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2022 (6) TMI 449 - AT - Income TaxRevision u/s 263 - grant of deduction u/s 54 was not made in the original return filed under Section 139(1) - case of the assessee was reopened as assessee did not show capital gain in the original return of income - HELD THAT - In the return in response to notice under Section 148 of the Act assessee disclosed Long Term Capital Gain as well as claimed deduction under Section 54 of the Act. The decision of the Hon'ble Supreme Court in Geotz India 2006 (3) TMI 75 - SUPREME COURT do not apply to the facts of the case as in the return in response to notice under Section 148 of the Act assessee claimed deduction in the return of income. Further, assessee can also claim eligible deductions from the escaped income in reassessment proceedings. AO also examined the details and allowed the claim. PCIT did not suggest any further enquiries which are required to have been made by the learned Assessing Officer in reassessment proceedings. Therefore, in our opinion explanation 2 to Section 263 of the Act cannot be applied. Further, the learned PCIT also could not show how the order passed by the learned Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Hence, the order passed under Section 263 of the Act by the learned PCIT is not sustainable. Hence, we quash the same. Appeal of assessee allowed.
Issues:
- Jurisdiction of the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 - Assessment of Long Term Capital Gain and deduction under Section 54 of the Act - Correctness of the assessment order passed under Section 143(3) read with Section 147 of the Act Analysis: Jurisdiction of the Principal Commissioner of Income Tax under Section 263: The appeal was filed against the order passed by the Principal Commissioner of Income Tax, Central Mumbai-1, under Section 263 of the Income Tax Act, 1961. The Principal Commissioner held that the assessment order passed under Section 143(3) read with Section 147 of the Act was erroneous and prejudicial to the interest of Revenue. The assessee contended that the Principal Commissioner erred in passing the order without jurisdiction and that the Assessing Officer had applied a plausible view. The Tribunal found that the Principal Commissioner's order was not sustainable as the Assessing Officer had correctly assessed the income, considered the capital gains, and allowed the deduction under Section 54 of the Act. The Tribunal quashed the Principal Commissioner's order. Assessment of Long Term Capital Gain and deduction under Section 54 of the Act: The case involved the sale of an immovable property by the assessee, resulting in Long Term Capital Gain. The assessee claimed a deduction under Section 54 of the Act. The Principal Commissioner found that the Assessing Officer did not examine the issue properly and allowed the deduction despite discrepancies in the original return of income. The Tribunal noted that the assessee had submitted relevant details and documents during the reassessment proceedings, showing ownership of the property and the claim for deduction under Section 54. The Tribunal observed that the Assessing Officer had verified the details and correctly allowed the deduction, leading to the conclusion that the assessment order was not erroneous. Correctness of the assessment order passed under Section 143(3) read with Section 147 of the Act: The Principal Commissioner held that the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of Revenue as the capital gain was not offered in the original return of income and the deduction under Section 54 was not claimed. However, the Tribunal found that the Assessing Officer had properly examined the details provided by the assessee during the reassessment proceedings and allowed the deduction under Section 54. The Tribunal concluded that the Principal Commissioner failed to show how the Assessing Officer's order was erroneous or prejudicial to the Revenue's interest, leading to the allowance of the assessee's appeal. In conclusion, the Tribunal allowed the appeal of the assessee, quashing the order passed under Section 263 of the Income Tax Act, 1961.
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