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2017 (5) TMI 1562 - AT - Income TaxValidity of the order u/s. 263 - sale of agricultural land - Held that - Impugned transaction of sale of agricultural land forming the basis of the order of learned Commissioner of Income Tax (Appeals) u/s. 263 of the Act has been properly adjudicated by learned Assessing Officer during the course of assessment proceedings u/s. 143(3) of the Act by way of calling specific information and the assessee has duly supplied all the information and learned Assessing Officer after taking one of the legally permissible view has accepted the bonafideness, genuineness and correctness of the transaction shown by the assessee. We are therefore of the view that the order u/s. 143(3) of the Act dated 28.12.2011 is neither erroneous nor prejudicial to the interest of revenue and needs to be restored back. - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under Section 263 of the Income Tax Act. 2. Determination of Short Term Capital Gain (STCG) on the sale of land. 3. Verification and inquiry conducted by the Assessing Officer (AO) during the assessment proceedings. 4. Consideration of case laws and judicial precedents. Detailed Analysis: 1. Validity of the order passed under Section 263 of the Income Tax Act: The assessee challenged the validity of the order passed under Section 263 by the Commissioner of Income Tax (CIT), arguing that the assessment order dated 28-12-2011 was neither erroneous nor prejudicial to the interest of revenue. The CIT had directed a fresh assessment, claiming that the AO had erred in accepting the STCG figure of ?5,04,668/- instead of ?4,09,82,337/-. The Tribunal examined whether the AO's order was indeed erroneous and prejudicial to the revenue's interests, as required under Section 263. 2. Determination of Short Term Capital Gain (STCG) on the sale of land: The CIT observed that the actual transfer of land took place on 23-03-2009 for a consideration of ?4,43,52,100/-, contrary to the ?38,74,431/- shown in the return of income. The CIT argued that the STCG should be calculated based on the higher amount. The assessee contended that the land was initially sold to Melody Complex Pvt. Ltd. for ?38,74,431/- and later transferred to Gatil Properties Ltd. for ?4,43,52,100/-, with Melody Complex Pvt. Ltd. receiving the differential amount. The Tribunal noted that the AO had accepted the declared income after examining the relevant details. 3. Verification and inquiry conducted by the Assessing Officer (AO) during the assessment proceedings: The Tribunal found that the AO had issued detailed questionnaires and notices under Sections 143(2) and 142(1) of the Act, and the assessee had provided comprehensive replies and supporting documents. The AO had examined the details of the sale transaction, including the agreements and possession letter, and was satisfied with the declared STCG. The Tribunal held that the AO had conducted a thorough inquiry and had taken a legally permissible view, which could not be termed erroneous. 4. Consideration of case laws and judicial precedents: The Tribunal referred to several judicial precedents, including the landmark judgment of the Supreme Court in Malabar Industrial Co. Ltd. (243 ITR 83), which established that an order is erroneous if it is not in accordance with law and prejudicial to the revenue's interests. The Tribunal also cited the Gujarat High Court's decision in Arvind Jewellers (259 ITR 502), which held that if the AO adopts one of the permissible views, the order cannot be revised under Section 263. Additionally, the Tribunal referenced the Bombay High Court's ruling in Gabriel India Ltd. (203 ITR 108), which stated that an AO's decision cannot be deemed erroneous simply due to a lack of elaborate discussion in the order. Conclusion: The Tribunal concluded that the AO's order was neither erroneous nor prejudicial to the revenue's interests, as the AO had conducted a proper inquiry and adopted a legally permissible view. Consequently, the Tribunal quashed the CIT's order under Section 263 and restored the AO's original assessment order. The appeal filed by the assessee was allowed.
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