TaxTMI 
TaxTMI 
2022 (11) TMI 578
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.... The common issue raised in various grounds of appeal by the assessee is against exercise of jurisdiction u/s 263 of the Act by PCIT thereby setting aside the assessment order which has been passed after making due enquiries. 3. Facts in brief are that the return was filed on 27.09.2014 electronically disclosing an income of Rs. 4,60,270/-. The case was selected under CASS for scrutiny and statutory notices were duly issued and served on the assessee. The assessee himself appeared during the assessment proceedings from time to time and produced necessary details before the AO and the assessment was finally framed accepting the returned income vide order dated 21.12.2016 passed u/s 143(3) of the Act. The PCIT upon perusal of the said orde....
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....uld be Rs.40,11,804/- as per provision of Section 50C of the Income Tax Act, 1961. Accordingly, taxable Long Term Capital Gain would be Rs.34,24,929/-[ Rs.40,11,804/- minus Indexed cost of acquisition as provided by you of Rs.5,86,875/-]. This LTCG of Rs.34,24,929/- should have been added to your total income in the assessment. 4. You along with your wife , jointly purchased a property from vendors (total 27 in number) at a price of Rs.9,50,000/-. The stamp valuation authority had determined the value of the property at Rs.1,91,23,804/-. Your submission before the AO was that you had purchased the property from family members, as such, provision of Section 56(2)(vii)(b) of the Income Tax Act, 1961 does not apply in your case. ....
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....uiries and after giving a fair hearing to the assessee. 4. The Ld. A.R submitted before the Bench that the order passed by PCIT is patently wrong and against the facts on records. The Ld. A.R. submitted before us that there were 28 absolute owners in the impugned property through succession from one Late Deokinandan Prasad Shrivastav and details thereof are available in the conveyance deed dated 06.08.2013 filed at page no. 69 to 73 of PB. There were four grandsons of Late Shri Deokinandan Prasad Shrivastav who entered into an agreement to sell the property on 10.04.2007 duly notarized with the three unrelated buyers namely i) Jagdamba Industries Ltd., ii) Maa Chandi Durga Cement Ltd. and iii) Maa Amba Sponge Iron Ltd. for a total sale c....
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....that for invoking jurisdiction u/s 263 of the Act, the PCIT has to satisfy twin conditions as envisaged u/s 263 and i.e. first assessment order has to be erroneous and secondly it has to be prejudicial to the interest of revenue. The ld counsel contended that in the present case, since the order is not erroneous and prejudicial to the interest of the revenue, the revisionary jurisdiction Section 263 of the Act has wrongly been invoked. The Ld. Counsel of the assessee relied in defense of his contentions and arguments on the decision of Ho'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs CIT [2000] 243 ITR 83 (SC) wherein the Hon'ble Court has held that for the purpose of invoking jurisdiction u/s 263 of the Act , the twin con....
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....nally the Ld. Counsel for the assessee submitted that in view of these facts the order of PCIT may kindly be quashed. 5. The Ld. D.R. on the other hand relied on the order of PCIT by submitting that there is no prejudice caused to the assessee by exercise of jurisdiction u/s 263 of the Act as the PCIT has not given any final direction to AO to make the addition, however the AO was given free hand to investigate and look into these issues and frame the assessment denovo after doing necessary enquiry. 6. After hearing the rival submissions and perusing the material on record, we find that jurisdiction u/s 263 of the Act was exercised for two reasons as discussed and stated hereinabove in the show cause notice. So far as the issue no. 1 ....
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.... is absent i.e if the order is erroneous but is not prejudicial to the Revenue or vice versa , recourse cannot be had to Section 263(1) of the Act. Similarly in respect of second issue proposed by the PCIT, we note that the sale and purchase were amongst the family members which was also acknowledged by the PCIT in the impugned order. Once this is established that the transaction is between family members , the provisions of Section 56(2)(viib) of the Act does not apply. On this issue also , the PCIT has made a finding that the AO has not made any enquiry without making any enquiry himself as to how the assessment order is erroneous and prejudicial to the interest of the revenue which is contrary to the ratio laid down by the Hon'ble Delhi ....