PCIT Cannot Invoke Section 263 When Appeal Is Pending Before CIT(A), Rules ITAT Ahmedabad

The Ahmedabad “D” Bench of the Income Tax Appellate Tribunal delivered its order on 24 February 2026 in the case of Jignasa Atulkumar Shah for Assessment Year 2018–19. The Tribunal examined the validity of revision proceedings initiated by the Principal Commissioner of Income Tax under Section 263 of the Income-tax Act while the reassessment appeal was already pending before the Commissioner (Appeals).

Reassessment Over Alleged Penny Stock Gains

The assessee had originally declared income of ₹15.53 lakh. Based on departmental information alleging that she was a beneficiary of accommodation entries linked to manipulation in shares of Oasis Tradelink Ltd., reassessment proceedings were initiated under Section 148. The Assessing Officer treated the sale of shares as penny stock transactions and brought the amounts to tax, rejecting the claim of exempt long-term capital gains under Section 10(38). The assessee challenged this reassessment before the CIT(A), where the appeal remained pending.

Tribunal Quashes PCIT’s Revision Order

While the appeal was pending, the Principal Commissioner issued a show cause notice under Section 263, alleging that the Assessing Officer should have taxed the share proceeds as unexplained income under Sections 69 and 69A read with Section 115BBE. The PCIT then set aside the reassessment order for fresh examination. The ITAT held that Explanation 1(c) to Section 263 bars revision when the same issue is already under consideration before the appellate authority. Since the penny stock issue formed the subject matter of the pending appeal, the PCIT had no jurisdiction to invoke Section 263.

Accordingly, the Tribunal quashed the revision order and allowed the assessee’s appeal.