2023 (4) TMI 896 - AT - Income Tax

Revision u/s 263 - Transfer of land by wife to her husband - Nature of transaction - Sale or Gift - Clubbing of income - CIT-A assailed the assessment order on the ground that LTCG arising on transfer of agriculture land by assessee to her husband is liable to taxation which has been erroneously not done by the AO resulting in prejudice to the interest of revenue - HELD THAT - Whether the re-assessment order can be regarded as erroneous insofar as prejudicial to the interest of the Revenue has to be tested on the touchstone of the plausibility of explanation given by the assessee before the Assessing Officer. Where the opinion formed by the Assessing Officer towards non taxability of any LTCG on purported sale is found plausible then the act of the Assessing Officer cannot be regarded as erroneous per se and consequently the jurisdiction of ld. Pr.CIT would be automatically ousted. In the reverse, if the opinion formed by the Assessing Officer is wholly incongruent with the scheme of the Act, the Pr.CIT shall be within its right to usurp jurisdiction under Section 263. As undisputed although the property was purchased in the name of the assessee-wife, the purchase consideration were paid by the husband of the assessee at the time of purchase of land in December, 1999. The sale deed was executed to handover the agricultural land back to husband for which no consideration whatsoever was received by the assessee. The only mistake committed was that instead of execution gift deed a sale deed was executed to restore the legal rights of husband. It is the case of the assessee that sale deed is nothing but gift deed intended to transfer the land as vouched by lack of consideration and in view of the intented circumstances. This fact was brought on record by way of oral evidence as well as circumstantial evidence. No negative fact is available on record to dispute the assertions made on behalf of the assessee as well as her husband jointly - AO also invoked Section 64 of the Act for clubbing of income and simultaneously exonerated the assessee from the liability of Long Term Capital Gain on notional consideration in the absence of any real income accrued to the assessee. AO thus accepted the version of the assessee with application of mind. Merely because the Pr.CIT thinks differently on the point on the issue would not entitle him in law to substitute his opinion by the view adopted by the AO in discharge of his quasi judicial functions - Appeal of the assessee is allowed.

Summary

Issues Involved:
The judgment involves issues related to revisional order passed by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act for Assessment Year 2009-10.

Revisional Order Challenge:
The assessee challenged the revisional order on various grounds including non-compliance with section 151(2), lack of consideration of documents, and direction for re-assessment under section 50C without invoking section 55A.

Background and Re-Assessment:
The case involved a resident individual whose proceedings were initiated based on AIR information suggesting the sale of immovable property to her husband. The Assessing Officer found that the property was originally purchased by the husband and framed a re-assessment order under Section 143(3) r.w. Section 147, taxing the income in the husband's hands per Section 64 of the Act.

Revisional Action and Tribunal's Analysis:
The Principal Commissioner observed that Long Term Capital Gains (LTCG) on the sale of agricultural land were not included in the income, leading to a revisional order to enhance the assessed income. The Tribunal analyzed the case, noting that the Assessing Officer had conducted detailed inquiries and found the transfer to be non-taxable under Capital Gains due to lack of consideration and the intent to restore the husband's ownership.

Assessee's Position and Tribunal's Decision:
The Tribunal upheld the assessee's position that the sale deed was essentially a gift deed, and the Assessing Officer's decision was plausible, leading to the dismissal of the revisional order. The Tribunal concluded that the revisional jurisdiction was unjustified as there was no error in the reassessment order, thereby allowing the appeal of the assessee.

Conclusion:
The Tribunal found no error in the reassessment order, leading to the quashing of the revisional order dated 27.12.2018 for Assessment Year 2009-10. The appeal of the assessee was allowed, and the order was pronounced in the open Court on 20/04/2023.