No Sec. 263 Revision if Sec. 153A Order Was Passed After Obtaining Prior Approval of JCIT

Case Details: PCIT v. Prakhar Developers (P.) Ltd. - [2024] 162 taxmann.com 48 (Madhya Pradesh)

Judiciary and Counsel Details

• • Vivek Rusia & Gajendra Singh, JJ.
  • Ms Veena Mandlik, Adv. for the Petitioner.

Facts of the Case

The assessee, a company engaged in the real estate business, filed the return of income, declaring the total income of rupees ‘NIL’ for the relevant assessment year. The Assessing Officer (AO) completed the assessment under Section 143(3), read with Section 153A, accepting the return of income of the assessee for the relevant assessment year.

Subsequently, the Principal Commissioner of Income Tax (PCIT) observed that the AO did not disallow the cash payment made by the assessee for the purchase of the land under section 40A(3) of the Act. Contending the assessment order to be erroneous and prejudicial to the interest of the Revenue, PCIT initiated revisionary proceedings against the assessee.

On appeal, the Tribunal quashed the revisionary order passed by the PCIT. Aggrieved by the order, an appeal was filed to the Madhya Pradesh High Court.

High Court Held

The High Court held that the PCIT can exercise the power under Section 263 of the Act, provided the conditions mentioned in the section are satisfied. The section empowers the PCIT to revise the order of the AO if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interests of the Revenue.

Further, as per Section 263 of the Act, the Principal Commissioner or Commissioner may call for and examine the record of any proceeding under the Act. If he considers any order passed therein by the AO is erroneous in so far as it is prejudicial to the interests of the Revenue, he may enquire and pass such order as he deems fit. Therefore, the power to revise the order is not only limited to the order passed by the AO with the approval of the PCIT.

In the instant case, the PCIT initiated the revisionary proceedings against the assessee for not disallowing cash payment made by the assessee to purchase the land. The PCIT contended that the assessee made cash payment for the purchase of the land in violation of section 40A(3). Thus, there was a prejudice to the interest of the Revenue.

However, the PCIT cannot revise the AO’s order if the AO has already exercised his power and passed the order with the approval of the PCIT. The AO passed the order under Section 143(3) read with Section 153A after obtaining prior approval from the Assistant Commissioner under Section 153D of the Act.

Accordingly, the PCIT has no jurisdiction to revise the order of the AO.

List of Cases Reviewed

• • IT(SS)A No.110/Ind/2021, dated 5-1-2023 affirmed.
  • Shri Ramamoorthy Vasudevan v. PCIT (ITA Nos.967 & 968/Pun/2016 (para 7) followed.