ITAT Quashes PCIT’s Revision in Haldiram Case; Section 263 Can’t Override 153D Approval

Haldiram Snacks Pvt. Ltd. filed its return for AY 2016-17 declaring income of Rs. 148.20 crore. A scrutiny assessment under Section 143(3) was completed on 18 December 2018 with a small disallowance under Section 14A. Although reassessment proceedings under Section 148 were later initiated, they were quashed by the High Court as time-barred.

After a search on the Bakshi (Oriental) Group, the Assessing Officer recorded satisfaction that certain seized material belonged to Haldiram. A notice under Section 153C was issued after obtaining mandatory approval under Section 153D from the Additional CIT. Thereafter, the Principal CIT invoked Section 263, alleging that the AO failed to examine alleged bogus purchases of Rs. 3.37 crore from M/s Vinayak Traders, and directed a fresh enquiry.

Question of Law: Whether an assessment completed under Section 153C after mandatory approval under Section 153D can be revised under Section 263 without first finding the statutory approval itself to be erroneous.

The ITAT Delhi held that once an assessment under Section 153C is completed with approval under Section 153D, such approval forms an integral part of the assessment. While exercising powers under Section 263, the PCIT must examine the validity of both the assessment order and the statutory approval.

The Tribunal noted that the PCIT neither questioned nor annulled the approval granted under Section 153D. The assessment could not be revised independently. Relying on PCIT v. Prakhar Developers Pvt. Ltd., the Tribunal held the assumption of jurisdiction under Section 263 to be invalid and quashed the revision order.

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