ITAT upholds invocation of revisional jurisdiction u/s 263 by PCIT: Twin Conditions of “Error” and “Prejudice to the Interest of Revenue” Satisfied [Read Order]
Assessing Officer committed an “error” of not making the addition of notional annual letting value on vacant units of building
![ITAT upholds invocation of revisional jurisdiction u/s 263 by PCIT: Twin Conditions of “Error” and “Prejudice to the Interest of Revenue” Satisfied [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/ITAT-ITAT-Mumbai-revisional-jurisdiction-under-section-263-TAXSCAN.jpg "ITAT upholds invocation of revisional jurisdiction u/s 263 by PCIT: Twin Conditions of “Error” and “Prejudice to the Interest of Revenue” Satisfied [Read Order]")
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently upheld the invocation of revisional jurisdiction under Section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax (PCIT), on being certain that the requisite twin conditions of “error” and “prejudice to the interest of revenue” had been duly satisfied. The PCIT observed that the...
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently upheld the invocation of revisional jurisdiction under Section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax (PCIT), on being certain that the requisite twin conditions of “error” and “prejudice to the interest of revenue” had been duly satisfied.
The PCIT observed that the Assessing Officer made an error by not making the addition of income accrued to the assessee company on unsold inventories under the head “Income from House Property”. It was further observed that the Assessing Officer failed to make sufficient inquiries without application of mind and passed the reassessment order.
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The Appellant contended that everything was within the knowledge of the Assessing Officer and the order was passed only after sufficient inquiries were made. It was further argued that where two views are possible and one view has been taken by the Income Tax Officer, the Commissioner cannot treat the order as erroneous and prejudicial to the interest of the Revenue.
Read more: Revisional Jurisdiction cannot be invoked on Highly Debatable Issues: ITAT
The Department on the other hand, contended that the twin conditions of “Error” and “prejudicial interest” were fulfilled in the present case. Thereby praying that the order of the PCIT be upheld.
The Bench of Amit Shukla (Judicial Member) and Omkareshwar Chidara (Accountant Member)observed that the order passed by the Assessing Officer was non-speaking and agreed with the view taken by the PCIT. It was further observed that there is absolutely no reasoning given by the Assessing Officer as to why addition relating to annual letting value of unsold property was not added even though the case was specifically reopened for this purpose.
Reliance was placed on the judgment of the Hon’ble Delhi High Court in CIT Vs. Ansal Housing Finance and Leasing Company Ltd. (2017)and of the Hon’ble Bombay High Court in CIT vs Sane Doshi Enterprises (2015) where it was held that “Income from house property” has to be offered for tax purpose on unsold inventories.
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Thus it was held that the Assessing Officer committed an “error” of not making the addition of notional annual letting value on vacant units of building. Additionally, the twin conditions of “error” and “prejudice to the interest of the revenue” were satisfied which justified invocation of Section 263 of the Income Tax Act, 1961.
Thus, the revisional order passed by the PCIT was upheld and the appeal was dismissed.
To Read the full text of the Order CLICK HERE
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