2021 (3) TMI 440 - HC - Income Tax

Revision u/s 263 - Principal Commissioner of Income Tax has decided to initiate suo motu revision by contending that the order of the Income Tax Officer is erroneous as it is prejudicial to the interest of the Revenue - as averred in the show-cause notice that the valuation report of the DVO, Thiruvananthapuram is reportedly incorrect as communicated by the Asst. Engineer and the Chief Engineer vide letter dated 19.05.2020 - HELD THAT - The matter is at the stage of show-cause notice. The 2nd respondent has proposed to revise the assessment order at Ext.P2 and for that purpose, objections of the petitioner are invited. Opportunity of hearing is also to be granted to the petitioner vide show- cause notice at Ext.P4. Thus the petitioner shall have full opportunity to put up its case before the revisional authority. At this stage, it cannot be said that the 2nd respondent revisional authority is biased and is bent upon to decide the matter adversly. Official acts are regularly done in wise principle of law and hence without there being any material on record, it cannot be said that issuance of show-cause notice reflects nothing but a biased attitude of the 2 nd respondent. This Court hope and expect that the 2nd respondent shall determine the issue in accordance with the provision of law without being influenced by the fact that the petitioner had approached this Court by filing writ petition. We do not feel it proper to interfere in the show-cause notice issued by the revisional authority, which has the power to revise the assessment order suo motu. The petition therefore fails and the same is accordingly dismissed.

Summary

Issues:
1. Assessment year determination based on possession date in registered sale deed.
2. Appeal process and modifications in assessment order.
3. Initiation of suo motu revision by Principal Commissioner of Income Tax.
4. Validity of show-cause notice and reliance on new report.

Analysis:
1. The petitioner sold properties as per a registered sale deed, with possession handed over in the previous year, leading to assessment preponement. The assessment order was modified in appeal, and a valuation report from the DVO was sought. The Income Tax Officer passed an assessment order based on this, which was challenged by the Principal Commissioner of Income Tax through a suo motu revision notice, alleging prejudicial impact on revenue.

2. The petitioner argued that the revision notice was not in line with Section 263 of the Income Tax Act, as the assessment was done based on the ITAT's appellate order and the DVO's valuation report. The respondents contended that the matter was at the show-cause notice stage, with no final order passed. The court noted that the impugned order was a show-cause notice proposing revision based on a new report, inviting objections and granting a hearing to the petitioner.

3. The petitioner objected to the new report being used for revision, as it was not before the Assessing Officer when the assessment order was passed. However, the court held that the Principal Commissioner could rely on such reports for suo motu revision. It emphasized that the petitioner would have a full opportunity to present its case and that the revisional authority should act impartially, following the law and not influenced by the petitioner's court petition.

4. Ultimately, the court declined to interfere in the show-cause notice, as the revisional authority had the power to revise the assessment order suo motu. It dismissed the petition, expecting the revisional authority to decide the matter in accordance with the law, without bias influenced by the petitioner's court filing.