2022 (11) TMI 1459 - AT - Income Tax

Revision u/s 263 - estimation of value of asset - case of the assessee for the year under consideration was reopened on the basis of information received by assessing officer from sub-registrar concerned that the assessee has sold her land during the relevant financial year - as per AO assessee has shown the cost of acquisition on higher side to reduce the capital gain and made a reference to DVO under section 55A for estimation of value of the land as on 01.04.1981 - HELD THAT - We find that the AO while passing the assessment order which was rectified on receipt of DVO s report is a reasonable, plausible and legally sustainable, which cannot be branded as erroneous. Since, AO has accepted the explanation of assessee, which was coupled with evidence; the assessing officer may not have thought to pass detailed order on the issue examined by her. In our view, once the contention of the assessee on a particular issue is accepted by assessing officer, the order is not appealable order and no appeal would be filed, against such accepted position as an assessee will not feel aggrieved with it, it is not necessary to give reasons of acceptance of such pleas. So far as the observation of ld PCIT that the assessing officer did nothing to sort out the enquiry to verify the assertion of the assessee and there was failure on the part of AO to bring on record the even correct facts or non-conduct of enquiry verification of facts, is concerned, we find that the assessing officer made requisite investigation before allowing relief to the assessee. The investigation conducted and the view adopted by the assessing officer in the present case, if not accepted by the Ld. PCIT, in nothing but change of opinion. It is settled position in law that no revision of assessment order is permissible on mere change of opinion. Therefore, we are of the view that on the basis of material before the assessing officer, she took reasonable, plausible and legally sustainable view, which cannot be branded as erroneous. There is no doubt that while accepting the claim in the assessment, there may be some loss of revenue, tax can be levied only with the authority of law, and every loss of revenue as a consequence of an order of the AO, cannot be treated as prejudicial to the interests of the revenue unless the view adopted by assessing permissible in law. Once the assessing officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the assessing officer is unsustainable in law. Grounds of appeal raised by the assessee are allowed.

Summary

Issues Involved:
1. Initiation of proceedings under section 263 of the Income Tax Act, 1961.
2. Assumption of jurisdiction under section 263.
3. Violation of principles of natural justice in the show cause notice.
4. Allegation of mere 'change in opinion' in the assessment order.
5. Verification of details and explanation regarding land sold by the assessee.
6. Direction to the Assessing Officer (AO) to pass a fresh assessment order.
7. Validity of the entire proceedings.
8. Setting aside the assessment order without pointing out specific errors.

Issue-wise Detailed Analysis:

1. Initiation of proceedings under section 263:
The assessee challenged the initiation of proceedings under section 263 by the Principal Commissioner of Income Tax (PCIT) for AY 2012-13. The PCIT initiated these proceedings on the grounds that the AO's assessment order was erroneous and prejudicial to the interests of the revenue due to the incorrect allowance of deductions and lack of proper inquiry.

2. Assumption of jurisdiction under section 263:
The assessee argued that the PCIT wrongly assumed jurisdiction under section 263. The PCIT's order stated that the AO allowed deductions without proper verification and application of mind, making the assessment order erroneous and prejudicial to the revenue.

3. Violation of principles of natural justice:
The assessee contended that the principles of natural justice were violated as the show cause notice did not mention specific grounds for initiating action under section 263. The PCIT's order, however, detailed that the AO's failure to inquire properly into the cost of acquisition and other aspects justified the revision.

4. Allegation of mere 'change in opinion':
The assessee claimed that the PCIT's action was merely a 'change in opinion' rather than identifying a genuine error. The Tribunal noted that the AO had made inquiries and adopted a plausible view based on the facts and law applicable at the time, thus the PCIT's order was indeed a change of opinion.

5. Verification of details and explanation regarding land sold by the assessee:
The PCIT argued that the AO did not verify the details and explanation regarding the land sale adequately. The Tribunal found that the AO had made necessary inquiries and the assessee provided all required details, including the valuation report from a government-approved valuer.

6. Direction to the AO to pass a fresh assessment order:
The PCIT directed the AO to pass a fresh assessment order considering all issues. The Tribunal found that the AO had already conducted a thorough examination, and the PCIT's direction was unwarranted.

7. Validity of the entire proceedings:
The assessee argued that the entire proceedings were invalid as the AO had already made due inquiries. The Tribunal agreed, noting that the AO's assessment was based on a reasonable and legally sustainable view.

8. Setting aside the assessment order without pointing out specific errors:
The PCIT set aside the assessment order without specifying how it was erroneous and prejudicial to the revenue. The Tribunal held that the AO's order was not erroneous as it was based on a plausible view, and thus, the PCIT's action was not justified.

Conclusion:
The Tribunal allowed the appeal, concluding that the AO's assessment order was neither erroneous nor prejudicial to the interests of the revenue. The PCIT's initiation of proceedings under section 263 was deemed a change of opinion, and the AO's inquiries and conclusions were found to be reasonable and legally sustainable. Consequently, the grounds of appeal raised by the assessee were allowed, and the PCIT's order was set aside.