2023 (7) TMI 340 - AT - Income Tax

Tribunal overturns CIT's decision under Section 263, upholds AO's legal stance.

Rinki Shashikant Gandhi Versus Deputy Commissioner of Income Tax, Circle-2 (1) (2), Vadodara

Rinki Shashikant Gandhi Versus Deputy Commissioner of Income Tax, Circle-2 (1) (2), Vadodara - TMI Issues Involved:1. Invocation of Section 263 by the Principal Commissioner of Income Tax (CIT).2. Deduction of payment made to Titco Ltd while computing capital gains tax.3. Scope of revisionary powers under Section 263 of the Income Tax Act.Summary:Invocation of Section 263 by the Principal Commissioner of Income Tax (CIT):The assessee filed an appeal against the order of the Principal CIT, who invoked Section 263 to set aside the assessment order passed under Section 143(3). The Principal CIT deemed the order 'erroneous and prejudicial to the interest of revenue' because the AO allowed a deduction of Rs. 1.50 crores paid to Titco Ltd, which the Principal CIT argued was contrary to the Supreme Court's decision in VSMR Jagadish Chandran 227 ITR 240.Deduction of Payment Made to Titco Ltd While Computing Capital Gains Tax:The assessee contended that the payment to Titco Ltd was not for discharging a mortgage but was made by the purchaser to clear the title of the property. This payment was deducted from the sale consideration while computing capital gains tax. The AO had accepted this deduction after examining the facts during the assessment proceedings. The assessee argued that the Principal CIT was attempting to substitute his own view for that of the AO.Scope of Revisionary Powers Under Section 263 of the Income Tax Act:The Tribunal observed that the AO had made a thoughtful consideration of the material on record and took a legally plausible view. It was noted that the Principal CIT cannot supplant his own view over the AO's view in 263 proceedings if the AO's view is not absurd or legally implausible. The Tribunal cited several judgments, including CIT Vs. Sunbeam Auto 332 ITR 167 (Del.) and Gabriel India Ltd. [1993] 203 ITR 108 (Bom), to emphasize that an order cannot be termed erroneous merely because the Commissioner has a different opinion. The Tribunal concluded that the Principal CIT's initiation of 263 proceedings was not justified as the AO had conducted adequate inquiries and applied the law correctly.Conclusion:The Tribunal allowed the grounds of appeal raised by the assessee and set aside the order of the Principal CIT. The appeal of the assessee was allowed, and the Tribunal pronounced the order in the open court on 05-07-2023.