2022 (8) TMI 905 - AT - Income Tax

Revision u/s 263 by CIT - valuation requires verification based on correct address given by the buyer - applicability of provisions of section 50C - HELD THAT - We noted that this very issue of revision proceedings u/s. 263 of the Act in the case of applicability of provisions of section 50C of the Act, where there is difference between the sale consideration as per sale deed and guideline value fixed by stamp valuation authority and because the guideline value is higher than the sale consideration as shown in the sale deed, it cannot be a reason for holding that the assessment is erroneous and prejudicial to the interest of revenue. Admittedly in the present case the assessee has registered the sale consideration in the sale deed of the property sold at Rs. 6,01,47,000/- as against the value adopted by sub-registrar office for charging stamp duty in view of the guideline value fixed at Rs. 9,51,20,528/-. The assessee sold the property of an extent of 9980 sq.ft, bearing Door #31F, Old Door #59, New Door #109, Anna Salai Lane (Mount Road), Guindy Ranganathan Street, Guindy, Chennai 600 032 to M/s. Rajam Foods P Ltd for a sale consideration of 601,47,000/- on 10.07.2015vide a deed of sale registered as document #1908/15 in the office of SRO, Adyar, Chennai. Respectfully following the decision of Hon ble Madras High Court in the case of Smt. Padmavathi 2020 (10) TMI 425 - MADRAS HIGH COURT we are of the view that the revision proceedings and order passed for revising of assessment by the PCIT is bad in law and hence quashed. In the present case before us the PCIT has ignored the valuation report of an approved valuer filed with the AO along with the photographs and survey plan and then framed assessment and formed an opinion that the sale consideration disclosed by assessee is a right consideration. Hence, according to us PCIT cannot interfere in the assessment order while acting u/s. 263 of the Act. Assessee appeal allowed.

Summary

Issues:
1. Whether the assessment order framed by the Assessing Officer is erroneous and prejudicial to the revenue due to valuation discrepancies.
2. Whether the Principal Commissioner of Income Tax (PCIT) was justified in revising the assessment order under section 263 of the Income-tax Act.

Analysis:
1. The appeal arose from the revision order of the Principal Commissioner of Income Tax, Chennai-3 under section 263 of the Income-tax Act, challenging the assessment order for the AY 2016-17. The main issue was the variance between the sale consideration declared by the assessee and the value adopted by the sub-registrar for stamp duty purposes. The PCIT found the assessment order erroneous and prejudicial to revenue due to lack of proper verification of valuation. The PCIT directed the Assessing Officer to verify the facts and pass a fresh assessment order. The assessee contended that the sale consideration was reasonable based on a valuation report by an approved valuer, disputing the stamp valuation authority's higher value.

2. The Tribunal noted that the difference between the sale consideration and the guideline value fixed by the stamp valuation authority does not automatically render the assessment erroneous. Citing a precedent from the Hon'ble Madras High Court, it was established that guideline value is an indicator for stamp duty calculation and does not dictate the actual property value. Therefore, the revision proceedings initiated by the PCIT were deemed unjustified. The PCIT failed to provide a valid reason for setting aside the assessment order, as there was no clear demonstration of how the order was erroneous or prejudicial to revenue.

3. The Tribunal further emphasized that the PCIT's disregard of the valuation report submitted by the assessee and the lack of specific grounds for finding the assessment order faulty undermined the validity of the revision order. Quoting a judgment from the Punjab & Haryana High Court, it was highlighted that the Commissioner can only revise an order if it is genuinely erroneous or prejudicial to revenue, based on specific grounds. In this case, the PCIT's intervention based on valuation discrepancies was deemed unwarranted, leading to the quashing of the revision order and allowing the appeal of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, quashing the revision order passed by the PCIT under section 263 of the Income-tax Act, thereby upholding the original assessment order for the AY 2016-17.