During the course of reassessment proceedings; the AO made addition of 25% of bogus sales. The Assessee had preferred an appeal before the CIT(A) which was pending. Meanwhile, the PCIT invoked jurisdiction under section 263 on the basis that the AO made addition of only 25% of bogus transaction without any basis which was without any verification/enquiry. According to PCIT entire 100% of bogus transaction ought to have been added. Assessee pleaded that PCIT had no power to invoke revisionary jurisdiction because he had filed an appeal against the Assessment Order; also the AO had duly examined the issue of bogus sales.

Held that power under section 263 extends to all such matters which are not considered and decided in appeal. Thus, only when some issue is decided in appeal by CIT(A) in an appeal against the Assessment Order; such issue cannot be subject matter of revision under section 263. Since the Appeal was still pending it cannot be said that the CIT(A) had ‘considered and decided’ the impugned issue. Accordingly, PCIT had the jurisdiction to invoke provision of section 263 over the said issue.

The PCIT had pointed out several discrepancy in the Assessment Order. Further, it was observed that even though the Assessee had filed required details; however, the AO had not made property inquiry/verification from his side upon the same. Accordingly, it was held that PCIT had validly invoked revisionary proceedings under section 263. (AY.  2011-12)