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2018 (3) TMI 220 - AT - Income TaxRevision u/s 263 - setting aside the assessment order by the CIT in respect of land premium - Held that - In the present case, the CIT has directed the Assessing Officer to make necessary examination regarding the extent of land acquired by the assessee with reference to which land premium of ₹ 3,50,00,000/- was demanded and rate at which said land was acquired and to whom the lands were sold and land premium was received and such receipts on account of transfer fees and stamp duty would constitute capital receipts. We are of the opinion that the Assessing Officer will make enquiries as directed by the CIT and make fresh assessment. Accordingly, we uphold the order of the CIT and dismiss the ground of appeal of the assessee.
Issues:
- Jurisdiction of CIT under section 263 of the Income Tax Act regarding assessment order u/s.143(3) for the assessment year 2009-2010. Analysis: The appeal was filed by the assessee against the CIT's order under section 263 of the Income Tax Act, questioning the jurisdiction of the CIT in setting aside the assessment order under section 143(3) and directing the Assessing Officer to redo the assessment for the assessment year 2009-2010. The primary issue before the tribunal was whether the CIT was justified in assuming jurisdiction under section 263 of the Act. The CIT found that the assessee had debited a substantial amount towards land premium in the profit and loss account, which was not treated as a revenue expenditure by the CIT. The CIT considered this to be a capital expenditure and concluded that the assessment order under section 143(3) was erroneous and prejudicial to the revenue's interests. The CIT directed the Assessing Officer to re-examine specific issues related to the land premium payment, including the extent of land acquired, sale of lands, and the nature of receipts. The assessee contended that the land premium paid was towards lands already sold in earlier years and was fully allowable as expenditure under section 37 of the Act. However, the CIT, after considering the submissions and relevant judicial decisions, upheld the decision to set aside the assessment order for further examination by the Assessing Officer. The tribunal noted that the Assessing Officer had not discussed the land premium payment in the original assessment order, nor made any inquiries regarding the same. The tribunal emphasized the duty of the Assessing Officer to investigate and verify facts, especially when circumstances warrant further inquiries. Citing various judicial precedents, the tribunal supported the CIT's decision to set aside the assessment order for a fresh adjudication on the disputed issue of land premium payment. Ultimately, the tribunal upheld the CIT's order, directing the Assessing Officer to conduct a thorough examination regarding the land acquisition, sale transactions, and the nature of receipts related to the land premium payment. The tribunal dismissed the appeal filed by the assessee, affirming the CIT's decision to set aside the assessment order under section 143(3) and remit the matter for fresh assessment based on the specific issues highlighted by the CIT.
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