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2026 Supreme(Online)(ITAT) 13300
INCOME TAX APPELLATE TRIBUNAL (INDORE BENCH)
B.M. Biyani, Accountant Member, Paresh M Joshi, Judicial Member
Subhash Chandra Agrawal – Appellant
Versus
Principal Commissioner of Income Tax-1 Bhopal – Respondent
ITA No.550/Ind/2024
For the Appellants/Petitioners: Gagan Tiwari
For the Respondents: Anup Singh
The ITAT held that if an assessee has an appeal pending before the CIT(A) challenging the validity of an assessment, they cannot simultaneously seek adjudication of the same legal issues (such as the validity of a notice under section 148) in proceedings under section 263 before the ITAT.
Headnote:(A) Income Tax Act, 1961 - Section 263 - Revisionary jurisdiction - Pendency of appeal before CIT(A) - Multiplicity of proceedings - Assessee challenged notice u/s 148 and reassessment order before CIT(A) while simultaneously challenging PCIT’s revision order u/s 263 on the same grounds - Tribunal held that allowing the assessee to agitate the same issue of legal validity of section 148 notice across two appellate forums simultaneously would lead to multiplicity of proceedings and runs counter to the ends of justice - Assessment order set aside by the PCIT is currently a subject of adjudication before the first appellate authority - Appeal of assessee dismissed with liberty to agitate the issues before the CIT(A). (Paras 4, 5 and Observations).
Facts of the case:
Assessee, a grain wholesaler, faced reopening of assessment u/s 147. Despite having an appeal pending before the CIT(A) against the reassessment order, the PCIT initiated revision proceedings u/s 263, alleging that the AO failed to properly examine certain expenses (“Binnai” and “Shop & Godown Rent”) and that the order was erroneous and prejudicial to the revenue. The PCIT cancelled the assessment for de-novo assessment.
Findings of Court:
The tribunal noted that the assessee is simultaneously challenging the validity of the section 148 notice before the CIT(A) and the ITAT. It concurred with the Revenue that adjudicating the same legal issue in two forums would lead to a multiplicity of proceedings. The tribunal upheld the PCIT’s order for de-novo proceedings as the legality of the underlying assessment is currently sub-judice before the CIT(A).
Issues: Whether the PCIT can exercise revisionary jurisdiction u/s 263 when the validity of the assessment is already pending adjudication before the First Appellate Authority and involves identical grounds.
Ratio Decidendi: Where an appeal against the assessment order is pending before the Commissioner (Appeals), the exercise of jurisdiction u/s 263 of the Act on the same issues may be constrained; however, to avoid multiplicity of proceedings and conflicting decisions, the assessee must exhaust remedies before the CIT(A) where the original jurisdiction over the assessment validity is vested.
Result: Appeal dismissed.
आदेश / O R D E R
Per Paresh M Joshi, J.M.:
This is an Appeal filed by the Assessee under section 253 of the income tax Act 1961,[ herein after referred to as the Act for the sake of brevity] before this tribunal, as & by way of an appeal. The Assessee is aggrieved by the order dated 20.03.2024 passed by the Ld. PCIT-1 u/s 263 of the Act, which is hereinafter referred to as the “Impugned order”. The Relevant Assessment year is 2013-14 and the corresponding previous year period is from 01.04.2012 to 31.03.2013.
Factual Matrix
That as and by way of an Assessment order made u/s 147 rws 144 of the Act, the total income of the Assessee was computed & assessed at Rs. 13,56,860/-. The total income as per the return of income was at Rs.12, 31,860/-. That the aforesaid “Assessment order” bears no:- ITBA/AST/S/147/2021-22/1042331268(1) and that the same is dated 31.03.2022, Which is hereinafter referred to as the “Impugned Assessment Order”.
That the assessee had filed ROI on 29.03.2013 declaring total income at Rs. 12, 31,860/-. The original assessment was completed on 22.03.2016 and the assessed income was determined at Rs. 13, 56,860/-.
That the case was reopened u/s 147 of the act and a notice u/s 148 of the act was issued on 31.03.2021. The relevant portion of the recording of reason was as under:-
"The assessee has e-filed return of income on 29.09.2013 declaring total income at Rs. 12,31,860/-. The assessment u/s 143(3) of the Income Tax Act 1961 has been completed on 22.03.2016 and assessed income was determined at Rs. 13,56,860/-.
On going through the case record it revealed that the assessee had shown suppressed net profit of Rs. 13.31 lakh only from turnover of Rs. 53.06 cr. The profit shown was very low keeping in view the same line of business. In fact, the assessee had debited excessive expenditure and thereby deliberately reduces the net profit and tax liability. Some figures of three year (immediately preceding year, current year and immediately succeeding year) appeared under different heads in P&L A/c are given below for reference:-
| S.No. | Particulars | F.Y. 2013-14 | F.Y.2012-13 (Current year) | F.Y. 2011-12 | Excess expenditure required to be disallowed in absence of bills / vouchers |
|---|---|---|---|---|---|
| 1 | Turnover | 49.50 Cr. | 53.06 | 37.77 Cr | |
| 2 | Gross profit | 1.30 (2.63%) | 1.45 Cr (2.7%) | 1.02 Cr (2.7%) | |
| 3 | Net Profit | 12.40 lakh (0.25%) | 13.31 lakh (0.25%) | 12.58 lakh (0.33%) | |
| 1 | Purchase | 49.39 Cr | 49.43 Cr | 39.33 Cr | |
| 2 | Binnai Expenses | 4,21,585 | 10,57,950 | 6,54,600 | 5,00,000/- |
| 3 | Shop & Godown rent | 3,55,000 | 9,68,622 | 5,59,614 | 5,00,000/- |
| Total | 7,76,585 | 20,26,572 | 12,14,214 | 10,00,000/- |
It is crystal clear from the above table that the expenses under heads “Binnai” & “Shop & Godown Rent” in respect of A.Y. 2013-14 were comparatively debited excessively as compared to immediately preceding year as well as succeeding year. Moreover, these expenditures were found allowed in scrutiny without obtaining documentary evidence in support of these expenditure and proper verification thereof. Copies of bill & vouchers of these expenses were not found on record for perusal. As such, at least aggregate amount of Rs. 10.00 lakh under both heads were liable to be disallowed u/s 37(1) read with section 40A(2)(a) of IT Act in absence of documentary evidence and required to be added back in total income of the assessee.
The mistake in allowing expenses under heads “Binnai” & Shop & Godown Rent” in respect of A.Y. 2013-14 without any documentary base led to underassessment of income of Rs. 10,00,000/-.”
The Ld. AO in the “Impugned Assessment Order” has held as under:-
"The PAN was transferred from DCIT-3(1), Bhopal, due to Covid-19 Pandemic situation was created and this case could not be attended properly and this office was not aware about pendency of the case. Therefore the income of the assessee is assessed as under:-
| Income as per return | Rs. 12,31,860/- |
| Income assessed as order u/s 143(3) dated 22.03.2016 | Rs. 13,56,860/- |
"
That the basis a show cause notice
