PCIT Cannot Revise Order Without Annulling or Challenging Statutory Approval u/s 153D: ITAT

The Income Tax Appellate Tribunal (ITAT) has ruled in favour of an assessee, quashing a revision order, which was issued under Section 263 of the Income Tax Act, passed by the Principal Commissioner of Income Tax (PCIT), Central, Delhi, without challenging the approval under Section 153D of the Income Tax Act.

The assessee, Alka Verma’s case, was reopened, alleging escapement due to bogus accommodation entries of unsecured loans and Long Term Capital Gain (LTCG)/Short Term Capital Gain (STCG) from the penny stock companies. The assessee received a notice under section 153 of the Act from the Income Tax Department, and the assessee filed her income tax return (ITR), reporting the same income as declared in the ITR filed under section 139(1). In the assessment order passed under section 153C, the tax authorities made several additions under section 69 of the Income Tax Act, including the addition towards cash payment in property purchase, the addition of commission income and the addition on the sale of shares of Cubical Financial Ltd.

The assessee challenged this order before the CIT(A), but did not succeed. During this, the PCIT initiated proceedings under section 263 of the Income Tax Act, holding that the assessment order passed under section 153 of the Act was incorrect, as the reopening reasons under section 148 of the Act were not discussed in the assessment proceedings under section 153C. The assessee challenged the revision order of PCIT before the ITAT, Delhi.

The assessee argued that the PCIT wrongly invoked the provision of section 263 of the Act, as the order under section 153C was passed after taking approval under section 153D from the ACIT.

The ITAT held that PCIT cannot pass a revision order invoking section 263 of the Act without first challenging the statutory approval under Section 153D. The Tribunal cited previous judgements of the High Court where the PCIT’s revision order was held unsustainable due to the same reason. Holding the same, the Tribunal quashed the revision order passed under section 263 of the Act by the PCIT.