2021 (8) TMI 213 - AT - Income Tax

Revision u/s 263 - business profit on sale of land at Nallur - HELD THAT - On perusal of the deed in document No.14320/2013 dated 02.12.2013, it is seen that the property valued at ₹ 6,81,69,559/- as per the SRO value. Hence, the value of consideration received on transfer of business asset is less than the value adopted by the SRO for the purpose of stamp duty, which is not in accordance with the provisions of s.43CA of the Act is at ₹ 2,50,05,694/- which failed to bring to tax. Failure to assess this has rendered the assessment is erroneous and prejudicial to the interests of revenue. Before the A.O, it was submitted by the assessee that the sale price is ₹ 6,81,69,559/- less cost price is at ₹ 1,12,83,619/- and profit on sale of land is at ₹ 5,68,85,940/- and the same is offered for taxation and therefore, the provisions of s.43CA of the Act will not apply. Exemption u/s. 54F - In this case, the A.O has completed assessment u/s. 143(3) of the Act dated 30.12.2019. The same was taken up by the Ld. PCIT for examination u/s. 263 of the Act and found that the A.O has not examined in respect of business profits on sale of land at Nallur, which is erroneous and prejudicial to the interests of revenue. He has also pointed out that the claim of assessee u/s. 54F of the Act is fully allowed, where only 50% has to be allowed. We have gone through the order of the Ld. PCIT, we found that there are two issues as pointed out by the Ld. PCIT. In our opinion, the A.O has not made any enquiry/investigation to complete the assessment u/s. 143(3) of the Act. PCIT rightly set aside the order passed by the A.O and directed the A.O to pass fresh assessment order in accordance with law. Hence, we find that no interference is called for in this case. - Decided in favour of assessee.

Summary

Issues:
Delay in filing the appeal with reasons for condonation, Merits of the case regarding reassessment under section 263 of the Income Tax Act, 1961.

Delay in filing the appeal:
The appeal was filed with a delay of 250 days, seeking condonation based on wrong advice from the Chartered Accountant. The assessee explained the delay citing genuine reasons in the affidavit. The Tribunal found the explanation sufficient and condoned the delay, allowing the appeal to proceed.

Merits of the case - Reassessment under section 263:
The Principal Commissioner of Income Tax (PCIT) directed the Assessing Officer (AO) to re-do the assessment under section 263 of the Income Tax Act, 1961. The PCIT invoked section 263 based on two grounds. Firstly, discrepancies in the valuation of property on sale of land at Nallur compared to the SRO value, impacting the tax liability under section 43CA. Secondly, incorrect allowance of exemption under section 54 of the Act for investment in a flat. The PCIT found the AO's assessment erroneous and prejudicial to revenue as key aspects were not adequately examined.

The assessee contended that the sale price and profit on land sale were correctly offered for taxation, disputing the PCIT's findings. Regarding the exemption claim under section 54, the assessee explained that the investment was made solely by her, though her daughter's name was added in the agreement for precautionary reasons.

The Tribunal noted that the AO failed to properly investigate the profit on land sale and the exemption claim under section 54F, leading to an erroneous assessment. Consequently, the PCIT's decision to set aside the AO's order and direct a fresh assessment was upheld, as the AO's order was found to be deficient in addressing the issues raised.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, affirming the PCIT's direction for a fresh assessment by the AO. The decision was pronounced on 27th July 2021 in Chennai.