The Income Tax Department challenged its own previous assessment order.
Here’s what happened.
A food-grain trader bought rice from farmers through a regulated mandi.
The purchases were supported by Form 6R, a statutory mandi document.
The AO accepted the purchases.
Then the PCIT ordered the case to be examined again.
The AO accepted the purchases again but made a fresh addition of Rs 12.12 Crores on an issue that was not part of the revision directions.
NFAC deleted it.
ITAT upheld the deletion.
The Revenue then took the matter to the High Court.
The HC drew an important line:
An assessment order is the Revenue’s own decision after examining the taxpayer’s case.
So if the Department believes that order is wrong, it cannot simply appeal against its own assessment.
The proper route is revision.
The Court also held that a fresh assessment cannot travel beyond the scope of the revision directions.
And on the Form 6R issue, the Court found that these statutory documents could not simply be brushed aside without a genuine doubt about their authenticity.
The Revenue has a remedy when an assessment goes wrong But it has to use the right route.