ITAT Delhi quashed PCIT’s revision under Section 263, holding that enhancement from 25% to 100% disallowance was impermissible where two views were possible.
Bogus Purchase Addition: PCIT Cannot Override Two Views
The ITAT Delhi quashed a revision order under Section 263 by the PCIT that enhanced a disallowance for bogus purchases from 25% to 100%, holding that the Assessing Officer’s view was one of two possible interpretations.
The tribunal emphasized that Section 263 cannot be used to substitute one reasonable view with another, even if the PCIT disagrees. Where substantial questions of fact exist and multiple conclusions are possible, the AO’s decision cannot be disturbed on mere difference of opinion.
The power under Section 263 is not to correct erroneous conclusions but to rectify jurisdictional errors or perversity.
This decision reinforces the limited scope of Section 263 revisions. It protects assessed taxpayers from arbitrary enhancements by higher authorities where the original finding was not perverse. Practitioners should challenge revision orders lacking evidence of jurisdictional error.
Citations
- Section 263, Income Tax Act
