2013 (6) TMI 474 - AT - Income Tax

Tax Tribunal upholds Commissioner's jurisdiction under S.263, orders reassessment to scrutinize transactions.

Shri V. Lingareddy & Others Versus Income-tax Officer

Shri V. Lingareddy & Others Versus Income-tax Officer - TMI Issues Involved:1. Jurisdiction of the Commissioner of Income-tax to revise the assessment under S.263.2. Adequacy of the Assessing Officer's enquiry into various aspects of the assessee's transactions.3. Validity of the Commissioner of Income-tax's findings and directions for a fresh assessment.Detailed Analysis:1. Jurisdiction of the Commissioner of Income-tax to Revise the Assessment under S.263:The primary issue revolves around the jurisdiction of the Commissioner of Income-tax (CIT) to revise the assessment orders dated 30.12.2009, passed by the Income Tax Officer (ITO) under S.263 of the Income-tax Act, 1961. The assessee challenged the CIT's authority to set aside the assessment orders on the grounds that the CIT did not have the jurisdiction to do so.2. Adequacy of the Assessing Officer's Enquiry into Various Aspects of the Assessee's Transactions:The CIT initiated proceedings under S.263 on the basis that the Assessing Officer (AO) did not conduct proper enquiries on several issues. These included:- The existence of a registered cancellation agreement.- The mode of repayment and evidence thereof.- The advances received by the assessee.- Statements recorded from one of the landlords, Mr. Rafiq Hyder, indicating no cancellation of the agreement.- The actual pendency of a civil suit filed by Mr. Bikshapathi.- Enquiries regarding the payment of land purchase consideration of Rs.1,33,03,050.- Unexplained expenditure incurred towards the development activity of the land.- The contention that the assessee received only commission.The CIT found that the AO had failed to make enquiries on these aspects, leading to the setting aside of the assessments for fresh enquiry.3. Validity of the Commissioner of Income-tax's Findings and Directions for a Fresh Assessment:The assessee argued that the AO had made necessary enquiries and that improper or inadequate enquiry does not justify invoking S.263. The CIT, however, pointed out several discrepancies and lack of proper documentation and evidence, such as:- Statements from members of the AOP (Association of Persons) indicating that the land was purchased and developed into plots, contradicting later statements that they only received commission.- Lack of evidence or correlation of development charges received and passed on.- Variations in the number of plots sold and the total extent of land sold.- No proper enquiry into the source of initial amounts paid to the landowners.The Tribunal examined the records and found that the AO did not make adequate enquiries into these critical aspects, supporting the CIT's decision to revise the assessments.Conclusion:The Tribunal upheld the CIT's jurisdiction under S.263, agreeing that the AO had not conducted proper enquiries into various aspects of the assessee's transactions. The Tribunal affirmed the CIT's direction to redo the assessments afresh, ensuring proper enquiry and verification of all relevant facts and figures. Consequently, the appeals of the assessee were dismissed, and the orders of the Commissioner of Income-tax were upheld.Order Pronounced:The Tribunal pronounced the order on 24.05.2013, dismissing the appeals of the assessee and upholding the CIT's orders.