2020 (11) TMI 215 - AT - Income Tax

Revision u/s 263 - computation of capital gains and the exemption claimed u/s 54 - PCIT has opined that the perusal of the assessment records shows that the AO has not carried out any verification of the details filed by the assessee - HELD THAT - On perusal of the revision order passed u/s 263 we find that the ld. PCIT has not given any specific findings as to what is erroneous in the assessment order and what is required to be verified by the AO. On perusal of the assessment order, we find that after examining the working of the capital gain/loss, the AO has observed that the assessee has wrongly computed the indexed cost of improvement with respect to the property and accordingly, after revision of the computation, the long term capital loss was reduced to NIL. In the revision order, after considering the explanations of the assessee, PCIT has not disputed the computation of indexed cost of improvement as well as investment in bond and claiming exemption under section 54 of the Act or given any findings as to what is required to be verified by the Assessing Officer and what way the assessment order is prejudicial to the interest of Revenue. Revision order passed under section 263 of the Act stands quashed and sustains the assessment order. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment order under section 263 of the Income Tax Act, 1961.
2. Computation of capital gains and exemption under section 54 of the Act.
3. Verification of details filed by the assessee.

Analysis:
1. The appeal was against the order of the Principal Commissioner of Income Tax, Chennai, under section 263 of the Income Tax Act, directing the Assessing Officer to redo the assessment concerning capital gains and exemption under section 54 of the Act for the assessment year 2014-15. The appellant argued that the specific issue in question was already considered by the Assessing Officer in the initial assessment. The Tribunal noted that the PCIT did not point out any specific issue not considered by the Assessing Officer, and the revision order lacked jurisdiction, leading to the quashing of the revision order and upholding of the assessment order.

2. The Assessing Officer initially assessed a long term capital loss claimed by the assessee, which was later revised to NIL after discrepancies were found in the computation of indexed cost of improvement related to the sale of a property. The PCIT observed that the property was a new building and disallowed the exemption under section 54, leading to short term capital gain tax liability. The assessee argued that the issue was discussed during the assessment proceedings, and the revision order lacked specific findings on errors in the assessment order. The Tribunal found that the PCIT did not dispute the indexed cost of improvement or the exemption claimed under section 54, and as such, quashed the revision order and upheld the assessment order.

3. The PCIT directed the Assessing Officer to redo the assessment after verifying the computation of capital gains and exemption claimed under section 54. The Tribunal noted that the PCIT did not provide specific findings on what needed verification or how the assessment order prejudiced revenue. As the Assessing Officer had already addressed the computation discrepancies, the revision order was deemed erroneous and prejudicial to the interest of Revenue. Consequently, the Tribunal allowed the appeal filed by the assessee, quashing the revision order passed under section 263 of the Act and sustaining the assessment order.