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Issues Involved:
1. Refund of excess fee paid by the assessee. 2. Admission of additional grounds by the assessee. 3. Validity of the CIT's order under Section 263 of the IT Act, 1961. Issue 1: Refund of Excess Fee Paid by the Assessee The learned counsel for the assessee argued that the appeal relates to an order under Section 263 of the IT Act and falls under the residuary clause (b) of sub-section (6) of Section 253, requiring a fee of Rs. 500. The assessee had paid Rs. 5,521 and requested a refund of the excess amount of Rs. 5,021. The Tribunal agreed, stating that the assessee's case is covered under the residuary clause and directed the AO to refund the excess fee either by adjusting it against any outstanding demand or by granting a refund within one month from the receipt of the order. Issue 2: Admission of Additional Grounds by the Assessee During the hearing, the assessee requested the admission of additional grounds but later did not press for their admission. Consequently, the additional grounds were not admitted. Issue 3: Validity of the CIT's Order under Section 263 of the IT Act, 1961 The main contention in the appeal was whether the CIT was justified in setting aside the AO's order under Section 263, claiming it was erroneous and prejudicial to the interest of Revenue. The facts revealed that the assessee was a partner in a firm that owned a cinema building, which was sold, and the assessee declared long-term capital gains in his return. The AO assessed the gains on a protective basis, considering the building belonged to the firm and depreciation had been claimed on it. The CIT observed that the AO's order was erroneous and prejudicial to the Revenue because the AO failed to determine the capital gain based on the information available. The CIT issued a show-cause notice and, after considering the assessee's reply, concluded that the capital gain should have been computed as per Section 50 of the Act, considering the WDV of the property. The CIT directed the AO to pass a fresh order after giving the assessee a reasonable opportunity of being heard. The Tribunal noted that the AO had assessed the long-term capital gain on a protective basis without disturbing the quantum of capital gain shown in the return. The Tribunal emphasized that for the CIT to exercise jurisdiction under Section 263, the order must be both erroneous and prejudicial to the interests of the Revenue. The Tribunal found that the AO's order was erroneous as it did not apply the correct provisions of law for computing capital gains and was prejudicial to the Revenue as the correct capital gain was not assessed. The Tribunal upheld the CIT's order, stating that both conditions for exercising powers under Section 263 were satisfied. The Tribunal also noted that the CIT had not revised the order based on a change of opinion but on the grounds that the AO did not apply the correct provisions of law. Conclusion: The appeal of the assessee was dismissed. The Tribunal confirmed the CIT's order under Section 263, directing the AO to recompute the capital gains correctly. The Tribunal also ordered the refund of the excess fee paid by the assessee.
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