2023 (4) TMI 192 - AT - Income Tax

Revision u/s 263 - as per CIT the exemption u/s 54F has been wrongly allowed to assessee and by not declaring notional income from properties under Income from house property head, there was underassessment of taxable income - HELD THAT - To address this query of Bench, Ld. AR sought adjournments from time to time to bring on record the bank statement from which investment would have been made in the impugned property. But, however, ultimately the Ld. AR admitted inability of assessee to submit the same. Therefore, we have no option except to conclude that since the flat at Pune is appearing in the Balance-Sheet of assessee, the investment had also been made by assessee. That means, the assessee was owner of at least 2 residential houses, viz. one at S.No. (iii) admitted by assessee; and another at S.No. (ii) being the flat at Pune . Having found that the assessee was owner of at least 2 residential houses, we are in agreement with the twin-issues raised by Ld. PCIT i.e. (i) the exemption u/s 54F has been wrongly allowed to assessee; (ii) by not declaring notional income from properties under Income from house property head, there was underassessment of taxable income. Therefore, the Ld. PCIT has rightly termed the assessment-order as erroneous in so far it is prejudicial to the interest of revenue.Decided against assessee.

Summary

Issues involved:
The issues involved in the judgment are the validity of the revision-order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income-tax Act, 1961, regarding the assessment-order passed by the Assessing Officer (AO) for the Assessment Year 2015-16.

Facts and Decision:
The assessee declared a long-term capital gain from relinquishment of right and claimed exemption under section 54F based on new investment in a residential house. The PCIT found the assessment-order erroneous as the assessee owned more than one residential property and had not declared notional income from those properties. The PCIT set aside the assessment-order for a de novo assessment. The assessee contended that she owned only one residential house on the transfer date and provided details to support her claim. However, the tribunal found that the assessee was the owner of at least two residential properties, leading to the conclusion that the exemption under section 54F was wrongly allowed, and there was underassessment of taxable income. Consequently, the tribunal upheld the revision-order, emphasizing that its decision was a prima facie impression and should not influence the AO's decision on the merits.

Conclusion:
The tribunal upheld the revision-order passed by the PCIT under section 263, concluding that the assessment-order was erroneous and prejudicial to the interest of revenue due to the incorrect allowance of exemption under section 54F and the failure to declare notional income from multiple properties. The appeal of the assessee was allowed, and the matter was remanded for a fresh assessment by the AO.