AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 2276
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....720/-. 2.2 A search and seizure action under Section 132 of the Act was carried out on 15.10.2019 in the case of "Land Broker & Financier Group" and one of the searched party was Mr. Dhaval Teli. From the mobile phone of Shri Teli, images of one Memorandum of Understanding (for short 'MoU') was found and seized. The said MoU was between the Dilip Atmaram Patel, Ashok Atmaram Patel (proposed Sellers) and Dhiren R Bharwad (proposed purchaser) for sale of land at Survey No.329 for Rs. 39.32 crores. On being asked, Mr. Teli explained that although he was the broker for the said transaction but it eventually did not go through due to Title Disputes. The Officer thereafter investigated the data in public domain and gathered information that the said land at Survey No.329 is eventually sold to the Sandhya Maulik Patel and Maulik Jayantibhai Patel for Rs.12 crores on 12.04.2018. Satisfaction note, noting the said facts, was recorded to initiate proceedings under Section 153C of the Act. 2.3 The Assessing Officer, thereafter, issued notice under Section 153C of the Act to the petitioner, on 13.10.2021, to carry out assessment. In the said Assessment Proceedings, the Assessing Officer ....
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....g Officer. It is submitted that such review of order of the Assessing Officer is not permissible. The learned advocate for the petitioner has placed reliance on the following decisions: a. Aryan arcade Ltd. vs. Commissioner of Income-tax I, [2017] 84 taxmann.com 293 (Gujarat) b. JMC Projects (India) Limited vs. Principal Commissioner of Income-tax (Central), [2016] 67 taxmann.com 258 (Gujarat) c. Abhijit Bhandari vs. Principal Commissioner of Income-tax-5, Chennai, [2017] 396 ITR 499 (Madras) 3.2 It is further submitted by learned advocate Mr. Soparkar that the respondent has issued the impugned notice on the ground that the Assessing Officer completed the assessment under Section 143(3) of the Act alleging three errors as below: a. The Action of the Assessing Officer in completing the Assessment on the basis of the Valuation Report by DVO, ignoring the incriminating material found during search was not correct. b. In the case of the purchaser, the assessing officer issued notices under Section 153C of the Act based upon the amount mentioned in the MoU i.e. Rs. 39.32 crores. Thus, two divergent views have been taken by the then assess....
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....hat on issues that are now sought to be raised by the respondent were correctly examined by the then Assessing Officer and inference drawn while passing assessment order under Section 143(3) of the Act cannot be taken into revision under Section 263 of the Act. It is therefore submitted that the impugned assessment order not being erroneous, the assumption of jurisdiction by the respondent is bad and illegal. It is therefore submitted that there is no error in the Assessment Order passed by the then Assessing Officer. It is submitted that on issues that are now sought to be raised by the respondent were correctly examined by the then Assessing Officer and inference drawn while passing assessment order under Section 143(3) of the Act cannot be taken into revision under Section 263 of the Act. It is therefore submitted that the impugned assessment order not being erroneous, the assumption of jurisdiction by the respondent is bad and illegal. 4. SUBMISSIONS ON BEHALF OF REVENUE: 4.1 Learned Senior Standing Counsel Mr. Varun Patel, at the outset, has submitted that since the draft order under Section 263 of the Act is already passed, the same may be allowed to be finalised. It is....
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...., at the documented price of Rs.12 crores only. 5.1 The petitioner had filed return at Rs. 2.36 crores on 26.10.2019 and based on the search and MoU, he was issued notice under Section 153C of the Act on 13.10.2021. The Assessment Order was passed on 19.06.2023, assessing the income at Rs.9.84 crores making addition of Rs.8.25 crores. During the Assessment proceedings, the Assessing Officer called for the fair market value of the property in question and accordingly, the DVO prepared his return valuing the property at Rs.28.50 crores. The petitioner has filed the appeal before Commissioner of Income-tax (Appeal) on 13.07.2023, which is pending. 5.2 A notice under Section 263 of the Act was issued by the respondent seeking revision of the Assessment Order, which has been challenged by the petitioner. He has filed the objection on 27.03.2026 and thereafter, a Draft Assessment Order has been passed on 28.03.2026 pursuant to the order passed by us, directing the petitioner to fully cooperate with the same. The same has been tendered to this Court and was taken on record by order dated 21.04.2026. 5.3 The issue which falls for deliberation before this Court is as to whether, at....
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....iction to impose the penalty only on or after 1st Day of April, 2025 and hence, when the Assessment Order was passed on 19.06.2023, the Assessing Officer could not have passed any order or to even initiate proceedings against the assessee for violation of provision of Section 269SS of the Act and thereby imposing the penalty under Section 271D of the Act. Thus, the respondent has manifestly erred in not examining the provision of Section 269SS read with Section 271D of the Act and, hence, the issuance of the notice for alleged inaction of the Assessing Officer to initiate and impose the penalty under Section 271D of the Act is erroneous and illegal. Hence, the revision proceedings under Section 263 of the Act become vulnerable. 5.7 So far as other aspect of which the respondent was impressed in invoking the power under Section 263 of the Act, is relating to the approach of the Assessing Officer for placing reliance on the Valuation Report by the DVO in assessing the value of land at Rs.28.50 crores, thereby ignoring the value of the land at Rs. 39.32 crores as mentioned in the MoU, is concerned, we find that the respondent has also committed error in invoking his revisional powe....
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....Assessing Officer made an addition of Rs.8.25 crores at the ends of the petitioner and one Shri Ashok Patel. 7. We may now refer to the decision of this Court in case of Aryan Arcade Ltd. (supra) wherein the Co-ordinate Bench after examining the scope of provision of Section 263 of the Act in context of the show-cause notice issued by the Commissioner has held thus: "10. The Division Bench of this Court in case of Rayon Silk Mills v. Commissioner of Income-tax reported in (1996) 221 ITR 155 was examining the challenge of the assessee to an order by the Commissioner in which in exercise of revisional powers, he had directed the Income Tax officer to hold certain inquiry on an issue which according to the Commissioner, the Income Tax officer had not examined. The assessee argued that merely because the order of assessment does not discuss the issue at length, would not mean that no inquiry was made. The Court accepted the contention and held that the Assessing Officer having made the inquiry but without detail reference in order, the Commissioner was not correct in directing fresh inquiry. It was however, clarified that the Court did not mean to lay down the law that when....
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....ous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax." 8. Thus, it is settled precedent that though the Commissioner can certainly invoke the powers under Section 263 of the Act, if he or she is of the opinion that the Assessing Officer has passed an order which is erroneous and prejudicial to the interest of the revenue, however such powers are to be exercised sparingly in those case where the Assess....
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....rrect parameters and though taxed the same income, by applying wrong methodology. We may recall, in the impugned order the Commissioner expressed prima facie opinion that the entire expenditure of Rs.105.36 crore was liable to be disallowed and added to the total income of the assessee. The assesssing officer, instead of making specific addition, rejected the books of accounts by invoking section 145 (3) of the Act and estimated the G.P. for different years. 14. As noted, when tax additions were made which resulted into orders of assessment being framed levying tax on the same income, the orders of assessment cannot be stated to be prejudicial to the interests of the revenue. To the factual aspect, even the Revenue is unable to raise any contest. The apprehension of the revenue appears to be that if the logic adopted by the assessing officer is not accepted in appeal, the entire additions would be deleted. Under the circumstances, if the correct methodology, as suggested by the Commissioner in the impugned notice, is adopted, the additions would stand the test of law. In other words, the Commissioner desires that the order of assessment should be better written and flaws, ....