ITAT Mumbai Quashes Section 263 Revision — PCIT Cannot Revise Section 153C Assessment Without Challenging Section 153D Approval

Case Reference

SWD Industries Vs PCIT (Central) — ITAT Mumbai
Order pronounced: 12.03.2026

Background and Factual Matrix

The present consolidated order of the Income Tax Appellate Tribunal, Mumbai Bench, arises from a set of appeals filed by the assessee challenging separate revisionary orders passed by the Principal Commissioner of Income Tax (Central), Mumbai-1 under Section 263 of the Income Tax Act, 1961, for multiple assessment years.

The appeals were consolidated given that the underlying facts, legal issues, and grounds of challenge were substantially identical across all the assessment years, all flowing from a common set of proceedings initiated pursuant to a search operation conducted in the Alankit group cases.

The Search Action and Initiation of Section 153C Proceedings

A search and seizure operation under Section 132 of the Income Tax Act, 1961 was carried out on 18.10.2019 in relation to the Alankit group. During post-search investigations, documents and electronic data were found and seized from the premises of one Shri Sunil Kumar Gupta, who was reportedly associated with Shri Alok Agarwal of the Alankit group. Based on this seized material, the Assessing Officer recorded satisfaction that certain documents were attributable to the assessee and accordingly initiated proceedings under Section 153C of the Act.

Pursuant to these proceedings, the Assessing Officer completed assessments for the relevant assessment years under Section 143(3) read with Section 153C of the Income Tax Act, 1961. During the course of these assessments, the books of account and other documents submitted by the assessee were examined. Assessment orders were passed determining the total income for each year — in certain years involving disallowance of interest expenditure claimed by the assessee, while in other years the returned income was accepted without any addition.

Year-Wise Assessment Details

The following is a summary of the assessment orders passed:

Additions and Disallowances by the Assessing Officer

Crucially, all assessment orders across all assessment years were passed only after obtaining the mandatory prior approval under Section 153D of the Income Tax Act, 1961, from the Additional Commissioner of Income Tax, Central Range – 1, Mumbai.

PCIT's Revisionary Action Under Section 263

On examining the assessment records, the learned PCIT formed a prima facie view that the assessment orders were erroneous and prejudicial to the interests of the Revenue within the meaning of Section 263 of the Income Tax Act, 1961. The PCIT's principal allegation was that the seized material recovered during the Alankit group search purportedly indicated that unaccounted cash transactions had been conducted by Shri Shashikant Damodar Khandelwal with entities controlled by Shri Alok Agarwal, and that accommodation entries had allegedly been channelled to the assessee through certain intermediary entities. The PCIT took the position that the Assessing Officer had failed to examine these aspects adequately during the assessment proceedings.

Aggrieved by the revisionary orders, the assessee filed the present appeals before the ITAT.

Grounds of Appeal Raised by the Assessee

The assessee raised comprehensive grounds of challenge, which can be grouped into the following broad categories: