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2021 (9) TMI 894 - AT - Income TaxRevision u/s 263 by CIT - case assessment order u/s.143(3) r.w.s. 153C r.w.s. 153A(1)(b) passed - HELD THAT - For instituting a valid proceeding under Section 263 of the Act, there should be a valid legal proceeding before the Assessing Officer. Once the assessment order was quashed on the ground that it was passed after limitation provided in the Act for passing such order, then it is to be construed that no assessment order is available on which learned Commissioner could form an opinion as to whether any error is available in such order or not. Section 263 of the Act specifically contemplates that there should be an error either in the proceedings or in the assessment order which has caused prejudice to the interests of the Revenue. Now, in the present appeal, as the assessment order itself has already been quashed by the Tribunal vide order dated 12.11.2020, no subsequent further proceedings can be initiated. For the completeness of the facts, we take note of the operating part of the order of the for Assessment Years 2009-10 to 2014-15, wherein the Tribunal, after an elaborate discussion, has quashed the assessment orders. Commissioner has committed an error in holding that Even though these issues are interlinked, but to keep the issue alive and in the interest of revenue, this proceedings are completed . Therefore, in view of the above discussions, the impugned order is not sustainable in the eyes of the law. Accordingly, we quash the order passed under Section 263 of the Act for the year under consideration and allow the appeal of the assessee.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act, 1961. 2. Consideration of replies and objections by the assessee. 3. Validity of the assessment order. 4. Applicability of Section 50C in the computation of capital gains. 5. Nature and valuation of the property sold. 6. Fair market value versus circle rate. 7. Consideration of case laws and precedents. Detailed Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act, 1961: The Principal Commissioner of Income Tax (PCIT) invoked jurisdiction under Section 263 of the Income Tax Act, 1961, directing the Assessing Officer (AO) to pass a fresh assessment order incorporating the market value of the property as per Section 50C of the Act. The assessee challenged this jurisdiction, arguing that the original assessment order had already been quashed by the ITAT on the grounds of being time-barred. The Tribunal held that since the assessment order was quashed, no subsequent proceedings could be initiated under Section 263 as there was no valid legal proceeding before the AO. 2. Consideration of Replies and Objections by the Assessee: The assessee contended that the PCIT failed to consider the replies and objections filed on 03/03/2020 and 19/03/2020. The Tribunal noted that the PCIT did not adequately address these objections and proceeded with the order under Section 263 without proper consideration of the assessee's submissions. 3. Validity of the Assessment Order: The validity of the assessment order was a critical issue. The Tribunal had previously quashed the assessment order for being passed beyond the statutory time limit. The Tribunal reiterated that for proceedings under Section 263 to be valid, there must be a valid assessment order. Since the original order was quashed, the proceedings under Section 263 were deemed invalid. 4. Applicability of Section 50C in the Computation of Capital Gains: The PCIT directed the AO to adopt the sale value as per Section 50C of the Act, which mandates that the value adopted for stamp duty purposes should be considered as the full value of consideration for computing capital gains. The assessee argued that the assessment sought to be reviewed was already quashed, and any additions under Section 50C could only be made based on incriminating documents found during the search, which was not the case here. 5. Nature and Valuation of the Property Sold: The assessee argued that the land in question was a farmhouse falling under the agricultural zone, and the stamp duty was charged at the rate applicable to non-agricultural land. The Tribunal noted that the PCIT did not consider the factual position regarding the nature of the land and the valuation objections raised by the assessee. 6. Fair Market Value versus Circle Rate: The assessee contended that the farmhouse land was sold at a fair market value higher than the circle rate for agricultural land. The Tribunal found that the PCIT ignored this contention and proceeded with the order under Section 263 without addressing the fair market value argument. 7. Consideration of Case Laws and Precedents: The assessee submitted various case laws supporting their contentions regarding the validity of jurisdiction under Section 153C, the scope of assessment under Section 153C, and the non-maintainability of action under Section 263. The Tribunal observed that the PCIT did not adequately consider these case laws, which were pertinent to the issues at hand. Conclusion: The Tribunal quashed the order passed under Section 263 of the Act, holding that the PCIT committed an error by proceeding with the revision despite the original assessment order being quashed. The Tribunal emphasized that for valid proceedings under Section 263, there must be a valid assessment order, which was not present in this case. The appeal of the assessee was allowed, and the impugned order was set aside.
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