2021 (4) TMI 1016 - AT - Income Tax

Revision u/s 263 - claim of deduction under section 54F - non-application of provision of section 50C - HELD THAT - There is no dispute to the fact that assessee has sold property, which was held in joint names for an amount of ₹ 1 crore and assessee s share being @30 %, the same has been disclosed in his return of income at jantri value of ₹ 30 lakhs - it also remains undisputed facts that the said property was valued by the Sub Registrar of Rajula (district Amreli) at ₹ 6,22,19,600/- and hence there is a difference of ₹ 5,22,19,600/-, in the value of the property shown by the assessee and as per stamp duty valuation. The assessee s share in said amount of ₹ 5,22,19,600/- was therefore, required to be considered u/s 50C of the Act in respect of assessee's total income for assessment year under consideration. Non-consideration of the same by the AO can in no way be considered to be one possible view in the facts of the case, and in view of provisions of section 50C - the omission on the part of the AO to consider such stamp duty valuation of the property at ₹ 6,22,19,600/- and thereby non-application of provision of section 50C of the Act has rendered the assessment order so passed by the AO erroneous, in so far as it is prejudicial to the interest of revenue. About claim of deduction u/s 54 F of the Act, the assessee seeks to submit that they had given all the details to the AO of the property in question. It was submitted that after sale of original property, new property was purchased by them on 04.04.2015, whereas original property was sold on 17.01.2015. In respect of these aspects, it is a fact not disputed by the assessee that old property sold and the new property purchased have not been reflected in balance sheet of the assessee. Even if, the properties were not to be shown in the balance sheet, as none may have existed in the hands of assessee as on 31.03.2015, still the amount received as sale consideration of old property should have been reflected in the balance sheet in Capital Gain account of the assessee, which assessee has neither contended nor has demonstrated. AO while completing the assessment has not looked into and examined these factual aspects. Accordingly, in the facts and circumstances, as mentioned above, the assessment order passed by the AO allowing the deduction u/s 54F of the Act without proper verification of the facts has rendered the assessment order erroneous in so far as it is prejudicial to the interest of Revenue. Based on these facts and precedents applicable to these facts, we hold that ld PCIT has rightly exercised his jurisdiction under section 263 of the Act, thus we uphold the order of ld PCIT. Appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act.
2. Non-consideration of Section 50C by the Assessing Officer.
3. Allowing deduction under Section 54F without proper verification.

Issue-wise Detailed Analysis:

1. Jurisdiction under Section 263 of the Income Tax Act:
The assessee challenged the correctness of the order dated 24.01.2020 passed by the Principal Commissioner of Income Tax (PCIT), Surat-2, under Section 263 of the Income Tax Act, 1961. The main contention was that the PCIT assumed jurisdiction without satisfying the necessary conditions. The assessee argued that the PCIT should not have invoked Section 263 on points already inquired and decided by the Assessing Officer (AO). The PCIT's decision to take a different view on the same matter was also contested.

2. Non-consideration of Section 50C by the Assessing Officer:
The PCIT noticed that the assessee sold an immovable property for ?1,00,00,000, but the Sub-Registrar Office (SRO) valued it at ?6,22,19,600. The assessee's share was 30%, and thus, the Jantri value should have been ?1,86,65,880. This differential amount of ?5,22,19,600 was required to be considered under Section 50C. The AO, however, did not consider this differential amount while finalizing the assessment, rendering the order erroneous and prejudicial to the Revenue's interest. The Tribunal upheld the PCIT's view, stating that the AO failed to make necessary inquiries regarding the differential amount.

3. Allowing Deduction under Section 54F without Proper Verification:
The PCIT also found that the AO allowed the assessee's claim for deduction under Section 54F without proper verification. The balance sheet did not reflect the purchase of a new property, yet the AO allowed the deduction. The Tribunal noted that the AO did not examine the factual aspects of the property transactions and the capital gain account. The Tribunal supported the PCIT's decision, stating that the AO's failure to verify these facts made the assessment order erroneous and prejudicial to the Revenue's interest.

Conclusion:
The Tribunal concluded that the AO did not properly investigate or verify the facts related to the differential amount under Section 50C and the claim for deduction under Section 54F. Therefore, the PCIT rightly exercised jurisdiction under Section 263 to revise the assessment order. The appeal by the assessee was dismissed, and the PCIT's order was upheld.