that in the absence of any discussion on assessee submission in the impugned order of the PCIT, the order was non-speaking order, clearly in violation of principle of natural justice and should be quashed in limine.

The Tribunal noted that the Assessing Officer had made detailed inquiries with the assessee through multiple notices issued under section 142(1) and the assessee responded to these notices by way of written submissions. Further, the detailed submissions made by the assessee before the PCIT in the course of proceedings under section 263 of the Act have been acknowledged by the PCIT in his impugned order but the PCIT failed to consider the submissions made by the assessee and also failed to pass a speaking order on why the submissions made by the assessee were not considered satisfactory.

The Tribunal, having regard to the submissions made by the assessee during proceedings undersection 263 of the Act, and earlier during assessment proceedings; and with deference and respect for case laws relied upon by the assessee held that the PCIT failed to make a case for action under section 263 of the Act.

Accordingly, the impugned order was set aside and the original assessment order was restored.

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