PCIT Cannot Invoke Section 263 if ITR Was Filed Under Section 44AD: ITAT
The Income Tax Appellate Tribunal (ITAT), Delhi, has ruled that in cases where the Income Tax Return (ITR) is filed under Section 44AD (Presumptive Taxation), invocation of action under Section 263 is not permissible.
The assessee, Neeraj, engaged in the trading of clothes and filed his ITR under section 44AD. This return was accepted, but the PCIT invoked revisionary powers under section 263 and said that the assessment order was incorrect. The PCIT directed the AO to conduct extra inquiries and collect more evidence to justify that the assessee was actually running a business. This was challenged before the ITAT.
The main argument of the assessee was that PCIT has wrongly assumed jurisdiction under section 263 because the return was filed under section 44AD and the assessee is not required to maintain any books of accounts.
The Tribunal agreed with the contentions of the assessee, holding that the invocation of action under section 263 is not permissible for cases where the ITR was filed under section 44AD. As a result, the tribunal quashed and set aside the PCIT’s order and the related order passed in response to the order under section 263.
Case Citation: Neeraj Vs PCIT (ITAT Delhi); ITA Nos.938 and 939/DEL/2025; 20/03/2026; 2012-13
