2024 (8) TMI 39 - AT - Income Tax

ITAT sets aside PCIT revision order under section 263 for stamp valuation benchmark error

Vijay Manubhai Hirpara Versus Principal Commissioner of Income Tax, Ahmedabad.

ITAT Ahmedabad set aside PCIT's revision order u/s 263 regarding stamp valuation benchmark. The tribunal held that property details were available to AO ... Revision u/s 263 - stamp valuation bench mark taken by the PCIT - HELD THAT:- We observe that the details regarding the property were made available to the Assessing Officer during the course of assessment proceedings, all the aforesaid properties were duly reflected in the books of accounts maintained by the assessee and the same were submitted before the AO during the assessment proceedings for his kind consideration, the PCIT has also not taken into consideration the fact that substantial payment in respect of the above properties were made in the year 2010 and, therefore, it was not analyzed whether the Jantri Value of Financial Year 2014-15 should be taken for the purpose of invoking Section 263 of the Act and further so far as cash component in respect of above property is concerned, evidently it is forming part of the purchase deed itself which was submitted before the AO during the course of assessment proceedings. We are of the considered view that the Assessment Order is not erroneous in so far as prejudicial to the interest of the Revenue. Accordingly, Order passed under Section 263 of the Act is liable to be set aside. Appeal of the assessee is allowed. Issues:1. Proper opportunity of being heard in revision order under Section 2632. Erroneous order under Section 263 by PCIT3. Passing order under Section 263 based on suspicion4. Ignoring inquiry and replies during original assessment proceedings5. Quashing of order passed by Principal CommissionerAnalysis:Issue 1: Proper opportunity of being heard in revision order under Section 263The appeal was filed against the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 for the Assessment Year 2015-16. The Assessee contended that the revision order was erroneous as proper opportunity of being heard was not provided. The delay in filing the appeal was attributed to lack of notification and service of the order on the Assessee. The Tribunal, after considering the circumstances, condoned the delay in filing the appeal, emphasizing the importance of justice.Issue 2: Erroneous order under Section 263 by PCITThe PCIT observed discrepancies in the assessment records related to the purchase of immovable property and agricultural land by the Assessee. The PCIT directed the Assessing Officer to conduct a denovo assessment due to alleged errors in the original assessment order. However, the Assessee argued that the PCIT's initiation of proceedings under Section 263 was based on incorrect presumptions and inadequate understanding of facts. The Tribunal found that the details of the properties were duly submitted during the original assessment proceedings, and the PCIT failed to consider substantial payments made in the past, leading to the conclusion that the initiation of Section 263 proceedings was unwarranted.Issue 3: Passing order under Section 263 based on suspicionThe PCIT's order under Section 263 was primarily based on suspicion rather than substantial evidence suggesting income escapement. The Assessee argued that all properties were duly reflected in the books of accounts, and the source of investments was disclosed during the assessment proceedings. The Tribunal noted that the PCIT did not adequately consider the information provided by the Assessee and failed to verify the substantial payments made in previous years, leading to the dismissal of the PCIT's order.Issue 4: Ignoring inquiry and replies during original assessment proceedingsThe Assessee contended that the Assessing Officer had been provided with necessary details and documents regarding the property transactions during the original assessment proceedings. The Tribunal observed that the PCIT failed to acknowledge the submissions made by the Assessee and did not consider the source of investments adequately. The Tribunal concluded that there was no lack of inquiry on the part of the Assessing Officer, and the original assessment order was not erroneous.Issue 5: Quashing of order passed by Principal CommissionerAfter a detailed analysis of the facts and legal precedents, the Tribunal found that the PCIT's order under Section 263 was unwarranted and not supported by substantial evidence. Citing relevant judicial precedents, the Tribunal held that the original assessment order was not erroneous or prejudicial to the interest of Revenue. Consequently, the Tribunal allowed the appeal of the Assessee and set aside the order passed under Section 263.In conclusion, the Tribunal ruled in favor of the Assessee, setting aside the PCIT's order under Section 263 and emphasizing the importance of proper assessment based on factual and legal considerations.