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2022 (10) TMI 1025 - AT - Income TaxRevision u/s 263 by CIT - short working of capital gain - assessee has received ancestral property from her father late - PCIT held that the Assessing Officer has not correctly verified the different valuation adopted by the assessee in different areas for the same land and, therefore, set aside the assessment order and directed the AO to pass fresh assessment order - HELD THAT - It is pertinent to note that the Assessing Officer in notice under Section 142(1) of the Act has asked the query not in general but specifically asked the details about the land purchased and sold along with sale deed and purchase deed. The reply of the assessee clearly shows that the assessee has given all the details in response to DVO s calculation related to land and the indexation thereto. In fact, AO in reopening has categorically made finding and made addition to the extent of Rs.18,63,319/- on account of short working of LTCG. DVO s report was authenticated and accepted by the Revenue. This is not a case of lack of enquiry or no enquiry at all. Besides this, the PCIT has given his own observation which amounts to review and change of opinion or review while exercising Section 263 is not permitted by the Income Tax Statute. Thus, the PCIT was not right in exercising Section 263 in assessee s case. The appeal of the assessee is thus allowed.
Issues:
1. Validity of order passed under section 263 of the Income Tax Act, 1961 by PCIT-2, Ahmedabad. 2. Correctness of the addition made on account of short working of capital gain. 3. Assessment of property value by the Assessing Officer and DVO. 4. Review of order under Section 263 by the PCIT. Issue 1: Validity of order under section 263: The appeal was filed against the order passed by the PCIT-2, Ahmedabad under section 263 of the Income Tax Act. The PCIT held the Assessment Order passed by the Assessing Officer as erroneous and directed the AO to pass a fresh assessment order. The PCIT observed discrepancies in the valuation of property and deemed the Assessing Officer's verification inadequate. The appellant argued that the PCIT's review amounted to a change of opinion, which is impermissible under the Income Tax Statute. The Tribunal found that the Assessing Officer had conducted a detailed enquiry, and the DVO's report was accepted by the Revenue. Therefore, the PCIT's intervention under section 263 was deemed unwarranted, and the appeal was allowed. Issue 2: Addition on account of short working of capital gain: The Assessing Officer made an addition of Rs.18,63,319/- on account of short working of capital gain, which was not offered for tax. This addition was based on discrepancies in the valuation of property received by the appellant from her father. The PCIT disagreed with the Assessing Officer's approach and directed a fresh assessment. However, the Tribunal noted that the Assessing Officer had already verified the details provided by the appellant in response to the notice under Section 142(1) of the Act. The Tribunal found that the PCIT's intervention was unwarranted, as the Assessing Officer had conducted a thorough enquiry before making the addition. Issue 3: Assessment of property value by the Assessing Officer and DVO: The property value was a key point of contention in the case, with the Assessing Officer and the DVO arriving at different valuations. The Assessing Officer had made the addition based on the DVO's valuation report, while the PCIT found fault with the Assessing Officer's verification process. The appellant argued that the valuation reports were correctly considered, taking into account prior and subsequent years' rates. The Tribunal noted that the Assessing Officer had appropriately considered the details provided by the appellant and had referred the case to the DVO for review. The Tribunal found no fault in the Assessing Officer's approach and upheld the original assessment. Issue 4: Review of order under Section 263 by the PCIT: The PCIT's order under Section 263 was challenged by the appellant, who contended that the PCIT's review amounted to a change of opinion. The Tribunal agreed with the appellant, stating that the PCIT's observations constituted a review, which is not permitted under the Income Tax Statute. The Tribunal found that the Assessing Officer had conducted a thorough enquiry, and the DVO's report was duly considered. Therefore, the PCIT's intervention was deemed unjustified, and the appeal was allowed. In conclusion, the Tribunal allowed the appeal of the assessee, finding that the PCIT's order under Section 263 was unwarranted as the Assessing Officer had conducted a detailed enquiry and considered the relevant valuation reports. The Tribunal upheld the original assessment and set aside the PCIT's order, emphasizing that a review under Section 263 should not amount to a change of opinion.
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