2023 (3) TMI 716 - AT - Income Tax

Tribunal affirms Commissioner's order under Income Tax Act, dismisses appeal.

The Tribunal upheld the Principal Commissioner's order under Section 263 of the Income Tax Act, finding the assessment erroneous and prejudicial to ... Revision u/s 263 - short computation in the sale consideration being difference between the sale consideration offered for LTCG and market value of the property sold as per sale deed - HELD THAT:- On perusal of the assessment order passed under section 143(3) of the Act dated 28.12.2017, the Assessing Officer has not discussed anything about the defects noticed by the ld. PCIT. Assessing Officer issued notice under section 143(2) of the Act. However, the defects noticed by the ld. PCIT in respect of computation of LTCG and advance payment received from M/s. Harmony Residences Pvt. Ltd. No question has been asked on the above aspects and no reply was given by the assessee. Even under section 142(1) of the Act, the Assessing Officer has not issued any questionnaire in respect of LTCG and advance payments received from M/s. Harmony Residences Pvt. Ltd. and even no reply was given by the assessee on these aspects. From the above, it is very clear that the Assessing Officer has not examined the above two defects noticed by the ld. PCIT. Therefore, we are of the opinion that the assessment order passed under section 143(3) of the Act is erroneous and prejudicial to the interest of Revenue and the ld. PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. Thus, we find no infirmity in the order passed by the ld. PCIT.Appeal filed by the assessee is dismissed. Issues Involved:The issues involved in this case are: Delay in filing appeal due to Covid-19 pandemic, Validity of notice issued under section 263 of the Income Tax Act against a deceased person, Applicability of Section 50C and Section 56, Correct issuance of notice under Section 263, Jurisdiction of the Principal Commissioner of Income Tax to invoke Section 263.Delay in Filing Appeal:The appeal filed by the assessee was delayed by 64 days due to the outbreak of the Covid-19 pandemic. The delay was condoned, and the appeal was admitted for adjudication.Validity of Notice Issued Under Section 263 Against a Deceased Person:The assessee raised concerns regarding the notice issued under section 263 against a dead person. It was argued that the notice should have been issued in the name of the correct person, especially after the death of the assessee. The legal representative of the deceased should have been the recipient of such notices, as per the provisions of the Act.Applicability of Section 50C and Section 56:The assessee contested the applicability of Section 50C and Section 56. It was argued that the assessment under these sections was erroneous and prejudicial to the interest of revenue. The guidelines used for valuation should not be the sole reason for deeming the assessment as incorrect.Correct Issuance of Notice Under Section 263:The issue of correct issuance of notice under Section 263 was raised by the assessee. It was contended that the notice should have been issued to the legal representative of the deceased assessee as per the provisions of the Act. The failure to do so rendered the notice invalid and the subsequent actions based on it void.Jurisdiction of Principal Commissioner to Invoke Section 263:The Principal Commissioner's jurisdiction to invoke Section 263 was questioned by the assessee. It was argued that the invocation of this section based on audit objections or recommendations is not valid. The Principal Commissioner should exercise this power only if the assessment order is found to be erroneous and prejudicial to the interests of revenue upon examination of records.Conclusion:After considering the arguments presented by both sides, the Tribunal upheld the order passed by the Principal Commissioner under Section 263 of the Income Tax Act. The Tribunal found that the assessment order was indeed erroneous and prejudicial to the interest of revenue as the defects pointed out by the Principal Commissioner were not addressed by the Assessing Officer. The appeal filed by the assessee was dismissed, and the order was pronounced on 15th March 2023 at Chennai.