ITAT Upholds PCIT Revision u/s 263 as AO Failed to Enquire into Excess Diesel Shortage Claimed by Assessee [Read Order]

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, upheld the revision order passed by the Principal Commissioner ofIncome Tax (PCIT) under Section 263 of the Income Tax Act, 1961 holding that the Assessing Officer (AO) failed to properly enquire into the assessee’s excess diesel shortage claim.

The appellant, Anita Banodha, filed an appeal challenging the order passed by the PCIT under Section 263 of the Income Tax Act for the Assessment Year (AY) 2018-19. The revision order had set aside the assessment order on the ground that the order was erroneous and prejudicial to the interests of the Revenue.

The PCIT noted that the assessment was not properly conducted as the Assessing Officer failed to carry out a complete enquiry regarding the shortage of diesel claimed by the appellant.

It was observed by the respondent that the AO had only examined the shortage of petrol during the assessment proceedings and did not verify the excess shortage of diesel. Therefore, the PCIT held that the assessment order was erroneous and prejudicial to the interests of the Revenue.

Yogesh Sethia, the counsel for the appellant, contended that the reassessment notice issued under Section 148 of the Income Tax Act was invalid as the approval required under the proviso to Section 148 and Section 148A(d) of the Act had not been obtained separately.

It was contended by the appellate counsel that the same approval had been used for both stages, which is contrary to the provisions of the Act, and therefore the reassessment proceedings were invalid.

Raghunath, appearing for the Revenue Department, contended that the provisions introduced under Section 148A require the AO to obtain prior approval from the specified authority before issuing notice under Section 148.

It was also submitted by the respondent counsel that once the approval required under Section 148A(d) had been obtained, the statutory requirement stood satisfied and there was no requirement under the Act to obtain two separate approvals.

Partha Sarathi Chaudhury, Judicial Member and Arun Khodpia, Accountant Member noted that the PCIT had invoked revision under Section 263 on the ground that the assessee had claimed excess shortage of diesel which had not been properly verified by the AO during the assessment proceedings.

It was observed by the Tribunal that the enquiry conducted by the AO related only to shortage of petrol and not to the shortage of diesel claimed by the assessee. The Tribunal further observed that failure on the part of the AO to conduct proper enquiry regarding the excess diesel shortage resulted in the assessment order being erroneous and prejudicial to the interests of the Revenue.

Accordingly, the Tribunal found no infirmity in the order passed by the PCIT under Section 263 of the Income Tax Act and upheld the revision order.

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