ITAT Kolkata Quashes Section 263 Revision Involving COVID-19 Relief Payment

The Kolkata bench of the Income Tax Appellate Tribunal quashed a revision order initiated under Section 263 of the Income Tax Act regarding a COVID-19 relief payment amounting to ₹5.65 crore. The tribunal based its decision on the finding that the assessing officer had duly carried out inquiries during the original assessment proceedings and the revenue failed to establish any unproved benefit extended to a specified person. Section 263 empowers principal commissioners or commissioners to revise orders passed by assessing officers if they find such orders to be erroneous and prejudicial to the interests of the revenue.

However, a revision cannot be sustained merely because the revising authority holds a different opinion, provided the original assessing officer applied their mind and conducted adequate fact-finding. The distinction here lies between a lack of inquiry, which justifies revision, and a possible view taken after due examination, which bars supervisory interference. Tax practitioners representing corporate clients should collate comprehensive replies submitted during original scrutiny assessments to defend against subsequent Section 263 notices.

Professionals must demonstrate that all relevant details regarding payments, such as COVID-19 relief funds, were fully disclosed and reviewed by the assessing officer. Bottom line: A completed assessment backed by proper inquiry cannot be reopened via revision simply due to a change in supervisory perspective.