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2017 (1) TMI 1248 - AT - Income TaxRevision u/s 263 - whether the assessment order passed under section 143(3) r.w.s. 153A of the Act is erroneous and prejudicial to the interest of the Revenue? - Held that - PCIT has independently, on verification of assessment records found that the information contained in the seized document at page Nos. 82 to 86 vide Annexure Ann/PS/SS/B&D/S-3 dated 10.01.2012, which was seized during the course of search under section 132 of the Act has been omitted by the Assessing Officer while framing the assessment under section 143(3) r.w.s. 153A of the Act dated 24.03.2014. Under the above facts and circumstances, we are of the considered opinion that the ld. PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. We find no infirmity in the order passed by the ld. PCIT - Decided against assessee
Issues Involved:
1. Legality of invoking Section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax (PCIT). 2. Assessment of income from sale of plots in Tharamangalam Village. 3. Verification and consideration of seized documents during the assessment. 4. Application of Explanation 2 to Section 263 of the Income Tax Act, 1961. Detailed Analysis: 1. Legality of invoking Section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax (PCIT): The appeals challenge the orders passed by the PCIT under Section 263 of the Income Tax Act, 1961, which were deemed erroneous and unsustainable. The PCIT noticed discrepancies in the assessment orders for the years 2010-11, 2011-12, and 2012-13, particularly regarding the sale of plots in Tharamangalam Village. The PCIT issued notices under Section 263, asking why the income from the sale should not be assessed. The Tribunal analyzed whether the assessment orders were erroneous and prejudicial to the Revenue's interest within the meaning of Section 263, referencing the Supreme Court decision in Malabar Industrial Co. Ltd. The Tribunal concluded that the PCIT rightly invoked Section 263, as the Assessing Officer failed to verify crucial seized documents, making the assessment orders erroneous and prejudicial to the Revenue. 2. Assessment of income from sale of plots in Tharamangalam Village: The PCIT observed that no income from the sale of plots in Tharamangalam Village was assessed in the assessee's hands for the assessment year 2010-11. The sale agreement indicated a consideration of ?1,05,09,000 for plots measuring 13,136 sq.ft. The PCIT determined that the sale consideration for the assessee's share was not accounted for, and directed the Assessing Officer to reassess the income, treating it as 'profits & gains of business.' 3. Verification and consideration of seized documents during the assessment: The Tribunal noted that the Assessing Officer did not carefully verify the seized materials before concluding the assessment. A specific document (Annexure ANN/PS/SS/B&D/S-3, dated 10.01.2012) detailing a sale agreement was found but not considered in the assessment. This omission led the PCIT to conclude that the assessment was erroneous and prejudicial to the Revenue's interest. The Tribunal supported the PCIT's view that the Assessing Officer's failure to consider the seized document warranted the invocation of Section 263. 4. Application of Explanation 2 to Section 263 of the Income Tax Act, 1961: The PCIT referenced Clause (a) of Explanation 2 to Section 263, which deems an order erroneous if it is passed without necessary inquiries or verification. The Tribunal agreed with the PCIT that the Assessing Officer's failure to verify the seized document made the assessment order erroneous under this clause. The Tribunal distinguished the present case from the case of Shri V.R. Venkatachalam v. ACIT, where the Tribunal annulled the orders under Section 263 due to the absence of incriminating materials. In the present case, the seized document was a crucial piece of evidence that the Assessing Officer overlooked. Conclusion: The Tribunal upheld the PCIT's orders under Section 263, directing the Assessing Officer to redo the assessments for the years 2010-11, 2011-12, and 2012-13. The appeals filed by the assessee were dismissed, affirming that the assessment orders were indeed erroneous and prejudicial to the Revenue's interest due to the lack of verification of seized documents.
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