2022 (10) TMI 109 - AT - Income Tax

Revision u/s 263 by CIT - miss match in income / capital of gain on sale of land or building - HELD THAT - When a query was raised to the AR that whether the AO has raised this point with respect to applicability of provisions of section 43CA of the Act in the course of assessment proceedings, the Ld AR submitted that since the AO has issued notice 142(1) of the Act and the assesseee has complied with the directions with substantial material information and which covers the disputed issue also. AR emphasized on the details submitted by the assesse before the Pr.CIT on 4-12-2019 which includes agreement copies, booking receipts, ready recokner ,and calculation sheet of value as of flat with ready recknor value placed and the bank statements highlighting payments received from flat owners was filed first time before the Honble Tribunal as per the certificate of the assessee. Whereas the Pr.CIT has observed that the Bank statement reflecting payments received from the flats was not produced by the assessee in the revision proceedings. So it is clear that the A.O. has never verified the payments received from the flats.We find the A.O has called for the information, but there is no examination and verification of the facts or findings by the A.O on the applicability of provisions U/s 43CA of the Act. Accordingly, We do not find infirmity in the order of the Pr.CIT on the directions to A.O. for verification, examination of working submitted by the assessee and up hold the same and dismiss grounds of appeal of the assessee.

Issues:
1. Condonation of delay in filing appeal before ITAT.
2. Validity of order passed under Section 263 of the Income Tax Act, 1961.
3. Assessment proceedings and application of Section 43CA of the Act.
4. Justification of setting aside the assessment order by Principal Commissioner of Income Tax.
5. Admissibility of appeal before the Tribunal and arguments presented by both parties.
6. Examination of submissions and evidences by the Assessing Officer.
7. Compliance with notice under Section 142(1) and verification of facts by the AO.
8. Verification of payments received from flat owners and applicability of Section 43CA.

Analysis:

1. The ITAT Mumbai considered the application for condonation of delay of 39 days in filing the appeal. The delay was condoned based on the explanation provided by the appellant and in line with the decision of the Hon'ble Supreme Court regarding the extension of the limitation period. The appeal was admitted after condoning the delay.

2. The appeal was filed against the order passed by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961. The grounds of appeal raised by the assessee challenged the jurisdiction and legality of the order, claiming that the original assessment order was not properly served and that all relevant documents were submitted during the original assessment proceedings.

3. The case involved a partnership firm engaged in the business of builders and developers. The Assessing Officer had accepted the total income as per the return filed by the assessee and passed an assessment order under Section 143(3) of the Act. However, the Principal Commissioner found discrepancies related to the sale of flats and invoked Section 263, setting aside the assessment order for further verification.

4. The Principal Commissioner found that the original assessment order was erroneous and prejudicial to the revenue due to non-verification of certain facts related to the sale of flats. The order was set aside, directing the Assessing Officer to conduct proper verification and pass a fresh assessment order. The ITAT upheld the decision of the Principal Commissioner in this regard.

5. During the appeal hearing, the appellant argued that the original assessment order was not erroneous, emphasizing compliance with notices and submission of relevant evidence. The appellant's contentions were supported by factual evidence and judicial decisions, while the Departmental Representative supported the order of the Principal Commissioner.

6. The ITAT examined the contentions of both parties and the material available on record. It was observed that the Assessing Officer did not conduct a thorough enquiry into the applicability of Section 43CA of the Act despite receiving information from the assessee. The ITAT upheld the directions given by the Principal Commissioner for further verification and dismissed the grounds of appeal.

7. The ITAT noted that while the assessee had provided details and information in response to notices, there was a lack of examination and verification by the Assessing Officer regarding the applicability of Section 43CA. The failure to verify payments received from flat owners led to the dismissal of the appeal filed by the assessee.

8. In conclusion, the ITAT dismissed the appeal, affirming the decision of the Principal Commissioner to set aside the original assessment order and directing the Assessing Officer to conduct a thorough verification process.

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