2018 (1) TMI 237 - AT - Income Tax

Revision u/s 263 - assessment was completed without making proper inquiry as to the correct quantum of capital gains and correct hands in which it was chargeable - Held that - It was stated by the appellant that property was purchased from joint family funds under an agreement dated 03.07.1980 for ₹ 64,750/- from Manjulaben D/o. Maganlal Narayandas and even possession was also taken. Therefore, the cost of acquisition of the said property should be taken at its FMV as on 01.04.1981 at ₹ 1,50,000/- and indexation should be done accordingly. The appellant had also claimed by way of cost of improvement ₹ 3,25,000/- jointly incurred by the family members towards removal of slum and hutments on this land during 01.04.1989 to 31.03.1991. On the other hand CIT has stated that the said property was purchased on 06.07.1999 as stated in the sale deed so that the title was acquired on 06.07.1999 and indexation was to be made on the basis of F.Y. 1999-2000 by taking the cost of acquisition at ₹ 50,000/-. We set aside the order of the ld. CIT and remit this matter back to the file of the AO to examine whether appellant was in possession of property on 03/07/1980 or was not. The appellant is also directed to file the relevant documents in support of his contention before the AO and thereafter, matter will be decided by the AO as per law. - Decided in favour of assessee.

Summary

Issues:
1. Revision of assessment order under section 263 for A.Y. 2008-09.
2. Erroneous assessment under section 143(3) by AO.
3. Verification of share of property sold, year of acquisition, indexation, cost of improvement, and refund.

Issue 1: Revision of assessment order under section 263 for A.Y. 2008-09
The appeal was against the order of the Commissioner of Income Tax (Appeals)-VII, Ahmedabad, for A.Y. 2008-09. The appellant contended that the order passed under section 263 revising the assessment made by the Assessing Officer (AO) under section 143(3) was illegal, unlawful, and against natural justice principles. The appellant argued that the Commissioner had erred in not fully considering the submissions and evidence. The Commissioner held that the AO's assessment was erroneous and prejudicial to revenue, justifying the revision under section 263. The appellant requested the cancellation of the Commissioner's order.

Issue 2: Erroneous assessment under section 143(3) by AO
The AO's assessment under section 143(3) for A.Y. 2008-09 was challenged as erroneous and prejudicial to revenue. The AO had not thoroughly examined vital income issues, leading to under-assessment of capital gains. The property sale details, acquisition year, indexation, and cost of improvement were not adequately verified. The AO's failure to verify these crucial aspects resulted in a significant under-assessment of income under the head of capital gains, leading to short levy of tax and interest. The AO's assessment was deemed erroneous and prejudicial to revenue, justifying the revision under section 263.

Issue 3: Verification of share of property sold, year of acquisition, indexation, cost of improvement, and refund
The case involved the sale of property and the subsequent assessment of capital gains. The appellant's share of the property sold, the year of acquisition, indexation calculations, cost of improvement, and refund details were crucial for determining the correct tax liability. The appellant's claims regarding property acquisition, indexation, and cost of improvement were contested by the authorities. Discrepancies in the acquisition year, indexation calculations, and property ownership required thorough verification. The Commissioner's decision to set aside the AO's assessment and remit the matter back for further examination was based on the need for additional verification and proper consideration of all relevant documents and submissions.

This detailed analysis of the judgment highlights the key issues involved, including the revision of the assessment order, erroneous assessment by the AO, and the verification of crucial aspects related to property sale and capital gains computation.