2021 (4) TMI 435 - AT - Income Tax

ITAT quashes PCIT's Section 263 revision, deeming assessment order not erroneous.

The ITAT concluded that the revision proceedings initiated by the PCIT under Section 263 were not sustainable. The assessment order was deemed neither ... Revision u/s 263 by CIT - Error in computing capital gain - PCIT holding assessment framed under section 143(3) read with 147 of the Act as erroneous and prejudicial to the interest of the revenue - AO erred in not making addition of difference in the value of the property viz a viz stamp value as provided under section 50C of Act which is causing prejudice to the interest of revenue - HELD THAT:- The value of the property determined for the purpose of the stamp value at the time of registration of the property shall not be taken as sale consideration for working out the capital gain if there is difference between the date of registration of sale deed and fixing the sale consideration of the property and seller has received the consideration from the buyer wholly or partly through banking channel on or before the time of agreement of transfer. There is no ambiguity to the fact that the assessee being a seller has received the consideration from the buyer in the financial year 2010-11 as discussed above and that too through banking channel as provided under 2nd proviso to section 50C of the Act which has been discussed above. This fact has not been challenged by the authorities below. Thus it can be inferred that the value of the property as determined by the assessee with the buyer of the property for transferring the property at the time of agreement shall be taken as the full value of consideration for the purpose of computing the capital gain under the provisions of section 48. Whether the amendment brought in the proviso to section 50C of the Act as applicable with effect from 1 April 2017 can be applied for the year under consideration i.e. assessment year 2012-13? - As decided in DHARAMSHIBHAI SONANI VERSUS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE – 9, SURAT [2016 (9) TMI 1259 - ITAT AHMEDABAD] such amendment being clarificatory in nature is applicable retrospectively - We also note that the fact that the assessee has transferred the property in the financial year 2010-11 was very much appearing in the sale deed - Thus there remains no ambiguity that there was no violation of the provisions of section 50C of the Act for adopting the sale consideration for the transfer of the property by the assessee. AO has made the assessment under section 147 of the Act after necessary verification and due application of mind. Thus, on this count as well, the order of the AO cannot be held as erroneous insofar prejudicial to the interest of revenue. Admittedly there is an explanation-2 brought under section 263 of the Act which states that the order of the AO shall be deemed to be erroneous insofar prejudicial to the interest of revenue if it was passed without making enquiries verification which should have been made. In this regard, we find that the AO has made the enquiries while framing the assessment under section 147 of the Act which have been discussed here in above. However, if the learned PCIT was of the view that the AO failed to make the necessary enquiries which should have been made during the assessment proceedings then it was a duty upon the learned PCIT to specify the relevant enquiries which should have been made but the order of the learned PCIT is silent about such enquiries which should have been made by the AO during the assessment proceedings. See SHRI ANIL L. TODARWAL VERSUS PR. CIT-19, MUMBAI [2018 (1) TMI 660 - ITAT MUMBAI] Thus we are of the view that the revision proceedings initiated by the learned PCIT under section 263 of the Act are not sustainable in the given facts and circumstances. - Decided in favour of assessee. Issues Involved:1. Legality and jurisdiction of the notice issued under Section 263 and the order passed under Section 263.2. Whether the assessment order under Section 143(3) read with Section 147 was erroneous and prejudicial to the interest of the Revenue.3. Application of Section 50C concerning the date of agreement versus the date of sale deed execution.4. Consideration of evidence and materials on record by the Principal Commissioner of Income Tax (PCIT).Issue-wise Detailed Analysis:1. Legality and Jurisdiction of Notice and Order under Section 263:The assessee challenged the legality, validity, and jurisdiction of the notice and order issued under Section 263 by the Principal Commissioner of Income Tax (PCIT). The assessee contended that the assessment order passed under Section 143(3) read with Section 147 was neither erroneous nor prejudicial to the interest of the Revenue. The PCIT's assumption of jurisdiction was questioned, asserting that the assessment was framed after due verification and application of mind by the Assessing Officer (AO).2. Erroneous and Prejudicial Nature of the Assessment Order:The PCIT held that the AO erred by not making an addition for the difference between the sale consideration of Rs. 32 lakh and the stamp value of Rs. 77,96,000 as per Section 50C. The assessee argued that the sale consideration should be based on the value at the time of the agreement (January 2011) rather than the date of the sale deed (April 2011). The AO had accepted the assessee's contention and framed the assessment accordingly. The PCIT, however, rejected this by stating that the assessee did not substantiate the claim with evidence of an agreement in January 2011 and that the proviso to Section 50C was prospective, effective from 01-04-2017.3. Application of Section 50C:The assessee argued that the stamp value for capital gain purposes should be taken from the date of the agreement to sell, as per the amended proviso to Section 50C, which should be considered retrospective. The ITAT referenced the case of Dharamshibhai Sonani vs. ACIT, where it was held that the amendment to Section 50C is clarificatory and retrospective. The ITAT confirmed that the consideration received through banking channels before the sale deed date should be considered, aligning with the proviso to Section 50C.4. Consideration of Evidence and Materials:The ITAT noted that the AO had conducted necessary verification and enquiries during the assessment proceedings. The contention that the sale consideration was fixed in January 2011 was supported by the sale deed and the payment details provided by the assessee. The ITAT found that the AO had duly considered these details and that the PCIT did not specify what further enquiries were required. The ITAT emphasized that the PCIT must indicate the specific enquiries the AO failed to make, which was not done in this case.Conclusion:The ITAT concluded that the revision proceedings initiated by the PCIT under Section 263 were not sustainable. The assessment order was neither erroneous nor prejudicial to the interest of the Revenue, as the AO had made the necessary enquiries and applied the relevant provisions of law correctly. The appeal filed by the assessee was allowed, and the order under Section 263 was quashed.Order Pronouncement:The appeal filed by the assessee was allowed, and the order was pronounced in the court on 22/02/2021 at Ahmedabad.