ITAT quashes revision order under section 263, rules assessment neither erroneous nor prejudicial to revenue

The ITAT Ahmedabad quashed a revision order passed by PCIT under section 263, ruling that the assessment order was neither erroneous nor prejudicial to revenue interest. The assessee successfully demonstrated with proper records that a property sale reflected in Form 26AS pertained to Vaibhav Corporation Pvt. Ltd. and not to the assessee, supported by sale deed and Sub Registrar confirmation. The tribunal held that incorrect calculation of income should be rectified under section 154 rather than through revision proceedings under section 263. The assessee's appeal was allowed.

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Issues:
Assessment order revision based on alleged errors in income calculation and property sale value determination.

Analysis:
The appeal was filed by the Assessee against the Revision order passed by the Principal Commissioner of Income Tax (Appeals)-3, Ahmedabad, concerning the Assessment Year 2019-20. The Assessee, engaged in land trading, had filed a return declaring total income and claimed losses, leading to additions by the Assessing Officer under section 68 for unsecured loans and cash deposits. The Principal Commissioner found discrepancies in the assessment, including an alleged escapement of income and incorrect cash deposit calculation, leading to a show cause notice for additional income addition. The Assessee contended that the property sale was mistakenly attributed to them instead of a company, supported by Form 26AS and Sale Deed evidence. The Principal Commissioner set aside the assessment, directing a fresh computation of taxable income. The Assessee appealed, challenging the revision order on various grounds, including the alleged errors in income calculation and property sale value determination.

The Assessee argued before the Appellate Tribunal that the property sale was executed by a company, not by them, as evidenced by the Sale Deed and Form 26AS reflecting the company's TDS payment. The Sub Registrar's response further confirmed no property transaction by the Assessee on the specified date. The Assessee contended that the revision proceedings lacked merit as there was no income escapement, and the assessment order was not erroneous or prejudicial to revenue. In contrast, the Revenue supported the revision order.

Upon review, the Tribunal found the Assessee's evidence compelling, demonstrating the property sale was conducted by the company, not the Assessee, supported by official records and the Sub Registrar's confirmation. The Tribunal noted that the Principal Commissioner should have terminated the revision proceedings based on the evidence provided, as the assessment order was not erroneous or prejudicial to revenue. The Tribunal concluded that any incorrect income calculation should be rectified under section 154 of the Act, not through revision proceedings under section 263. Consequently, the Tribunal allowed the Assessee's appeal, quashing the revision order.

In conclusion, the Appellate Tribunal ruled in favor of the Assessee, setting aside the revision order and emphasizing the need for proper verification before initiating revision proceedings under section 263 of the Income Tax Act.

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