Capital gains year of transfer, Form 26AS mismatch, and section 50C adjustment all fail on the facts.

The article explains that where an earlier revisional order under section 263 is set aside, the Assessing Officer cannot continue to reassess the same transfer issue for the year under appeal, and any capital gains computation must follow the correct year of transfer. It also notes that a difference between job work income in the profit and loss account and Form 26AS receipts may be explained by netting against purchases and supported records, rather than treated as undisclosed income. On the same reasoning, a section 50C adjustment cannot survive if no capital gain arises in that assessment year.

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Issues: (i) Whether the year of transfer of the immovable property was A.Y. 2007-08 or A.Y. 2011-12 and whether the capital gain could be assessed in the year under consideration after the section 263 order was set aside; (ii) Whether the addition made on account of difference between job work income shown in the profit and loss account and receipts reflected in Form 26AS was sustainable; (iii) Whether the addition made under section 50C of the Income-tax Act, 1961 was sustainable.

Issue (i): Whether the year of transfer of the immovable property was A.Y. 2007-08 or A.Y. 2011-12 and whether the capital gain could be assessed in the year under consideration after the section 263 order was set aside.

Analysis: The transfer issue had already been conclusively decided in the assessee's favour in the earlier order, holding that the land stood transferred when the agreement to sell and possession arrangement operated in A.Y. 2007-08 and not on execution of the sale deed in A.Y. 2011-12. Once the revisional order under section 263 stood vacated, the Assessing Officer's jurisdiction to reopen the same issue in the impugned assessment ceased. The Tribunal therefore found no merit in the Revenue's challenge to the capital gains assessment.

Conclusion: The issue was decided in favour of the assessee and the capital gains addition for the year under consideration was not sustainable.

Issue (ii): Whether the addition made on account of difference between job work income shown in the profit and loss account and receipts reflected in Form 26AS was sustainable.

Analysis: The assessee had produced purchase accounts, ledger extracts and job work records to explain that the apparent difference represented netting of receipts against purchases and did not indicate unaccounted income. The addition was made without adequate enquiry and without evidence that the entire differential amount constituted undisclosed receipts. The Tribunal accepted the explanation and upheld the deletion made by the first appellate authority.

Conclusion: The addition was deleted and the issue was decided in favour of the assessee.

Issue (iii): Whether the addition made under section 50C of the Income-tax Act, 1961 was sustainable.

Analysis: The Tribunal held that, in view of its finding that the capital gain itself did not arise in the year under consideration, the consequential application of section 50C could not survive for that assessment year.

Conclusion: The section 50C addition was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The Revenue's challenges on all grounds failed, and the assessment additions made for the year under appeal were not sustained.

Ratio Decidendi: Once a revisional order under section 263 is vacated, the Assessing Officer cannot continue to reassess the same issue for the year under appeal; consequential additions depending on that issue also fail if the foundational year of taxability is found to be different.

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