Tribunal sets aside CIT's order on share determination, upholds AO's cost decision

The Tribunal set aside the CIT's order under section 263, except for the determination of the assessee's share in the property pending final decree by the Civil Court. The Tribunal found the CIT's direction to compute capital gains based on a 1/3rd share unjustified as the preliminary decree had been confirmed by the High Court. The Tribunal upheld the AO's adoption of the cost of acquisition and allowed the brokerage claim, noting that the assessment order had merged with appellate orders, barring revision under section 263 for these issues. The assessee's appeals were allowed.

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Issues Involved:
1. Determination of the assessee's share in the property and consequential capital gains.
2. Adoption of the cost of acquisition as on 01.04.1981.
3. Allowance of brokerage claimed without supporting evidence.

Detailed Analysis:

1. Determination of the Assessee's Share in the Property and Consequential Capital Gains:
The CIT held that the assessment order was erroneous and prejudicial to the interests of Revenue because the Assessing Officer (AO) had determined the assessee's share in the property at 1/6th based on a preliminary decree by the 1st Additional District Judge, Ranga Reddy District, which was stayed by the High Court of Andhra Pradesh. The CIT directed the AO to compute the capital gains based on a 1/3rd share. However, the Tribunal found that the preliminary decree had been confirmed by the High Court, making the CIT's basis for revision redundant. The Tribunal noted that the issue of property sharing was still pending before the Civil Court, and the CIT could not determine the share of the assessee when the matter was sub judice. Therefore, the Tribunal concluded that the CIT's direction to compute the capital gains based on a 1/3rd share could not be sustained. However, any changes resulting from the final decree by the Civil Court should be taken into account by the AO.

2. Adoption of the Cost of Acquisition as on 01.04.1981:
The CIT found that the AO had erroneously adopted the cost of acquisition at Rs.2/- per sq. yard instead of Rs.2/- per acre. The assessee had produced certified copies of sale deeds indicating a higher value of Rs.6/- per sq. yard for comparable land, but the CIT rejected them for lack of original documents. The Tribunal held that the CIT's insistence on original documents was unreasonable and that certified copies should be accepted. Moreover, the Tribunal emphasized that SRO rates do not necessarily reflect fair market value, and the AO's adoption of Rs.2/- per sq. yard was not erroneous.

3. Allowance of Brokerage Claimed Without Supporting Evidence:
The CIT held that the AO had wrongly allowed the brokerage claim without supporting evidence. The assessee had provided confirmation letters and sworn statements supporting the brokerage payment. The Tribunal found that the AO had made necessary inquiries and applied his mind to the evidence before allowing the brokerage claim. The Tribunal noted that the CIT(A) and the ITAT had already dealt with the brokerage issue in detail, and the assessment order had merged with the appellate orders. Therefore, the CIT could not revise the assessment order under section 263 for this issue.

Conclusion:
The Tribunal concluded that the CIT's exercise of jurisdiction under section 263 was not justified, except for the issue of the assessee's share in the property, which depended on the final decree by the Civil Court. The Tribunal set aside the CIT's order under section 263 for all other issues, thereby allowing the assessee's appeals. The Tribunal also noted that the assessment order had merged with the appellate orders of the CIT(A) and ITAT, barring the CIT from revising the assessment under section 263.

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