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2023 (4) TMI 574 - AT - Income TaxRevision u/s 263 by CIT - non-invocation by AO of Section 56(2)(vii)(b) to the transaction of immovable property, being land, purchased by the assessee as a co-owner along with other two persons - contention being that the property was purchased for a sum far below its stamp duty value and thus warranted the addition to be made to the income of the assessee of the amount short paid as compared to its stamp duty value, as per the provisions of Section 56(2)(vii)(b) - HELD THAT - We are not convinced with the contention of the learned Counsel for the assessee. The inquiry of the AO was only a cursory inquiry calling for facts relating to the purchase of immoveable property by the assessee during the year. The only query raised by AO was asking for details of properties transacted into by the assessee, to which the assessee had supplied the copies of the agreements or deeds entered into. No other question or query was raised by the AO. No query relating to the invocation of Section 56(2)(vii)(b) of the Act was raised by the AO in the present case. Therefore, it cannot be said that the AO had examined the issue of purchase of immoveable property and taken a plausible view by making no addition u/s 56(2)(vii)(b) when the issue was not even examined by the AO. Therefore this contention of the learned Counsel for the assessee is rejected. The assessee has been unable to justify his contention that no addition was warranted in the facts of the present case under Section 56(2)(vii)(b) - This contention raised by the learned Counsel for the assessee is, therefore, rejected. As per the facts noted by the Ld. PCIT in his order, the assessment in the present case was a limited scrutiny assessment for the purpose of examining the issue of cash deposits and purchase of property. Vis- -vis the issue of purchase of property, PCIT found the assessment order to be erroneous for the reason that the AO having not examined the applicability and invocation of the provisions of Section 56(2)(vii)(b) - Therefore, it cannot be said that Ld. PCIT had directed the entire assessment to be framed afresh or that the entire assessment was open before the AO even in the restored proceedings. AO in any case, could not have exceeded the limited brief being a limited scrutiny assessment and, as we have noted, the order of the Ld. PCIT was very clear with regard to examination of the issue of invocation of Section 56(2)(vii)(b) . Whether PCIT had directed the Assessing Officer to conduct further inquiry or to examine the issue in the light of provisions of Section 56(2)(vii)(b) of the Act and, therefore, he himself was not sure about the applicability of the same? - In the present case, the Ld. PCIT has brought out the fact that the Assessing officer was required to examine the issue of purchase of property while framing the assessment in the present case as per the limited scrutiny norms; that the details of purchase of property before him showed that the assessee had purchased the property at a very low price as compared to its stamp duty value. The Assessing Officer had clearly not examined the applicability of section 56(2) (vii) (b)in the light of the above facts and therefore, it was a clear case of error in the order of the Assessing Officer. It is not the case of the assessee that the stamp duty value taken by the Ld. PCIT was incorrect. Therefore, based on the facts before him, the Ld. PCIT had rightly found the non-examination of the issue of purchase of land by the assessee in the light of provisions of Section 56(2)(vii)(b) of the Act was an error in the order of the Assessing Officer causing prejudice to the Revenue and accordingly had set aside the assessment order to the Assessing Officer to examine this aspect after giving due opportunity of hearing to the assessee and in accordance with law. It cannot be said in the light of these facts that the Ld. PCIT himself was not convinced whether the provisions of Section 56(2)(vii)(b) of the Act were applicable in the facts of the present case. Decided against assessee.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Erroneous and prejudicial assessment order. 3. Consideration of detailed submissions by the assessee. 4. Setting aside the whole assessment order. Summary: Jurisdiction under Section 263 of the Income Tax Act: The appeal challenges the order of the Principal Commissioner of Income-Tax (PCIT) who exercised revisionary powers under Section 263 of the Income-tax Act, 1961. The PCIT assumed jurisdiction on the grounds that the Assessing Officer (AO) did not invoke Section 56(2)(vii)(b) regarding the purchase of immovable property at a price below its stamp duty value, making the assessment order erroneous and prejudicial to the interest of the Revenue. Erroneous and Prejudicial Assessment Order: The PCIT noted that the property, purchased by the assessee along with two co-owners, was acquired for Rs. 59,01,000, whereas its stamp duty value was Rs. 1,61,38,775. The difference of Rs. 34,12,590 (1/3rd share of the assessee) was not examined by the AO under Section 56(2)(vii)(b), rendering the assessment order erroneous. Consideration of Detailed Submissions by the Assessee: The assessee contended that the issue of property purchase was duly inquired during assessment proceedings. However, the Tribunal found that the AO's inquiry was cursory and did not specifically address the applicability of Section 56(2)(vii)(b). The assessee also argued that the property was purchased through a confirming agent based on an agreement from 2008, and the stamp duty value of 2008 should apply. The Tribunal rejected this, stating that the agreement was not between the assessee and the vendors, and the conditions of the proviso to Section 56(2)(vii)(b) were not met. Setting Aside the Whole Assessment Order: The PCIT set aside the entire assessment order, directing the AO to re-examine the issue of Section 56(2)(vii)(b). The Tribunal upheld this, noting that the PCIT's order was clear and required the AO to examine only the specific issue of the applicability of Section 56(2)(vii)(b). The Tribunal dismissed the assessee's argument that the PCIT was unsure about the applicability of Section 56(2)(vii)(b), stating that the PCIT had reasonably identified an error causing prejudice to the Revenue. Conclusion: The Tribunal found no infirmity in the PCIT's order under Section 263 and dismissed the appeal of the assessee. The order was pronounced on 12th April 2023 at Ahmedabad.
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