Tribunal upholds PCIT's revision under Section 263 on disallowed purchases from M/s Meet Enterprises

The Tribunal upheld the Principal Commissioner of Income Tax's (PCIT) invocation of revisionary jurisdiction under Section 263 regarding the disallowance of purchases from M/s Meet Enterprises. The PCIT's action was deemed valid within the permissible time frame, despite the settlement under the Direct Tax Vivad se Vishwas Act, 2020, and the reassessment order was found to be erroneous. The PCIT was directed to reconsider the disallowance of Rs 33,35,500, dismissing the assessee's appeal.

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Issues Involved:
1. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income-tax Act, 1961.
2. Limitation and validity of the revisionary proceedings under section 263.
3. Examination of the reassessment order regarding alleged bogus purchases from M/s Meet Enterprises.
4. Impact of the Direct Tax Vivad se Vishwas Act, 2020 (VsV) on the revisionary proceedings.

Summary:

1. Jurisdiction of PCIT under Section 263:
The core issue was whether the PCIT was justified in invoking revisionary jurisdiction u/s 263 of the Act concerning the disallowance of purchases amounting to Rs 33,35,500/-. The assessee argued that the impugned order dated 27.03.2021 passed by the PCIT was without jurisdiction, illegal, bad in law, and void-ab-initio. The Tribunal held that the PCIT was justified in invoking his revisionary jurisdiction u/s 263, as the Assessing Officer (AO) had committed a grave error by disallowing only Rs 73,45,040/- instead of the entire amount of Rs 1,06,80,540/- from M/s Meet Enterprises.

2. Limitation and Validity of Revisionary Proceedings:
The assessee contended that the order passed by the PCIT was barred by limitation under section 263(2) of the Act and that the reassessment order had attained finality under the VsV Act. The Tribunal found that the PCIT's action was within the permissible time frame and that the reassessment order was erroneous and prejudicial to the interests of the Revenue, thus justifying the invocation of section 263.

3. Examination of Reassessment Order:
The AO had initially disallowed Rs 73,45,040/- towards bogus purchases from M/s Meet Enterprises, which was found to be non-existent and engaged in providing accommodation entries. The PCIT observed that the AO should have disallowed the entire purchase amount of Rs 1,06,80,540/-. The Tribunal upheld the PCIT's view, stating that the AO's partial disallowance was a serious error that caused prejudice to the Revenue.

4. Impact of VsV on Revisionary Proceedings:
The assessee argued that the dispute was settled under the VsV scheme, limiting the disallowance to Rs 73,45,040/-. The Tribunal clarified that the settlement under the VsV scheme did not grant blanket immunity and was limited to the specific disallowance made in the reassessment. The PCIT was within his rights to reconsider the remaining amount of Rs 33,35,500/-.

Conclusion:
The Tribunal held that the PCIT was justified in invoking revisionary jurisdiction u/s 263, directing the AO to reconsider the disallowance of Rs 33,35,500/-. The appeal of the assessee was dismissed, and the order pronounced in the open court on 08.06.2023.

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