TaxTMI 
TaxTMI 
2025 (8) TMI 1863
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.... "1) The Learned Principal Commissioner of Income Tax, Mumbai-6, [hereinafter referred as "Principal Commissioner of Income Tax" or "PCIT"], erred in passing Revision Order under section 263 of the Income tax Act, 1961 (the Act) and setting aside the Assessment Order passed under section 143(3) of the Act read with section 144B of the Act without fulfilling the twin conditions precedent to invoke the provisions of section 263 of the Act ie that the order passed by Assessing Officer is erroneous and the order is prejudicial to the interest of the revenue, therefore the Revision Order passed under section 263 is illegal, null, bad in law and without jurisdiction and ought to be quashed. 2) Without prejudice to what has been stated....
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.... and without prejudice to each other." 2. The assessee is a company and filed the return of income for AY 2020-21 on 15.02.2021 declaring a total income of Rs. 5,74,54,270/- under the normal provisions of the Act and an income of Rs. 7,25,36,880/- under the provisions of section 115JB of the Act. The case was selected for scrutiny and the AO completed the assessment under section 143(3) accepting the income returned by the assessee. It is relevant to mention here that one of the reasons for selecting the case for scrutiny is to examine the deduction claimed under Chapter-VIA. Subsequently, the PCIT issued a show-cause notice under section 263 of the Act stating that the AO has erroneously allowed the deduction under section 80G of the Ac....
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....diture is eligible for deduction under section 80G of the Act if otherwise eligible. 4. The ld. DR supported the order of the PCIT. 5. We heard the parties and perused the material on record. The PCIT has held the order of the AO to be erroneous and prejudicial to the interest of the revenue for the reason that the AO has not conducted proper enquiry towards deduction claimed under section 80G. The PCIT while holding so, has invoked the provisions of explanation 2 to section 263. It is apposite now to take note of the relevant extract of section 263 and the Explanation (2) to section 263 of the Act, which read as under :- "Revision of orders prejudicial to revenue. 263. (1) The [Principal Chief Commissioner or Chief ....
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.... or any other person." 6. Thus, from close scrutiny of the provisions of section 263, it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction under section 263 of the Act i.e., firstly, the order of the Assessing Officer is erroneous; and secondly, it is prejudicial to the interests of the revenue on account of error in the order of assessment. Explanation 2 provides that when the AO fails to make the enquiry are verification that ought to have been then the order can be held to be erroneous and prejudicial to the interest of the revenue. In the light of the above provisions of the Act, we will now look at the facts in the present case. From the perusal of the details submitted by the asses....