2024 (9) TMI 478 - AT - Income Tax

Revision u/s 263 v/s rectification u/s 154 - AO failed in correctly work out undisclosed income after considering correct sale value of land as per Form 26A - claim of the assessee that one of the land in Form 26AS does not pertain to him but pertains to Vaibhav Corporation Pvt. Ltd. requires further verification at the end of the AO but he failed to make correct addition u/s.68 and failed to consider the cash deposit thereby under assessment of income HELD THAT - As clearly stated by the assessee with proper records before Ld. PCIT explaining that the sale of property was done by the Vaibhav Corporation Pvt. Ltd. and not by the assessee and relevant Form 26AS that of the company was also produced confirming the TDS @ 1% made by the purchaser of the property. Further from perusal of the Sale Deed, the assessee name is nowhere reflecting in the registered Sale Deed dated 28.03.2019. In addition to this the letter dated 04.01.2024 from Sub Registrar, Vadodara has stated that there was no transaction of the property on 28.03.2019 by the assessee. When such evidences are filed by the assessee before Ld. PCIT, he ought to have dropped the Revision proceedings. However he set aside the issue back to the file of AO for verification which in our considered view against the provisions of section 263 more so when the assessment order is neither erroneous nor prejudicial to the interest of Revenue. Incorrect calculation of income is liable to be rectifiable u/s 154 of the Act and not by invoking Revision proceeding u/s. 263 of the Act. Thus the Revision order passed by PCIT is hereby liable to be quashed. Appeal filed by the Assessee is hereby allowed.

Summary

Issues:
Assessment order revision based on alleged errors in income calculation and property sale value determination.

Analysis:
The appeal was filed by the Assessee against the Revision order passed by the Principal Commissioner of Income Tax (Appeals)-3, Ahmedabad, concerning the Assessment Year 2019-20. The Assessee, engaged in land trading, had filed a return declaring total income and claimed losses, leading to additions by the Assessing Officer under section 68 for unsecured loans and cash deposits. The Principal Commissioner found discrepancies in the assessment, including an alleged escapement of income and incorrect cash deposit calculation, leading to a show cause notice for additional income addition. The Assessee contended that the property sale was mistakenly attributed to them instead of a company, supported by Form 26AS and Sale Deed evidence. The Principal Commissioner set aside the assessment, directing a fresh computation of taxable income. The Assessee appealed, challenging the revision order on various grounds, including the alleged errors in income calculation and property sale value determination.

The Assessee argued before the Appellate Tribunal that the property sale was executed by a company, not by them, as evidenced by the Sale Deed and Form 26AS reflecting the company's TDS payment. The Sub Registrar's response further confirmed no property transaction by the Assessee on the specified date. The Assessee contended that the revision proceedings lacked merit as there was no income escapement, and the assessment order was not erroneous or prejudicial to revenue. In contrast, the Revenue supported the revision order.

Upon review, the Tribunal found the Assessee's evidence compelling, demonstrating the property sale was conducted by the company, not the Assessee, supported by official records and the Sub Registrar's confirmation. The Tribunal noted that the Principal Commissioner should have terminated the revision proceedings based on the evidence provided, as the assessment order was not erroneous or prejudicial to revenue. The Tribunal concluded that any incorrect income calculation should be rectified under section 154 of the Act, not through revision proceedings under section 263. Consequently, the Tribunal allowed the Assessee's appeal, quashing the revision order.

In conclusion, the Appellate Tribunal ruled in favor of the Assessee, setting aside the revision order and emphasizing the need for proper verification before initiating revision proceedings under section 263 of the Income Tax Act.