ITAT Quashes PCIT’s Section 263 Orders Passed Without Any Finding of Error in 153C Assessments

ITAT Quashes PCIT’s Section 263 Orders Passed Without Any Finding of Error in 153C Assessments

The assessee, Safal Constructions (India) Pvt. Ltd., faced revisionary proceedings under Section 263 for Assessment Years 2018-19 and 2019-20 after assessments were completed under Section 153C pursuant to a search in the case of land broker Shri Suresh Thakkar. The Assessing Officer had examined the seized and digital material, issued detailed notices under Section 142(1), and received comprehensive replies explaining the nature of TDR entries, land records relating to Makarba, and survey disclosures about slum redevelopment projects. The AO accepted the explanations and made only minor disallowances unrelated to the seized material.

Appeal Before PCIT: The PCIT invoked Section 263 on the premise that the AO failed to properly scrutinise seized documents, TDR jottings, land papers, and survey disclosures. The PCIT, however, set aside both assessments without dealing with the assessee’s explanations or demonstrating any specific error in the AO’s orders.

Issue Raised: Whether Section 263 could be invoked when the AO had made due enquiries, applied his mind to the seized materials, and adopted a plausible view without any demonstrable error in the assessment order.

Tribunal’s Decision: The Tribunal held that the PCIT’s orders were unsustainable, as they did not identify a single error in the assessment orders, nor did they show how the assessments were prejudicial to the interests of the Revenue. The Bench noted that the AO had issued detailed notices under Section 142(1), obtained page-wise explanations for every seized and digital document, examined the survey disclosures, and accepted the assessee’s submissions after considering all materials. The PCIT, instead of addressing these replies, merely reproduced portions of seized documents belonging to a third party and concluded that further enquiry was needed, an approach that amounted only to a change of opinion.

The Tribunal ruled that the PCIT cannot invoke revisional powers merely because he prefers a deeper or different enquiry. Since the AO had already made adequate enquiries and taken a reasonable and plausible view, the PCIT’s orders lacked the foundational finding of error. Therefore, the Tribunal quashed the Section 263 orders for both A.Y. 2018-19 and 2019-20.

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