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2017 (10) TMI 1238 - AT - Income TaxRevision u/s 263 - Held that - In the present case, the regular books of accounts, viz. the cash book, the ledger, the bank account statements, were produced by the assessee which were verified and examined vis- -vis the findings of the search (cash found, jewellery found, immovable property found), the diary / loose sheets found and facts emerging out of the statements recorded under section 132(4) and the financial statements filed by the with the return of income. We further find that the case laws cited by the Ld. DR are not applicable in the present case. We hold that the impugned order passed by the Ld. CIT u/s. 263 of the I.T. Act is without jurisdiction and not sustainable in the eyes of law. Accordingly, the impugned order is hereby quashed and appeal of the assessee is allowed.
Issues Involved:
1. Invocation of Section 263 of the I.T. Act. 2. Classification of capital gains (long-term vs. short-term). 3. Assessment of sale consideration and cost of acquisition. 4. Genuineness of sale transactions and application of Section 68 of the I.T. Act. Issue-wise Detailed Analysis: 1. Invocation of Section 263 of the I.T. Act: The primary issue is whether the Commissioner of Income Tax (CIT) was justified in invoking Section 263 of the I.T. Act. The CIT invoked this provision on the basis that the assessee wrongly claimed long-term capital gain instead of short-term gain. The Tribunal found that the CIT's invocation of Section 263 was based on a wrong assumption and that the assessee had never purchased any new assets during the assessment year 2005-06; it was an old property. The Tribunal noted that the Assessing Officer (AO) had made the assessment judiciously after making all necessary inquiries and verifications. Therefore, the Tribunal held that the CIT's order was erroneous and not sustainable in law. 2. Classification of Capital Gains: The CIT presumed that the gains from the property transaction were short-term, while the assessee claimed them as long-term capital gains. The Tribunal noted that the property in question was purchased in 1989 and that the assessee had provided sufficient evidence to support the claim of long-term capital gain. The Tribunal found that the CIT erred in directing the AO to make additions to the computation of capital gains without appreciating the information submitted by the assessee. 3. Assessment of Sale Consideration and Cost of Acquisition: The CIT questioned the cost of acquisition and improvement claimed by the assessee. The assessee had shown the cost of acquisition and improvement of the property in the balance sheets for the relevant years. The Tribunal found that the CIT did not appreciate the fact that the property was an old one and that the cost of acquisition and improvement was correctly shown by the assessee. The Tribunal held that the CIT's direction to enhance the assessment was based on incorrect assumptions and was not justified. 4. Genuineness of Sale Transactions and Application of Section 68: The CIT directed the AO to examine the genuineness of the sale transactions and consider applying Section 68 of the I.T. Act if the transactions were found to be non-genuine. The Tribunal found that the assessee had provided all necessary documents, including sale agreements, possession letters, and bank statements, to prove the genuineness of the transactions. The Tribunal held that the CIT's direction to treat the sale consideration as cash credit under Section 68 was incorrect, as the transactions were genuine and the sale consideration was received through cheques deposited in the bank account of the assessee. Conclusion: The Tribunal quashed the CIT's order invoking Section 263 of the I.T. Act for all the assessment years involved. It held that the AO had made the assessments judiciously after proper inquiries and verifications. The Tribunal found that the CIT's directions to enhance or modify the assessments were based on incorrect assumptions and were not sustainable in law. The appeals filed by the assessee were allowed, and the CIT's orders were set aside. Order Pronounced: The Tribunal pronounced the order on 27/10/2017, allowing all three appeals filed by the assessee.
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