9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 310 - AT - Income TaxRevision u/s 263 - addition on lumpsum basis to the returned income - HELD THAT - PCIT in a very casual and negligent manner has passed the order and copy pasted the finding of some other assessee in the instant case. In our opinion, great power comes with extraordinary responsibility and should be exercised mindfully and cautiously. However, in the instant case, the same appears to be not at all exercised in the manner in which it should have been exercised. Even on merit also, we find that by the time the AO passed the assessment order u/s.143(3) had passed the judgment against the seller namely Ms. Kalavati Rajendran who had sold the property to the assessee and has held that the title of Ms. Sukul Yashoda is valid and the claim of Ms. Kalavati about the title and ownership of the impugned property was declared as void. Since the title of the seller and in consequent of the assessee are held to be bad in law, therefore, the question of making the addition on the basis of such a defective and illegal title cannot be sustained. Since the AO in the instant case has passed the order on the basis of the receipts and payments statement, bank statement, sale deed copies etc., therefore, in absence of any specific reasoning given by the PCIT as to how the order has become erroneous and prejudicial to the interest of the Revenue and since he has cancelled an order passed u/s. 143(3) dated 18.4.2017 whereas the order passed u/s.143(3) in the instant case is 11.12.2017, therefore, it is a complete non-application of mind by the PCIT for which we set aside the order of the learned PCIT passed u/s. 263. The grounds raised by the assessee are therefore, allowed.
Issues Involved:
1. Validity of the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act. 2. Whether the original assessment order under section 143(3) was erroneous and prejudicial to the interest of the Revenue. 3. Examination of the difference in property valuation and its treatment as income from other sources. 4. Adequacy of inquiries conducted by the Assessing Officer (AO) during the original assessment. Detailed Analysis: 1. Validity of the Order Passed by the PCIT under Section 263: The assessee challenged the order dated 04.03.2020 passed by the PCIT under section 263 of the Income Tax Act, arguing that it was erroneous both on facts and in law. The Tribunal noted that the PCIT's order contained errors, such as referencing facts and figures that pertained to a different assessee. Specifically, the PCIT discussed the source of cash deposits and interest income that were not relevant to the assessee's case. The Tribunal found that the PCIT had not applied his mind and had arrived at a conclusion based on the facts of another case, thereby rendering the order invalid. 2. Whether the Original Assessment Order under Section 143(3) was Erroneous and Prejudicial to the Interest of the Revenue: The PCIT issued a notice under section 263, stating that the AO had failed to make inquiries regarding the difference between the purchase consideration of the land (Rs. 1,13,00,000) and its market value (Rs. 4,04,25,000). The PCIT argued that this difference should have been treated as income from other sources. The Tribunal, however, found that the AO had made inquiries during the original assessment and had considered the details provided by the assessee, such as bank statements and sale deeds. Thus, the Tribunal concluded that the original assessment order was neither erroneous nor prejudicial to the interest of the Revenue. 3. Examination of the Difference in Property Valuation and Its Treatment as Income from Other Sources: The PCIT contended that the difference of Rs. 2,91,25,000 between the market value and the purchase consideration of the land should have been added as income from other sources. The Tribunal noted that the property in question was involved in a legal dispute, and a civil court had declared the seller's title void. Given this context, the Tribunal held that the addition of the difference as income from other sources was not warranted, as the title itself was defective and illegal. 4. Adequacy of Inquiries Conducted by the AO During the Original Assessment: The Tribunal observed that the AO had conducted adequate inquiries during the original assessment, including examining the receipts and payments statement, bank statements, and sale deeds. The Tribunal criticized the PCIT for not providing specific reasons as to how the original assessment order was erroneous and prejudicial to the Revenue. The Tribunal also pointed out that the PCIT had erroneously referenced an assessment order dated 18.04.2017, whereas the relevant order was dated 11.12.2017, indicating a lack of due diligence. Conclusion: The Tribunal set aside the order passed by the PCIT under section 263, finding it to be based on erroneous facts and a lack of proper application of mind. The original assessment order under section 143(3) was upheld as neither erroneous nor prejudicial to the interest of the Revenue. The appeal filed by the assessee was allowed.
|
