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2022 (5) TMI 998 - AT - Income TaxRevision u/s 263 - disallowance of deduction u/s.54B - assessment order passed by the AO is erroneous, insofar as it is prejudicial to the interests of revenue on the issue of assessment of difference in guideline value of property u/s.56(2)(vii)(b) - HELD THAT - The assessee neither appeared nor filed any details in response to show-cause notice. Therefore, the PCIT has passed order u/s.263 and set aside assessment order passed by the Assessing Officer. We have gone through order passed by the learned PCIT and find that the PCIT has given one opportunity of hearing to the assessee in contravention of settled legal principles, as per which, it is requirement of law that reasonable opportunity of hearing must be given to the assessee before passing an order. Since, the learned Principal CIT has not given sufficient opportunity of hearing to the assessee, we are of the considered view that appeal needs to be set aside to the file of the PCIT to give another opportunity of hearing to the assessee. Hence, we set aside order passed by the learned PCIT and restore the issue back to the file of PCIT to reconsider the issue afresh in accordance with law, after affording reasonable opportunity of hearing to the assessee - Appeal filed by the assessee is treated as allowed for statistical purposes.
Issues involved:
1. Revision of assessment order under section 263 of the Income Tax Act, 1961. 2. Principles of natural justice not observed in passing the order by the Principal Commissioner of Income Tax. 3. Opportunity of hearing to the assessee before passing the order. Issue 1: Revision of assessment order under section 263 of the Income Tax Act, 1961: The appeal was filed against the order passed by the Principal Commissioner of Income Tax, Coimbatore-1, which set aside the assessment order passed by the Assessing Officer under section 143(3) for the assessment year 2016-17. The Principal Commissioner found errors in the assessment related to the disallowance of deductions under sections 54B and 54F of the Income Tax Act, 1961, and the computation of Long Term Capital Gains (LTCG). The Principal Commissioner invoked section 263 of the Act due to these errors, which were deemed to be prejudicial to the interest of revenue. The order directed the Assessing Officer to redo the assessment after proper verification of facts and in accordance with the law. Issue 2: Principles of natural justice not observed in passing the order by the Principal Commissioner of Income Tax: The learned Authorized Representative for the assessee contended that the Principal Commissioner passed the order without observing principles of natural justice as only one opportunity was given to the assessee to justify its case. It was argued that the appeal should be set aside to allow the assessee another opportunity of hearing. However, the learned Departmental Representative supported the order of the Principal Commissioner, stating that the assessee did not respond to the show-cause notice issued under section 263. The Tribunal noted that the Principal Commissioner did not provide sufficient opportunity of hearing to the assessee, which is a legal requirement. Therefore, the Tribunal set aside the order and directed the issue to be reconsidered by the Principal Commissioner after affording reasonable opportunity of hearing to the assessee. Issue 3: Opportunity of hearing to the assessee before passing the order: The Tribunal found that the Principal Commissioner did not adhere to the settled legal principle that a reasonable opportunity of hearing must be given to the assessee before passing an order under section 263. As the assessee was not adequately heard, the Tribunal set aside the order and remanded the issue back to the Principal Commissioner to reconsider after providing a proper opportunity of hearing to the assessee. In conclusion, the Tribunal allowed the appeal filed by the assessee for statistical purposes, emphasizing the importance of following principles of natural justice and providing adequate opportunity of hearing to the parties involved in such proceedings.
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