The assessee did not appear before the Commissioner in the revision proceedings. Does that alone justify the revision order?
No. Non-appearance before the Commissioner does not convert an assessment made after specific queries and full replies into an order passed without enquiry. The Commissioner still has to make his own enquiry and satisfy both conditions, and prejudice to the revenue must actually exist.
Decided by the High Court (G.S. Kulkarni J and Aarti Sathe J) on 2026-06-19, reported as Income Tax Appeal No. 286 of 2024 (Bombay High Court). It bears on section 263 of the Income Tax Act 1961, in Revision & Rectification matters.
The Tribunal here had upheld the revision essentially because the assessee did not turn up, while itself accepting that all the information required for the assessment was on record. The High Court called that an inherent contradiction. It is recent, it is from the Bombay High Court, and it deals with the exact form of Explanation 2 order — 'order passed without making inquiries or verification which should have been made' — that Commissioners now issue as standard.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee carries on digital marketing and buys online media space from LinkedIn, Google, Twitter and similar channels on behalf of its clients, recovering the media cost from them and charging a campaign management fee of 4 to 7 per cent. Following Accounting Standard 9 it recognised only the fee as revenue and routed the reimbursement of media cost through the balance sheet, so that it appeared neither as income nor as expenditure. For assessment year 2017-18 it returned income of Rs. 3,29,30,260 and the case was picked up for scrutiny. By notice under section 142(1) dated 21 October 2019 the Assessing Officer sought reconciliation of Form 26AS, service tax and sales tax returns with the audited books and the return of income. The assessee replied on 29 November 2019, and after a further show cause notice of 7 December 2019 proposing an addition of Rs. 19,07,83,213 it filed reconciliations on 14 December 2019 and party-wise details of the reimbursements of Rs. 17,26,89,469 with details of tax deducted at source on 17 December 2019. The assessment under section 143(3) was completed on 23 December 2019 with a minor addition, accepting the treatment of the reimbursements. On 24 February 2022 the Principal Commissioner issued a notice under section 263 on the ground that no proper enquiry had been made into the reimbursements. The assessee, whose consultant was occupied elsewhere, did not respond in time and did not appear, and the revisional order was passed on 27 March 2022 under the heading 'Order passed without making inquiries or verification which should have been made', partly setting aside the assessment. The Tribunal dismissed the assessee's appeal on 2 January 2023 and rejected a rectification application under section 254(2) on 12 March 2024.
The appeal was allowed, the questions of law were answered in favour of the assessee and against the revenue, and the Tribunal's order of 2 January 2023 was quashed and set aside. Where the Assessing Officer had raised specific queries which were duly answered, the case was one neither of lack of enquiry nor of inadequate enquiry, and the assessee's failure to appear before the Principal Commissioner could not supply the missing jurisdictional foundation (paras 9, 10, 15 and 16).
The Court found an inherent contradiction in the Tribunal's approach: the Tribunal had begun by accepting that all the relevant information required for the assessment appeared to have been furnished, so that there could not be a section 263 order, and then upheld the revision merely because the assessee had not appeared before the Principal Commissioner (para 8). The Court held the Tribunal had lost sight of the letters of 29 November, 14 December and 17 December 2019 in which the difference in reported revenue on account of reimbursements, and the tax deducted at source on those payments, had been explained in detail, so the case was not one of lack or inadequacy of enquiry (para 9). It further held there was no prejudice to the revenue at all, because the reimbursed media cost, even if included in total income, would carry a corresponding deduction on payment to the media companies, leaving the income chargeable to tax unchanged; the Tribunal had proceeded without applying the principle that in revisionary proceedings the twin conditions of error and prejudice must both be satisfied (para 10). At paras 11 and 12 the Court applied its own decision in CIT v. Gabriel India Ltd. and reproduced its reasoning at length, including that section 263 is not an arbitrary or unchartered power, that the Commissioner cannot start fishing and roving enquiries into concluded matters, and that an order is not erroneous merely because the Commissioner would have written it more elaborately. At para 13 it referred to decisions quashing revision where adequate enquiry and specific queries had been raised at the original assessment. At paras 14 and 15 it distinguished the cases the Tribunal had relied on, in which no query at all had been raised by the Assessing Officer, and held that here a specific query had been raised on 21 October 2019 and duly answered, and that the Principal Commissioner had himself raised no further query and made no further enquiry before passing what the Court called a bald order.
Further, the PCIT also had not raised any further queries or made any further enquiries prior to the passing of the order under Section 263 of the Act and proceeded to pass a bald order invoking the provisions of Section 263 of the Act.
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Handle my notice → Ask a CA on WhatsAppNo. Non-appearance before the Commissioner does not convert an assessment made after specific queries and full replies into an order passed without enquiry. The Commissioner still has to make his own enquiry and satisfy both conditions, and prejudice to the revenue must actually exist. This was decided by the High Court (G.S. Kulkarni J and Aarti Sathe J) and bears on section 263 of the Income Tax Act 1961. It is reported as Income Tax Appeal No. 286 of 2024 (Bombay High Court). The Tribunal here had upheld the revision essentially because the assessee did not turn up, while itself accepting that all the information required for the assessment was on record. The High Court called that an inherent contradiction. It is recent, it is from the Bombay High Court, and it deals with the exact form of Explanation 2 order — 'order passed without making inquiries or verification which should have been made' — that Commissioners now issue as standard. If it applies to you, the first step is this: Even if a hearing before the Commissioner was missed, run the merits — the assessment record itself is the evidence that enquiry was made.
The assessee carries on digital marketing and buys online media space from LinkedIn, Google, Twitter and similar channels on behalf of its clients, recovering the media cost from them and charging a campaign management fee of 4 to 7 per cent. Following Accounting Standard 9 it recognised only the fee as revenue and routed the reimbursement of media cost through the balance sheet, so that it appeared neither as income nor as expenditure. For assessment year 2017-18 it returned income of Rs. 3,29,30,260 and the case was picked up for scrutiny. By notice under section 142(1) dated 21 October 2019 the Assessing Officer sought reconciliation of Form 26AS, service tax and sales tax returns with the audited books and the return of income. The assessee replied on 29 November 2019, and after a further show cause notice of 7 December 2019 proposing an addition of Rs. 19,07,83,213 it filed reconciliations on 14 December 2019 and party-wise details of the reimbursements of Rs. 17,26,89,469 with details of tax deducted at source on 17 December 2019. The assessment under section 143(3) was completed on 23 December 2019 with a minor addition, accepting the treatment of the reimbursements. On 24 February 2022 the Principal Commissioner issued a notice under section 263 on the ground that no proper enquiry had been made into the reimbursements. The assessee, whose consultant was occupied elsewhere, did not respond in time and did not appear, and the revisional order was passed on 27 March 2022 under the heading 'Order passed without making inquiries or verification which should have been made', partly setting aside the assessment. The Tribunal dismissed the assessee's appeal on 2 January 2023 and rejected a rectification application under section 254(2) on 12 March 2024. The matter was decided on 2026-06-19 by the High Court (G.S. Kulkarni J and Aarti Sathe J). On those facts the High Court held as follows. The appeal was allowed, the questions of law were answered in favour of the assessee and against the revenue, and the Tribunal's order of 2 January 2023 was quashed and set aside. Where the Assessing Officer had raised specific queries which were duly answered, the case was one neither of lack of enquiry nor of inadequate enquiry, and the assessee's failure to appear before the Principal Commissioner could not supply the missing jurisdictional foundation (paras 9, 10, 15 and 16).
The Court found an inherent contradiction in the Tribunal's approach: the Tribunal had begun by accepting that all the relevant information required for the assessment appeared to have been furnished, so that there could not be a section 263 order, and then upheld the revision merely because the assessee had not appeared before the Principal Commissioner (para 8). The Court held the Tribunal had lost sight of the letters of 29 November, 14 December and 17 December 2019 in which the difference in reported revenue on account of reimbursements, and the tax deducted at source on those payments, had been explained in detail, so the case was not one of lack or inadequacy of enquiry (para 9). It further held there was no prejudice to the revenue at all, because the reimbursed media cost, even if included in total income, would carry a corresponding deduction on payment to the media companies, leaving the income chargeable to tax unchanged; the Tribunal had proceeded without applying the principle that in revisionary proceedings the twin conditions of error and prejudice must both be satisfied (para 10). At paras 11 and 12 the Court applied its own decision in CIT v. Gabriel India Ltd. and reproduced its reasoning at length, including that section 263 is not an arbitrary or unchartered power, that the Commissioner cannot start fishing and roving enquiries into concluded matters, and that an order is not erroneous merely because the Commissioner would have written it more elaborately. At para 13 it referred to decisions quashing revision where adequate enquiry and specific queries had been raised at the original assessment. At paras 14 and 15 it distinguished the cases the Tribunal had relied on, in which no query at all had been raised by the Assessing Officer, and held that here a specific query had been raised on 21 October 2019 and duly answered, and that the Principal Commissioner had himself raised no further query and made no further enquiry before passing what the Court called a bald order. In the words reproduced by the source cited on this page: "Further, the PCIT also had not raised any further queries or made any further enquiries prior to the passing of the order under Section 263 of the Act and proceeded to pass a bald order invoking the provisions of Section 263 of the Act." The decision followed or applied CIT v. Gabriel India Ltd. — applied at paras 11 and 12. Note: the Mirum judgment as carried on Indian Kanoon prints the citation as (1989) 176 ITR 349, whereas the citation for CIT v. Gabriel India Ltd. (Bombay High Court, 15 April 1993, Dr. B.P. Saraf J) is [1993] 203 ITR 108 (Bom). The correct citation is given here rather than the one the source prints; this should be checked against a printed copy of the Mirum judgment; CIT v. Ballarpur Industries Ltd., (2017) 85 taxmann.com 10 (Bom) — distinguished at para 14, on the ground that there the Assessing Officer had raised no query at all; Sify Software Ltd. v. ACIT, (2017) 80 taxmann.com 273 — distinguished at para 14, on the same ground that no query at all had been raised by the Assessing Officer.
It was decided by the High Court on 2026-06-19 and is reported as Income Tax Appeal No. 286 of 2024 (Bombay High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 263, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed, the questions of law were answered in favour of the assessee and against the revenue, and the Tribunal's order of 2 January 2023 was quashed and set aside. Where the Assessing Officer had raised specific queries which were duly answered, the case was one neither of lack of enquiry nor of inadequate enquiry, and the assessee's failure to appear before the Principal Commissioner could not supply the missing jurisdictional foundation (paras 9, 10, 15 and 16). It arises in Revision & Rectification matters, on section 263 of the Income Tax Act 1961, and was decided by G.S. Kulkarni J and Aarti Sathe J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Match each ground in the revision order to the specific section 142(1) query and the reply that answered it, with dates. That correspondence is what carried this case. Argue prejudice separately from error. Where an amount, if included in income, would carry a matching deduction, there is no prejudice to the revenue at all. Point to what the Commissioner did not do: if he raised no further query and made no enquiry of his own before passing the order, say so in terms.
Still good law. Applied by the Chennai Bench of the Tribunal. In M/s WS Industries India Ltd v PCIT, Chennai (ITAT Chennai, 25 August 2026, doc 82817522) the Bench sets out this judgment at para 28 as Mirum Digital (P.) Ltd v PCIT [2026] 188 taxmann.com 469 (Bombay), quoting that 'the PCIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed', and adopts that as a ground for quashing the revisionary order before it; the appeal was allowed. Nothing overruling, doubting or confining the judgment was found, the citedby index is empty, and no Supreme Court challenge appeared in either search. Note that two further Bombay High Court orders in this company's matters — 11 June 2026 in the same appeal and 23 June 2026 in Writ Petition (L) 7891 of 2026 — are separate proceedings, not treatment. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
One slip in the judgment as reported. Paragraph 7 refers to a show cause notice dated 24 February 2023, whereas paragraph 3(x) gives the section 263 notice as 24 February 2022 and the revisional order as 27 March 2022. Read the dates from paragraph 3, which is internally consistent. Two further slips asserted in earlier drafts of this entry have been removed. The first — that paragraph 10 says the case "was not that of a lack of enquiry or inadequate enquiry on the part of the Appellant-Assessee" where the Assessing Officer is meant — is not in the judgment: paragraph 10 deals with prejudice, and the lack-of-enquiry finding is at paragraph 15, where the judgment reads "on the part of the AO". The second — that paragraph 15 refers to "the assessment order dated 2nd January 2023" when 2 January 2023 is the date of the Tribunal's order — could not be confirmed: three retrievals of the page disagreed on whether that date appears in paragraph 15 or only in paragraph 16 (where it correctly describes the Tribunal's order). It is not published here on that evidence and would need checking against a printed copy. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed, the questions of law were answered in favour of the assessee and against the revenue, and the Tribunal's order of 2 January 2023 was quashed and set aside. Where the Assessing Officer had raised specific queries which were duly answered, the case was one neither of lack of enquiry nor of inadequate enquiry, and the assessee's failure to appear before the Principal Commissioner could not supply the missing jurisdictional foundation (paras 9, 10, 15 and 16).
TaxSphere, “Mirum Digital Pvt Ltd v PCIT”, https://taxnotice.vittsphere.com/caselaw/case/mirum-digital-v-pcit/ (validity last checked 2026-09-06)
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