Revision order us 263 on conducting additional enquiry on different pattern when AO conducted adequate enquiry and took view permissible in law could not be said to be erroneous or prejudicial to the interest of Revenue – ITAT
ABCAUS Case Law Citation:
ABCAUS 1262 (2017) (05) ITAT
The appellant assessee had challenged the order passed by the CIT u/s 263 of the Income Tax Act, 1961 (‘Act’).
Assessment Year : 2009-10
Date/Month of Pronouncement: May, 2017
Important Case Laws Cited/relied upon:
Commissioner of Income Tax u. Amit Corporation
Commissioner of Income Tax v. Arvind Jewellers
CIT V/s Amit Corporation
CIT V/s Sarvana Developers
Malabar Industrial Company
Brief Facts of the Case:
The assessee was an individual . His case was selected for scrutiny under CASS. During the course of assessment proceedings u/s 143(2) the AO examined the transaction of sale of agriculture land in which the assessee was joint owner. For the purpose of long term capital gain, the assessee had adopted the fair market value as on 01/04/1981. To substantiate the quality of land and basis of reasonability of adopting the rate per sq.mt, the assessee filed a valuation report in which the FMV was calculated at a lower amount. Based on the report, the assessee offered the additional long term capital gain by submitting revised computation and paid the differential tax. The AO accepted the revised computation and valuation.
Subsequently, CIT called for the assessment records and opined that AO should have taken Jantri rate which was available for the agriculture land in question. Accordingly CIT invoked its revisionary power and issued notice u/s 263 of the Act and finally held that order passed by the AO suffered serious infirmities and was not only erroroneous but prejudicial to the interest of Revenue. CIT set aside the order of the AO for framing it afresh.
Observations made by the Tribunal:
The Tribunal observed that the AO had specifically dealt with the issue of capital gains in detail and the assessee was asked to furnish the basis of valuation of land, the quality of land and basis of reasonability of the adopting the rate for valuation purpose. The AO after giving due consideration of the assessee’s submission made a specific findings in the body of assessment order and calculated the revised long term capital gain.
It was observed that in reply to a specific query raised during the assessment proceedings, the assessee gave a specific reply which was accepted by the AO and which resulted in fetching more Revenue to the income tax department.
The ITAT noted the following observations of the Jurisdictional High Court:
“during course of framing of assessment, Assessing Officer had access to all records of assessee, and after perusing said records, he framed assessment, said assessment could not be re-opened in exercise of revision power under section 263 for making further inquiries’’.
“ It was held that since material was there on record and said material was considered by ITO and a particular view was taken mere fact that different view could be taken, should not have been basis for an action under section 263.The Commissioner was unjustified in arriving at a conclusion that order passed by ITO was erroneous and prejudicial to interest of revenue.’’
The Tribunal observed that the enquiry conducted was sufficient and was to the satisfaction of the AO which resulted in enhancing the long term capital gain originally shown by the assessee. CIT ‘s order was directed on conducting additional enquiry on different pattern.
The ITAT opined that where adequate enquiry and observations had been clearly mentioned in the body of assessment order and the view taken by the AO was permissible in law, such assessment could not be held to be erroneous or prejudicial to the interest of Revenue
Held that the CIT had wrongly assumed the jurisdiction u/s 263 of the Act and accordingly the impugned order u/s 263 of the Act was quashed.