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2023 (6) TMI 384 - AT - Income TaxRevision u/s 263 - According to the CIT, the assessee had incorrectly claimed the cost of acquisition while calculating the capital gain arising from sale of the properties - HELD THAT - These charges were claimed towards cost of acquisition as it was one time charges paid for realising the enduring benefit arising out of the properties. Therefore, the expenditure was capital in nature and was capitalised in the books of account in the year in which it was incurred. During assessment proceedings the same explanation was submitted before the AO who after considering all the details had come to the conclusion that the assessee had correctly computed and declared the capital gain - In such a scenario, in our opinion, CIT had no jurisdiction u/s 263 merely because the Ld. AO did not express his satisfaction in so many words in the assessment order as held in CIT vs. Reliance Communication Ltd. 2016 (4) TMI 173 - BOMBAY HIGH COURT SLP filed by the Department against the decision (supra) has been dismissed by the Hon ble Supreme Court 2016 (11) TMI 1189 - SC ORDER After considering the material placed by both the parties before us, we have come to the conclusion that assumption of jurisdiction by the CIT u/s 263 of the Act is not in accordance with law. Allow the appeal of the assessee.
Issues involved:
The appeal challenges the order passed by the Ld. Pr. Commissioner of Income Tax under section 263 of the Income Tax Act, 1961 for Assessment Year 2015-16. Grounds of appeal: 1. The Ld. Pr. CIT erred in finding the order passed by the Assessing Officer under section 143(3) as erroneous and prejudicial to the interest of Revenue. 2. The Ld. Pr. CIT passed the order without jurisdiction or authority of law. 3. The order was based on information from the Office of the Dy. Director of Audit Centre, ITRA, Allahabad, without proper application of mind. 4. The Ld. Pr. CIT invoked section 263 due to lack of supportive documents for cost of improvement, ignoring that inadequate inquiry does not amount to lack of inquiry. 5. Allegation of insufficient inquiries by the Assessing Officer was unfounded as extensive inquiry had been conducted during the original assessment. 6. The Ld. Pr. CIT incorrectly treated capital expenditure as revenue expenditure, disregarding the proper application of the law. 7. Direction to re-compute capital gain based on incorrect cost of acquisition was deemed contrary to accounting standards. 8. The order was passed solely on a difference of opinion with the Assessing Officer, which is not a valid reason under the law. Judgment Details: The Ld. Pr. CIT's order under section 263 was challenged by the assessee. The Ld. AR argued that the assessment order was not erroneous or prejudicial to Revenue's interests. It was contended that the Assessing Officer had examined all details before arriving at conclusions, rendering the revisionary powers under section 263 unwarranted. The Ld. CIT-DR supported the Pr. CIT's order, citing lack of proper inquiry by the Assessing Officer. Court's Analysis: Upon reviewing the records, it was found that the Assessing Officer had diligently examined all relevant aspects before passing the assessment order. The contention that no proper inquiry was made was dismissed, as the assessment was based on thorough examination of records and evidence. The Ld. Pr. CIT's assertion of incorrect cost of acquisition was found to be unfounded, as the expenditure in question was capital in nature and properly accounted for. The court held that the Ld. Pr. CIT had no jurisdiction under section 263 based on the facts presented. Conclusion: The court concluded that the assumption of jurisdiction by the Ld. Pr. CIT under section 263 was not in accordance with the law. Therefore, the impugned order was vacated, and the appeal of the assessee was allowed. Final Decision: The appeal of the assessee was allowed, and the order was pronounced in the open court on 23rd May, 2023.
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