ITAT Delhi Quashes Tax Revision Against Senior Advocate Mukul Rohatgi For AY 2020–21

The Delhi Bench of the Income Tax Appellate Tribunal on Monday quashed a revision order passed against Senior Advocate Mukul Rohatgi for Assessment Year 2020–21, holding that the Income Tax Department lacked material to exercise its revision powers for an assessment of Rs.133.46 crore.

Section 263 allows a senior tax officer to revise a completed assessment if it is found to be erroneous and prejudicial to the interests of the Revenue. In Rohatgi's case, the Tribunal held that these statutory conditions were not satisfied.

Allowing his appeal, the Bench of Vice President Mahavir Singh and Accountant Member Manish Agarwal held that the Principal Commissioner of Income Tax could not interfere with the completed assessment in the absence of material showing that the original order suffered from an error causing prejudice to the Revenue.

“We are of the view that there is no material available with the learned PCIT for revision of assessment order under Section 263 of the Act, which enabled him to form a prima-facie opinion that the assessment order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of the Revenue,” the tribunal said in its ruling dated February 16, 2026.

The original assessment for AY 2020–21 had computed Rohatgi's income at Rs. 133.46 crore after disallowances of Rs. 44.77 lakh under Section 24(b) (home loan interest ) and Rs. 40.10 lakh under Section 14A (expenses linked to exempt income). The Commissioner subsequently initiated revision proceedings questioning, among other things, the tax treatment of gains arising from six mutual funds and the determination of Annual Letting Value of certain properties.

On the capital gains issue, the Commissioner held that the six funds were not equity-oriented and directed that the gains be treated as short-term capital gains taxable at normal rates.

The Tribunal rejected this view. After examining the ISIN codes and fund statements on record, it held that the funds were equity-oriented and that the gains were eligible for the concessional 10 percent long-term capital gains rate under Section 112A of the Act. It held that this issue did not justify the exercise of revisionary jurisdiction.

The Commissioner had also questioned the Annual Letting Value of Rohatgi's Golf Links property in New Delhi. The Tribunal recorded that the property had been demolished and was under reconstruction during the relevant assessment year, with reconstruction completed only in March 2024. “Hence, in the relevant assessment year, there is no question of any ALV,” the Bench observed.

The Tribunal further examined the basis adopted by the department while estimating Annual Letting Value of overseas properties but held that the legal requirements for invoking the revision power under Section 263 were not met.

On the question of multiple self-occupied properties, the tribunal clarified that the amendment restricting the benefit was introduced by the Finance Act, 2025, and would apply only from Assessment Year 2026–27. It therefore had no application to AY 2020–21.

The tribunal set aside the revision order and restored the original assessment, subject to verification of purchase details relating to the SBI Gold Fund. Rohatgi's appeal was accordingly allowed.

For Rohtagi: Senior Advocate Sachit Jolly with Advocate Mansha Anand

For Dept: Jitendra Singh