2019 (6) TMI 985 - AT - Income Tax

Tribunal upholds decision to revise assessment order under Income Tax Act, directs fresh assessment.

Shri Pukhraj Singh Rajpurohit Versus Income Tax Officer Ward–10 (2) (3), Mumbai

Shri Pukhraj Singh Rajpurohit Versus Income Tax Officer Ward–10 (2) (3), Mumbai - TMI Issues Involved:1. Jurisdiction of the Principal Commissioner under section 263 of the Income Tax Act.2. Examination of the applicability of section 56(2)(vii)(b)(ii) of the Act in the assessment proceedings.3. Validity of the assessment order passed by the Assessing Officer.Analysis:1. Jurisdiction of the Principal Commissioner: The appeal challenged the order passed by the Principal Commissioner of Income Tax under section 263 of the Income Tax Act, 1961. The Principal Commissioner exercised his power to revise the assessment order for the assessment year 2014-15. The grounds raised by the assessee primarily questioned the jurisdiction of the Principal Commissioner in assuming jurisdiction and passing the order under section 263. The contention was that the assessment order under section 143(3) was neither erroneous nor prejudicial to the interests of Revenue. The Principal Commissioner found a discrepancy in the valuation of properties purchased by the assessee, leading to the invocation of section 56(2)(vii)(b)(ii) of the Act. Despite the assessee's submissions, the Principal Commissioner held the assessment order to be erroneous and prejudicial to the Revenue's interests, setting it aside for a fresh assessment.2. Examination of Section 56(2)(vii)(b)(ii) Applicability: The crux of the issue revolved around the applicability of section 56(2)(vii)(b)(ii) of the Act to the transactions involving the purchase of shops by the assessee. The Principal Commissioner observed that the Assessing Officer failed to examine the applicability of this provision during the assessment proceedings. The Tribunal noted that the stamp duty valuation exceeded the declared sale consideration, making the excess amount taxable as the assessee's income. The Tribunal found that the Assessing Officer did not conduct any enquiry into the applicability of this provision, rendering the assessment order erroneous and prejudicial to Revenue's interests. Consequently, the Principal Commissioner's decision to revise the order under section 263 was upheld.3. Validity of the Assessment Order: The Authorized Representative contended that the Assessing Officer had thoroughly examined the purchase transactions and accepted the details provided by the assessee, hence the assessment order was not erroneous. However, the Departmental Representative argued that the failure to consider section 56(2)(vii)(b)(ii) made the assessment order both erroneous and prejudicial to Revenue. The Tribunal concurred with the Departmental Representative, emphasizing that the non-examination of the provision by the Assessing Officer rendered the assessment order flawed. The Tribunal upheld the Principal Commissioner's decision to set aside the order for a fresh assessment considering the provisions of section 56(2)(vii)(b)(ii) and providing the assessee with an opportunity to present their case.In conclusion, the Tribunal dismissed the appeal, affirming the Principal Commissioner's exercise of power under section 263 to revise the assessment order due to the failure to examine the applicability of section 56(2)(vii)(b)(ii) during the initial assessment proceedings. The Tribunal directed a fresh assessment to be conducted after considering all relevant submissions and provisions, ensuring a well-reasoned decision.