An assessment order is erroneous and prejudicial to the revenue when the Assessing Officer fails to conduct necessary inquiries into claims or issues explicitly identified for scrutiny. Passive acceptance of information without investigation, resulting in a loss of revenue, empowers the commissioner to invoke revisionary jurisdiction.

ORDER

PER AMITABH SHUKLA, AM,

This appeal filed by the assessee is against order dated 28.03.2025 of the Learned Principal Commissioner of Income Tax, Delhi-1[hereinafter referred to as ‘ld. PCIT] arising out of assessment order dated 2012-2022 passed u/s 143(3) of the Income Tax Act, 1961 pertaining to Assessment Year 2021-22. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

2. The assessee has raised following grounds of appeal:-

1. That on the facts and circumstances of the case and in law, the order dated 28.03.2025, passed by the Principal Commissioner of Income Tax, Delhi ['PCIT'], under section 263 of the Income Tax Act, 1961 ('the Act) is without jurisdiction, illegal, bad in law, void ab initio and liable to be quashed.

2. That the PCIT erred in invoking revisionary jurisdiction under section 263 of the Act qua assessment completed by National Faceless Assessment Centre ('NFAC/assessing officer') under section 143(3) read with sections 144C(3) and 144B of the Act, which is a complete code in itself.

3. That on the facts and circumstances of the case, the impugned order having been passed by the PCIT in undue haste without: (a) considering the submissions filed, and (b) first disposing off the legal objections by passing a separate speaking order, and (c) providing a reasonable opportunity of being heard, is illegal, bad in law and liable to be quashed set aside.

4. That the PCIT erred on facts and in law in exercising revisionary powers under section 263 of the Act on various issues in the impugned order, without satisfying the twin jurisdictional conditions of the assessment order being: (a) erroneous; and (b) prejudicial to the interests of the Revenue and consequently, the impugned order is illegal, bad in law and liable to be quashed.

5. That the order passed by the PCIT under section 263 setting aside the assessment order and directing the assessing officer to make de-novo assessment qua certain issues [referred to in paras 5 to 7 of the order] after making fresh enquiries is, in the absence of any finding on merits demonstrating how and why the assessment order was erroneous, invalid and bad in law.

6. That the PCIT failed to appreciate that revisionary proceedings under section 263 of the Act could not be initiated merely to: (a) conduct vague/ roving enquiries; or (b) authorize the assessing officer to again conduct roving fishing enquiries, by merely setting aside the assessment.

7. That the PCIT erred in holding that the AO failed to make necessary enquiries, which could be subjected to revisionary jurisdiction in terms of Explanation 2 to section 263 of the Act.

Qua Disproportionate increase in certain expenses debited to profit and loss:

8. That on the facts and circumstances of the case and in law, the exercise of revisionary jurisdiction by the PCIT under section 263 qua each of the following issues [collectively referred as "allowability of expenses"] is without jurisdiction and bad in law:

(i) the nature and genuineness of expenses falling under various heads viz. Outsourced professional fees, Platform selling fees, Miscellaneous expenses and Legal and professional fees,

(ii) disproportionate increase in aforesaid expenses vis-à-vis the increase in revenue as compared to the preceding year.

8.1. Without prejudice, that the PCIT erred in issuing vague/ open ended directions to the assessing officer to examine the aforesaid issue of allowability of expenses' [refer ground No.8 supra].

8.2. That the PCIT failed to appreciate that expenses were duly examined and accepted in the original assessment order after