2025 (6) TMI 981 - HC - Income Tax

Tax Assessment Overturned: Income Tax Order Invalidated for Improper Evaluation of Capital Gains Evidence

Bhavna Darshanbhai Patel Versus National E Assessment Centre & ORS.

GHC addressed a tax assessment petition challenging an Income Tax Order. The SC found the original assessment flawed, as the Assessing Officer incorrectly ... PCIT order u/s 264 setting aside the impugned Assessment Order deleting addition of unexplained money u/s 69A - as submitted that the grievance raised in this petition would not survive as the Assessment Order is already quashed and set aside. Petitioner submitted that PCIT, instead of setting aside and remanding the Assessment Order, ought to have allowed the Revision Application filed by the petitioner by only setting aside the Assessment Order as the entire Assessment Order was based on incorrect facts and premises contrary to the show-cause notice issued by the Assessing Officer. HELD THAT:- As the fact remains that the show-cause notice issued by the Assessing Officer is required to be adjudicated and therefore, without entering into the merits of the matter, the petition is disposed in view of the order dated 17th April, 2025 passed by the Principal Commissioner of Income Tax under Section 264 of the Act. Notice is discharged. The Gujarat High Court, through an oral order by Justice Bhargav D. Karia, addressed a petition challenging an Assessment Order dated 23.03.2024 under Sections 143(3) read with 144B of the Income Tax Act, 1961. The Principal Commissioner of Income Tax, by order dated 17.04.2025 under Section 264 of the Act, set aside the impugned Assessment Order on the ground that the Assessing Officer (AO) erred in adding Rs. 109.56 crore as unexplained money under Section 69A, despite the assessee having disclosed the amount as long-term capital gains (LTCG) from sale of unlisted shares, and relevant details being available but ignored by the AO. The Commissioner found that the AO did not call for certain details before making additions, rendering the additions unjustified.The Court noted that the Assessment Order was quashed and remanded for fresh adjudication, directing the AO to allow the assessee adequate opportunity to submit evidence. The petitioner contended that the Commissioner should have allowed the revision application outright rather than remanding, as the Assessment Order was based on incorrect facts. However, the Court refrained from delving into merits, emphasizing the necessity for adjudication of the show-cause notice and disposed of the petition accordingly, discharging notice.