ITAT upholds PCIT's decision to set aside assessment under Income Tax Act

Mrs. Minakshi Shivkumar Bansal Versus Pr. CIT- 6, Pune

Mrs. Minakshi Shivkumar Bansal Versus Pr. CIT- 6, Pune - TMI Issues:
- Whether the assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 is erroneous and prejudicial to the interests of revenue.
- Whether the lands purchased by the assessee are agricultural lands and fall outside the purview of section 56(2)(vii)(b) of the Act.

Analysis:

1. Issue 1 - Assessment Order under Section 143(3):
The appellant challenged the order of the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961, arguing that the assessment order passed by the Assessing Officer was not erroneous or prejudicial to revenue. The PCIT found the assessment order erroneous as the Assessing Officer accepted a valuation report for a property at a lower value than the stamp duty value, resulting in income not being taxed. The PCIT held that the Assessing Officer failed to refer the matter to the DVO or conduct proper verification, making the order erroneous. The appellant contended that the Assessing Officer applied due diligence and relied on case law to support their position. However, the ITAT found that the Assessing Officer did not adhere to the provisions of section 50C and failed to verify the valuation report properly, rendering the assessment order erroneous and subject to revision under section 263.

2. Issue 2 - Classification of Lands as Agricultural:
The appellant argued that the lands purchased were agricultural and thus not subject to section 56(2)(vii)(b) of the Act. The PCIT and CIT-DR contended that the lands were not agricultural but open lands, falling under the purview of the Act. The ITAT noted that the appellant did not raise the agricultural land classification issue during the original assessment or revision proceedings. The ITAT emphasized that revision proceedings are adversarial and issues concluded in the original assessment cannot be raised again. Despite arguments citing case law, the ITAT held that the lands were not agricultural and upheld the PCIT's decision to set aside the assessment order under section 263.

In conclusion, the ITAT dismissed the appellant's appeal, upholding the PCIT's decision to set aside the assessment order and directing the Assessing Officer to re-do the assessment after proper verification and compliance with the law. The ITAT emphasized the importance of following statutory provisions and conducting thorough assessments to ensure accurate taxation and compliance with the Income Tax Act.