2019 (4) TMI 1378 - AT - Income Tax

Income Tax Assessment Order Set Aside for Fresh Review: Lack of Inquiry into Vital Aspects

M/s. Gayatri Enterprise Versus The Income Tax Officer Ward 1 (2) (4), Vadodara

M/s. Gayatri Enterprise Versus The Income Tax Officer Ward 1 (2) (4), Vadodara - TMI Issues:Challenging revisional jurisdiction under s.263 of the Act by the Principal Commissioner of Income Tax, assessment order under s.143(3) of the Income Tax Act, 1961 concerning AY 2011-12, alleged error in assessment order regarding cost of land purchase and stamp duty paid, exercise of revisional power by the Principal Commissioner, justification of setting aside the assessment order, applicability of Section 263 of the Act, judicial precedents, dismissal of the appeal.Detailed Analysis:1. Challenging Revisional Jurisdiction:The appeal was filed by the Assessee against the order of the Principal Commissioner of Income Tax-1, Vadodara, challenging the revisional jurisdiction invoked under s.263 of the Act. The Principal Commissioner set aside the assessment order passed by the Assessing Officer under s.143(3) of the Act for fresh assessment due to lack of inquiry into vital aspects.2. Alleged Error in Assessment Order:The Principal Commissioner found the assessment order erroneous and prejudicial to the interest of the Revenue due to discrepancies in the cost of land purchase. The stamp duty paid by the Assessee indicated a significantly higher value of the land compared to the declared purchase price, suggesting undisclosed income. The Principal Commissioner directed the Assessing Officer to conduct further inquiries and verifications.3. Justification of Setting Aside Assessment Order:The Assessee contended that the transaction did not relate to the assessment year in question, and the application of Section 69B of the Act was unwarranted. However, the Principal Commissioner justified the exercise of revisional power under s.263 based on the glaring discrepancy in the declared cost of land purchase and the stamp duty paid, indicating potential revenue leakage.4. Applicability of Section 263 of the Act:The Tribunal examined the revisional order and cited the lack of meaningful inquiry by the Assessing Officer into the cost of land purchase. The Principal Commissioner was deemed justified in setting aside the assessment order as it was passed without proper scrutiny, and the declared value of the land appeared unrealistically low.5. Judicial Precedents and Dismissal of Appeal:The Tribunal rejected the judicial precedents cited by the Assessee, emphasizing the necessity for the Principal Commissioner to find the order erroneous and prejudicial to the Revenue to invoke Section 263 of the Act. The appeal of the Assessee was ultimately dismissed, upholding the revisional action of the Principal Commissioner.This detailed analysis covers the issues involved in the legal judgment, including the challenges to revisional jurisdiction, alleged errors in the assessment order, justification for setting aside the order, the application of Section 263 of the Act, examination of judicial precedents, and the final dismissal of the appeal.