PAVANA MANUEL XAVIER,ERNAKULAM V. ITO, CORPORATE WARD-2(3), KOCHI

ITA 589/COCH/2025

AI Insights

The case involves an appeal by Pavana Manuel Xavier against the revisional order of the Principal Commissioner of Income Tax, Kochi-1, which was passed under Section 263 of the Income-tax Act, 1961. The revisional order was based on an earlier assessment by the Income Tax Department, which had added Rs.31,38,000 as 'unexplained income' to the assessee's income for the Assessment Year 2020-21. The PCIT found the original assessment order to be erroneous and prejudicial to the interests of the revenue, leading to the appeal. The Tribunal found that the assessee was not given sufficient opportunity to respond to the notice under Section 263, thus violating the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785237 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Appeal Filed On: 20-08-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS
• Assessee Lawyers: PADMANATHAN
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Revision of order
• Section: 143(3); 263

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI ANIKESH BANERJEE, JM ITA No. 589/Coch/2025 Assessment Year: 2020-21 Pavana Manuel Xavier .......... Appellant Pavana House, Kadavnthara Road Ernakulam 682020 [PAN: AACPX0280F] vs. ITO, Corporate Ward - 2(3), Kochi ......... Respondent Assessee by: Shri Padmanathan, Advocate Revenue by: Shri Sanjit Kumar Das, CIT-DR Date of Hearing: 28.10.2025 Date of Pronouncement: 30.10.2025 O R D E R Per: Anikesh Banerjee, JM The instant appeal of the assessee was filed against the order of the Learned Principal Commissioner of Income Tax, Kochi-1 [for brevity, ‘Ld. PCIT’] passed under section 263 of the Income-tax Act, 1961 (in short, the Act’) for Assessment Year 2020-21, date of order 28/03/2025. The impugned order is emanated from the order of the Assessment unit Income Tax Department (in short, ‘Ld. AO’) order passed under section 143(3) r.w.s. 144B of the Act, date of order 23/09/2022. Printed from counselvise.com 2 ITA No. 589/Coch/2025 Pavana Manuel Xavier 2. The assessee filed its return of income, and the case was selected for scrutiny. The assessment was completed by the Ld. AO under Section 143(3) read with Section 144B of the Act, determining an addition of Rs.31,38,000/- as “unexplained income.” Subsequently, the Ld. PCIT, by invoking the provisions of Section 263, held that the assessment order was erroneous and prejudicial to the interests of the revenue. Accordingly, the Ld. PCIT set aside the said assessment order for fresh verification. Aggrieved by this revisional order, the assessee has preferred an appeal before us. 3. The Ld. AR argued that during passing the revisional order U/s 263 the Ld. PCIT denied the reasonable opportunity to the assessee. He invited our attention in paragraph 3 of the impugned revisional order which is reproduced as below:- “3. Accordingly, a show-cause notice dated 24/03/2025 was issued to the Assessee proposing for revision of assessment order u/ s. 143(3) r.w.s. 144B dated 23/09/2022 under Section 263 of the Act. The Assessee was informed to file their objection if any on 25/03/2025 in person/ authorized representative or on or before the date through written submission. Assesee's authorized representative Shri. Sreejith, CA attended the online hearing on 25/03/2025. The case was discussed and agreed to set aside the case to AO for re-examination. Assessee sought opportunity to present the case in detail before AO. The submissions were accepted and considered.” 4. The Ld. DR argued and relied on the order of the Ld. PCIT. Printed from counselvise.com 3 ITA No. 589/Coch/2025 Pavana Manuel Xavier 5. We have carefully considered the submissions and examined the records. It is observed that the notice under Section 263 of the Act was issued on 24.03.2025, whereas the revisional order was passed on 28.03.2025. In our considered view, the Ld. PCIT has not afforded sufficient opportunity to the assessee to respond effectively to the notice before passing the revisional order. The principle of natural justice requires that the assessee be given adequate time and opportunity to present its case before any adverse order is passed. Accordingly, in the interest of justice, we deem it appropriate to set aside the revisional order passed under Section 263 of the Act and remand the matter to the file of the Ld. PCIT for fresh consideration. The Ld. PCIT shall re-examine the issue afresh after providing the assessee a proper and reasonable opportunity of being heard and to furnish necessary evidences in support of its contentions. We make it clear that we have not expressed any opinion on the merits of the case, so as not to prejudice the proceedings before the Ld. PCIT. 6. In the result, the appeal of the assessee bearing ITA No. 589/Coch/2025 is allowed for statistical purposes. Order pronounced in the open court on 30th October, 2025. Sd/- Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (ANIKESH BANERJEE) JUDICIAL MEMBER Cochin, Dated: 30th October, 2025 n.p. Printed from counselvise.com 4 ITA No. 589/Coch/2025 Pavana Manuel Xavier Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin Printed from counselvise.com "