Section 263 Revision Invalid When CIT Raises Issues Outside Reassessment Scope — ITAT Delhi

Case Background: Shiv Punj vs CIT (ITAT Delhi)

The Income Tax Appellate Tribunal, Delhi Bench, delivered a significant ruling in the matter of Shiv Punj Vs CIT, partially allowing the assessee's appeal against an order dated 03.02.2025 passed by the CIT(IT), Delhi-2 under Section 263 of the Income Tax Act, 1961, pertaining to Assessment Year 2019-20.

This decision carries important implications for the exercise of revisionary jurisdiction by the Commissioner of Income Tax and clarifies the boundaries within which such powers may legitimately be invoked — particularly in the context of reassessment proceedings under Section 147.

Preliminary Issue: Condonation of Delay

Before proceeding to the substantive questions of law, the Tribunal had to address a procedural hurdle. The assessee's appeal was filed with a delay of 84 days beyond the prescribed due date of 30.04.2025, with the actual filing occurring on 23.07.2025.

The assessee submitted a condonation petition supported by an affidavit, explaining that he remained outside India during the relevant period and that the delay was therefore not deliberate but arose from circumstances entirely beyond his control. Upon hearing both sides and examining the materials on record, the Tribunal was satisfied that sufficient cause existed to justify the delay and accordingly condoned the same, admitting the appeal for adjudication on merits.

This aspect of the order reaffirms the principle that genuine hardship supported by credible evidence warrants a liberal approach toward condonation of delay in appellate proceedings.

Facts of the Case

Reassessment Initiation

The assessment for AY 2019-20 in the case of the assessee was originally reopened when the Assessing Officer issued a notice under Section 148A(b) dated 27.02.2023. The basis for reopening was information indicating that the assessee had not filed a return of income for AY 2019-20, while bank account data reflected certain transactions and balances requiring explanation.

Specifically, the Assessing Officer noted an unexplained opening balance of Rs. 3,49,881/- in an HDFC Bank Ltd. account, along with possible interest income that had escaped assessment. After receiving the assessee's response and evaluating the submissions made, the Assessing Officer passed an order under Section 148A(d) on 29.03.2023, concluding that income of Rs. 3,49,881/- was chargeable to tax and had escaped assessment.

Completion of Reassessment

Following the above order, reassessment proceedings were formally completed on 15.04.2024 under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The Assessing Officer determined the total income of the assessee at Rs. 4,45,221/-, incorporating an addition of Rs. 3,49,881/- — the precise figure corresponding to the bank balance identified as unexplained income during the reopening proceedings.

CIT's Invocation of Section 263

Subsequently, the CIT(IT), Delhi-2 issued a show cause notice proposing to exercise revisionary jurisdiction under Section 263 of the Income Tax Act, 1961. The basis advanced by the CIT was entirely different from the subject matter of the reassessment.

The CIT alleged that:

  • A survey was conducted in the case of M/s. Punj Lloyd Limited (PLL) on 19.02.2019
  • The assessee, along with one Mr. Atul Punj, were promoters of PLL
  • Survey material allegedly indicated that funds of PLL had been siphoned off by its promoters
  • The Assessing Officer had failed to examine this survey material and related transactions while completing the reassessment
  • This omission rendered the reassessment order erroneous and prejudicial to the interests of the Revenue