2021 (12) TMI 592 - AT - Income Tax

Revision by PCIT u/s 263 - As per CIT assessment framed u/s 143(3) is erroneous and prejudicial to the interest of the revenue as the AO has not examined the issue of sale of flat at a price lower than stamp value - HELD THAT - The date of purchase is the date when the allotment letter was issued to the assessee and not the date of registered agreement. The case of the assessee is squarely covered by the decision of the coordinate bench in the case of Naina Saraf 2021 (9) TMI 766 - ITAT JAIPUR wherein held we are not in agreement with the view taken by the ld. Pr.CIT holding the applicability of S. 56(2)(vii)(b)(ii) in the facts and circumstances of the case and therefore we hold that the assessment order, subjected to revision u/s 263, is not erroneous and prejudicial to the interest of the revenue. Therefore, considering the totality of facts and circumstances of the case, the impugned order passed u/s 263 of the Act by the ld. Pr.CIT, is therefore, quashed. Hence revisionary jurisdiction has not been validly exercised. Hence we quash the order passed u/s 263 of the Act by ld. PCIT and restore the order of AO. The appeal of the assessee is allowed.

Summary

Issues Involved:
1. Exercise of revisionary jurisdiction by Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act.
2. Determination of the date of purchase of the flat.
3. Applicability of Section 56(2)(vii)(b) of the Income Tax Act.

Detailed Analysis:

1. Exercise of Revisionary Jurisdiction by PCIT under Section 263 of the Income Tax Act:
The primary issue raised in the appeal is the exercise of revisionary jurisdiction by the PCIT under Section 263 of the Income Tax Act. The PCIT deemed the assessment framed under Section 143(3) as erroneous and prejudicial to the interest of the revenue because the Assessing Officer (AO) did not examine the issue of the sale of the flat at a price lower than the stamp value. The PCIT issued a show-cause notice and subsequently passed a revisionary order setting aside the assessment framed by the AO, directing the AO to re-examine the issue.

2. Determination of the Date of Purchase of the Flat:
The facts reveal that the assessee purchased a flat for ?67,50,000 as per an allotment letter dated 25.02.2010 and paid the entire consideration by 30.06.2010. However, the flat was registered on 10.12.2014, with the stamp value being ?1,39,38,500 on that date. The assessee argued that the date of purchase should be considered as the date of the allotment letter, not the date of the registered agreement. The Tribunal agreed with the assessee, stating that the date of purchase is when the allotment letter was issued, not the registration date.

3. Applicability of Section 56(2)(vii)(b) of the Income Tax Act:
The PCIT contended that the difference between the agreement value and the stamp value should have been added to the total income of the assessee under Section 56(2)(vii)(b). However, the Tribunal referred to the decision in the case of Naina Saraf Vs Pr CIT, where it was held that if an allotment letter constitutes a complete agreement, the provisions of Section 56(2)(vii)(b) would not apply if the agreement was entered into before the amendment. The Tribunal noted that the pre-amended law did not cover situations where an immovable property was received for inadequate consideration, and the amended law applicable from AY 2014-15 could not be applied retrospectively.

Conclusion:
The Tribunal concluded that the PCIT erred in invoking the provisions of Section 56(2)(vii)(b) and applying them to the facts of the case. The Tribunal quashed the order passed under Section 263 by the PCIT and restored the order of the AO. The appeal of the assessee was allowed, and the revisionary jurisdiction was deemed to have been invalidly exercised. The Tribunal emphasized the importance of the date of the allotment letter as the date of purchase and the non-applicability of the amended Section 56(2)(vii)(b) to transactions completed before the amendment.