2019 (7) TMI 661 - AT - Income Tax

Tribunal corrects tax assessment errors, directs reassessment for 2010-11 and 2013-14

The Tribunal upheld the Principal Commissioner of Income Tax's orders under Section 263, finding the assessment erroneous and prejudicial to revenue due ... Revision u/s 263 - proceedings barred by limitation - assessment order passed u/s u/s 153A r.w.s. 143(3) - HELD THAT:- No merit into this contention of the assessee that impugned order is hit by limitation as in the case in hand, there was no assessment u/s 143(3). It was merely a processing where the assessing officer had processed the return of the income and did not scrutinise the claim of the assessee. We are also in agreement of the finding of the Ld. CIT(DR) that section 147 and section 153A operate in two different and distinct fields. Therefore, the judgement of Hon'ble Apex Court rendered in the case of CIT Vs. Alagendran Finance Ltd. [2007 (7) TMI 304 - SUPREME COURT] would not help the assessee. Hence, we find no merit in the ground raised and the same is dismissed. Undisclosed sale of property - not working out LTCG in accordance with the value adopted by the stamp valuation authority as per section 50C - Lack of enquiry on the admissibility of claim for deduction u/s 54F - no incriminating material found - HELD THAT:- CIT had invoked provisions of section 263 of the Act on the basis that the assessee failed to disclose the sale consideration and also did not work out long term capital gain in accordance with the value adopted by the stamp valuation authority as per section 50C. The contention of the assessee is that provisions of section 50C of the Act are not applicable as the assessee is engaged in the real estate business. However, this fact is contrary to the records as per the audited report, wherein the nature of business is stated to be contractors/civil contractors. Hence, we do not have any hesitation to come to the conclusion that the Ld. Principal CIT was justified in invoking the provisions u/s 263. The grounds raised in the appeal are dismissed. However, before parting we wish to clarify that A.O. would decide claim of deduction u/s 54F in accordance with law. - Decided against assessee. Issues Involved:1. Limitation in initiating proceedings under Section 263.2. Justification of the Principal Commissioner of Income Tax's (Pr. CIT) order as erroneous and prejudicial to the interest of the revenue.3. Verification of the assessee's claim of investment in a residential house for exemption under Section 54F.Detailed Analysis:1. Limitation in Initiating Proceedings under Section 263:The assessee contended that the initiation of proceedings under Section 263 by the Pr. CIT was barred by limitation. The original return was filed on 7.9.2011, and the assessment was deemed completed on 30.9.2012, making the deadline for initiating Section 263 proceedings 31.3.2015. The Pr. CIT initiated proceedings on 16.3.2018, which the assessee argued was beyond the permissible period. The assessee relied on the Supreme Court judgment in CIT Vs. Alagendran Finance Ltd. However, the Tribunal found that the assessment was not under Section 143(3) but merely a processing of the return, and thus the limitation argument did not hold. The Tribunal agreed with the CIT(DR) that Sections 147 and 153A operate in different fields and dismissed the ground, finding no merit in the limitation argument.2. Justification of the Pr. CIT's Order as Erroneous and Prejudicial:The Pr. CIT observed that the assessee sold a plot and claimed exemption under Section 54F without purchasing a residential house or depositing the capital gains in a capital gains account scheme. The Pr. CIT deemed the assessment order erroneous and prejudicial to the revenue's interest because the long-term capital gain was not assessed correctly, and the exemption was allowed without verifying the conditions under Section 54. The Tribunal upheld the Pr. CIT's view, stating that the order was erroneous and prejudicial to the revenue because the assessing officer did not make requisite inquiries into the claim. The Tribunal emphasized that the revisionary power under Section 263 is not merely to correct errors but to address errors causing prejudice to the revenue.3. Verification of the Assessee's Claim under Section 54F:The assessee argued that the claim for deduction under Section 54F was made in the original return and processed, and there was no incriminating material found during the search to doubt this claim. The Tribunal noted that the Pr. CIT is empowered to revise any order if it is erroneous and prejudicial to the revenue's interest. The Tribunal found that the assessing officer did not scrutinize the claim properly, and the Pr. CIT was justified in directing a re-examination. The Tribunal dismissed the assessee's grounds, stating that the Pr. CIT's invocation of Section 263 was warranted due to the lack of proper inquiry and verification of the claim under Section 54F.Conclusion:The Tribunal dismissed the appeals, upholding the Pr. CIT's orders directing the assessing officer to reframe the assessments after proper examination. The Tribunal clarified that the assessing officer should decide the claims in accordance with the law without being influenced by the observations in the impugned order. The appeals for both assessment years 2010-11 and 2013-14 were dismissed with the same reasoning. The order was pronounced on 10.07.2019.