ITAT Delhi Quashes Revision Order Against Studds, Flags Lack of Clear Findings

The Delhi Bench of the Income Tax Appellate Tribunal has recently set aside a revision order passed against Studds Accessories Limited for Assessment Year 2020–21, holding that the Principal Commissioner failed to show how the assessment was “erroneous as well as pre-judicial to the interest of the revenue.”

Studds Accessories Limited is a popular two-wheeler helmert manufacturer.

Allowing the appeal, the Bench of Judicial Member Raj Kumar Chauhan and Accountant Member S. Rifaur Rahman said the Principal Commissioner “has not even whispered the mistake” on the detailed submissions made by the assessee.

The assessment had originally been completed under Section 143(3) (scrutiny assessment) read with Section 144B (faceless assessment procedure) on September 6, 2022. The Principal Commissioner subsequently invoked Section 263 (revision of erroneous and prejudicial orders), alleging discrepancies in legal and professional expenses, salary payments, deduction under Section 80JJAA (deduction for additional employee cost), and Corporate Social Responsibility expenditure.

The tribunal recorded that Studds had furnished detailed explanations during both the assessment and the revisional proceedings. However, the revisional authority remitted the issues to the Assessing Officer “without giving any clear cut finding” as to how the assessment order was erroneous and prejudicial.

Referring to settled law, the bench quoted that “a commissioner in his revisionary jurisdiction is obligated to bring on record error and prejudice through independent verification and inquiry” and that “without there being any proper findings the assessment order u/s 143(3) of the Act cannot be treated as erroneous and prejudicial to the interest of the revenue.”

The Tribunal further noted that the Principal Commissioner had “only expressed suspicion” and that “merely setting aside the assessment order without clear findings, in our view, the jurisdiction u/s 263 cannot be invoked.”

Accordingly, the appeal was allowed, and the revision order was set aside.