TaxTMI 
TaxTMI 
2026 (9) TMI 696
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....ntents of the application are reproduced as under: 3. We have considered the contents of the condonation application and the submissions made by the ld. AR. We find that the assessee has satisfactorily explained the reasons for the delay. In view of the principles laid down by the Hon'ble Supreme Court in Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC), wherein it has been held that a liberal approach should be adopted while considering applications for condonation of delay to substantial justice, we are satisfied that the assessee has shown sufficient cause. Accordingly, the delay of 192 days in filing the instant appeal is condoned in the larger interest of justice, and the appeal is admitted for adjudication on merits. 4. Facts in brief as culled out from the orders authorities below are that the assessee company filed original return of income on 01.10.2018 declaring total income of Rs. 10,39,370/- for A.Y. 2018-19. The case was reopened u/s 147 of the Act on the basis of information received through insight Portal noticing that the assessee has made bogus purchases to the tune of Rs. 24,08,172/-. It was stated that the information pertains ....
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....of the seller company, the transaction should have been added as unexplained expenditure u/s 69C of the Act and should have been taxed under special provision of Section 115BBE of the Act. It is therefore observed by ld. PCIT that the mistake has resulted into short levy of tax to the extent of Rs. 19,84,897/- including interest. Accordingly, show-cause notice u/s 263 of the Act was issued dated 18.10.2024 to the assessee who has replied the same vide reply dated 07.11.2024. In the reply, the assessee has explained the transaction in detail, stating that it has purchased copper wire rod weighing 5906 kg from RCI Industries and Technologies Ltd. It was further explained that the copper wire rod was dispatched by RCI Industries and Technologies Ltd. from its manufacturing unit at 10/128/IV, Vishnu Gali, Vishwas Nagar, Delhi to our manufacturing unit situated at G-950, DSIDC Indl. Area, Narela, Delhi and the material was transported within Delhi through local transport. It was further stated that the freight was paid by RCI Industries and Technologies Ltd. as per agreed terms and the payment was made against aforesaid invoice to RCI Industries and Technologies Ltd. through RTGS on 17.....
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....e I T Act, the above order u/s 147 read with section 144B of the Income tax Act dated 21-03-2023, for AY 2018-19, is held to be erroneous, in so far as it is prejudicial to the interest of revenue under the ambit of the provisions of section 263 of the I. T. Act, on the issues highlighted in this order above. The Assessing Officer is directed to pass an order u/s 263 r.w.s. 147 and 144B of the I. T. Act, 1961 and take necessary remedial action on various issues involved, as directed in the order and specifically in para 7.9 of the order." 6. Aggrieved by the impugned order, the assessee is in appeal before the Tribunal and has raised the following grounds of appeal: "1. On the basis of facts and circumstances of the case, the order passed under section 263 of the Income Tax Act, 1961 ("the Act") by the learned Principal Commissioner of Income Tax (Central), Delhi-1 ("PCIT") is bad both in the eye of law and facts. 2. On the facts and circumstances of the case, the revision order passed under section 263 by the learned PCIT holding that the re-assessment order passed under section 147 r.w.s. 144B of the Act by the Assessment Unit, Income Tax Department, National....
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....disallowance of purchases already made in the reassessment order passed under section 147 r.w.s. 144B of the Act and apply the special rate of 60% in accordance with the provisions of section 115BBE r.w.s. 69C of the Act. 10. On the facts and circumstances of the case, the learned PCIT has erred both on facts and in law in invoking revisionary jurisdiction and directing the AO to revise the reassessment order despite the fact that the provisions of section 69C are not applicable to the said transaction and accordingly, provisions of section 115BBE are also not applicable. 11. On the facts and circumstances of the case, the learned PCIT has erred both on facts and in law in passing the order despite the fact that the purchases made by the assessee are genuine and have been made during the normal course of business and therefore addition made by the AO in the reassessment order is itself is illegal, invalid and unsustainable and liable to be deleted. 12. The appellant craves leaves to add, amend or alter any of the grounds." 7. On perusal of the grounds of appeal, we have noticed that the assessee/appellant has challenged the impugned order on three issu....
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....ee and the issue on the basis of which section 263 jurisdiction has been exercised is directly subject matter of the appeal before the ld. CIT(A). Therefore, the revisional proceedings u/s 263 were barred by virtue of Clause (c) of Explanation 1 to section 263 of the Act. In support of these arguments, the ld. AR for applicant has relied upon the case of Mumbai Tribunal in MP Trading Company vs. PCIT, Mumbai-20, 2026(8) TMI 478, order dated 04.08.2026. The observation of the ld. co-ordinate bench contained in paras 34, 35, 36 & 37 are relevant and extracted below as under: "34. We observe that identical issue came up for consideration before the Hon'ble Madras High Court in the case of Renuka Philip (Smt ) v. ITO ( 2018) 409 ITR 567 (Mad.), wherein the Hon'ble High Court held as under: "21. With regard to the merits of the case, the learned counsel for the assessee referred to a decision of the Division Bench of this Court in Dr. Smt. P.K. Vasanthi Rangarajan v. CIT [2012) 23 taxmann.com 299/209 Taxman 628 (Mad.), wherein, the Hon'ble Division Bench held that there is no inhibition in the assessee claiming the benefit of investment made in four flats t....
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....lause (c) of Explanation 1 to section 263 of the Act provides that when an appeal is pending before the Commissioner, the exercise of jurisdiction under section 263 of the Act by the Commissioner of Incometax is barred. Thus, in the present case, the Commissioner of Income-tax wrongly exercised jurisdiction under section 263 of the Act by remanding back the matter to the assessing authority on March 25, 2013, while the appeal was decided by the Commissioner of Income-tax (Appeals) on June 5, 2013. Thus, the order passed by the Income tax Appellate Tribunal does not suffer from any irregularity and needs no interference." 36. Similar view has been taken by the Mumbai Bench of the Tribunal in the case of Cupid Diamonds (P) Ltd. vs. DCIT in ITA No.478/Mum/2025 dated 11.08.2025, to which one of us (Hon'ble AM) was a party. 37. The ratio of the above decisions squarely applies to the facts of the assessee's case. The larger issue as to whether the purchases made by the assessee from M/s Mahadev Enterprises and M/s Tirupati Traders were genuine or not, or whether the profit element embedded therein should be estimated at 25%, was already the subject matter of appeal....
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....ts of the case, which otherwise cannot be termed as illegal or unlawful view and is thus a legally permissible view taken after due consideration of the fact and circumstances by the ld Assessing Officer. Issue No. 2 is accordingly decided in favour of the assessee and against the Revenue. 13. Regarding issue No. 3, the ld. AR has submitted that the ld. PCIT exercised the jurisdiction illegally by directing the Assessing Officer to invoke the provision of section 69C r.w.s. 115BBE of the Act and further to apply special rate of 60% for charging the tax against the alleged bogus purchases involved in the case in hand. The ld. AR submitted that the provisions of section 69C are not attracted in the case of the assessee because the necessary conditions of invoking section 69C are not fulfilled. It is submitted that the assessee has already placed on record the copy of the purchase invoice from RCI Industries & Technologies Ltd. (paper book page 49), copy of the bank statement reflecting amount demitted (paper book page 50-51), copy of GST Registration Certificate of RCI Industries & Technologies Ltd. (paper book page 52-58) and copy of the master Data of RCI Industries & Technologi....
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....s been distinguished on facts by various decisions of the co-ordinate Benches of the Bombay Tribunal because in the said case before the Hon'ble Bombay High Court, it was an ex-parte proceedings where assessee has not appeared to contest the appeal. And for that reason, the said decision is also distinguishable on facts and is not applicable to the case in hand. The arguments advanced by the ld. AR in that regard, in our opinion, are forceful and legally acceptable because both the cases, N.K. Industries Ltd. (supra) and Kanak Impex India (supra) are distinguishable on facts from the facts of the case in hand. Accordingly, we hold that issuing direction u/s 263 to the AO to invoke section 69C r.w.s. 115BBE of the Act despite pendency of the appeal against the alleged addition made by the AO is not legally permissible in the eyes of law. The issue No. 3 is accordingly decided in favour of the assessee and against the Revenue. 14. In the view of our above observation and decision on the issues involved in the case, the appeal of the assessee is allowed and the impugned order u/s 263 is set aside. 15. In the result, the appeal of the assessee is allowed. Order Pronounced ....