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Mar 07, 2026
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Second thoughts after Rs 133 crore? ITAT says no
When 133 cr is involved, second thoughts are inevitable. But the I-T Appellate Tribunal's (ITAT) Delhi bench has reminded the tax administration that Sec 263 of I-T Act is not a statutory licence for second thoughts, especially when they arise after a completed scrutiny assessment.
Last month, in an order involving senior advocate Mukul Rohatgi's AY 2020-21 return, ITAT quashed the revisionary order under Sec 263 and restored the completed scrutiny assessment passed under Sec 143(3) read with Sec 144B. So, has ITAT reshaped Sec 263 law? No. It has firmly redrawn its boundaries at a time when those boundaries have been under pressure. For AY 2020-21, Rohatgi's return was scrutinised and assessed at about 2133 cr. Subsequently, the principal commissioner invoked Sec 263 on three grounds:
Characterisation of certain MF gains (long-term vs short-term).
Determination of annual letting value for properties in India and abroad.
Alleged failure to initiate penalty under Sec 271C for non-deduction of TDS.
Sec 263 allows a commissioner to revise an assessment only if it's both: erroneous, and prejudicial to interests of revenue. These are conjunctive conditions, not alternatives. The Supreme Court settled this in 'Malabar Industrial'. The tribunal found the principal commissioner lacked objective material demonstrating the completed assessment suffered from a legally sustainable error causing revenue prejudice. That finding proved fatal to the revision.
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