2023 (6) TMI 573 - AT - Income Tax

Revision u/s 263 by CIT - Notice issued u/s 263 not accompanied with DIN (Document identification number) - Assessment u/s 143(3) - addition u/s 56 - stamp value of the immovable property (IP), being land, acquired by the assessee during the relevant previous year, being higher that the stated purchase consideration and, consequently, the applicability of sec. 56(2)(vii)(b)(ii) of the Act on the said acquisition - HELD THAT - Notice u/s. 263(1) of the Act, even as observed by the Bench during the hearing, is not a jurisdictional notice. - As explained by the Hon'ble Apex Court per a series of decisions, that a show cause notice is not a concomitant of the proceedings u/s. 263. - Both these attributes of putting the assessee to notice as well as extending due opportunity of hearing, are met in the instant case - Revision proceedings sustained. Addition u/s 56 - Purchase of property below the stamp value - the applicability of sec. 56(2)(vii)(b)(ii) of the Act - HELD THAT -The only enquiry made in assessment with regard to the purchase of land was with reference to the source of investment, i.e., as disclosed, and which was explained by the assessee as by way of withdrawal from his capital in his proprietary firm. There is no whisper of valuation thereof and, accordingly, of it being a case of under-valuation, i.e., with reference to the FMV, to which therefore sec. 56(2)(vii)(b)(ii) of the Act may apply. The failure to make enquiry, where it is prima faice warranted, would make an order of adjudication erroneous and prejudicial to the interests of Revenue, liable for revision u/s. 263 of the Act. Case law in the matter is legion, and toward which the ld. Pr. CIT cites two, i.e., Malabar Industrial Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT and Raja Co. 2010 (10) TMI 575 - KERALA HIGH COURT . It is then said that purchases do not amount to receipt , and that the matter ought to have been referred by the ld. Pr. CIT to the Valuation Officer (DVO). We are unable to appreciate the import of the said objection. The revisionary autnority has not adjudicated on merits of the matter, but only set aside the assessment, directing the AO to examine it afresh, and decide in accordance with law. All contentions are open for being made before the assessing authority, and the assessee can make out a case of it being, despite apparent, undenied difference in value, not a case of under-valuation or falls under the provisos to the provision. Decided against assessee.

Summary

Issues Involved:
The judgment involves the issue of validity of the notice under section 263 of the Income Tax Act, 1961 and the merits of the section 263 proceedings regarding the stamp value of an immovable property acquired by the assessee.

Validity of Notice under Section 263:
The appeal was agitating the Order under section 263 of the Income Tax Act, 1961 dated 03.3.2021 by the Principal Commissioner of Income Tax-1, Kochi. The notice issued under section 263(1) of the Act dated 25.01.2021 was challenged by the assessee for not quoting the Document Identification Number (DIN) as mandated. However, the absence of DIN in the notice was held to be a technical argument and of no assistance as the notice was to put the assessee to notice of the proceedings under section 263 and provide an opportunity of hearing.

Merits of Section 263 Proceedings:
The assessee's objection on the merits of section 263 proceedings was related to the stamp value of the immovable property acquired during the relevant year. The assessment was set aside by the Principal Commissioner as no enquiry was made regarding the applicability of sec. 56(2)(vii)(b)(ii) of the Act on the acquisition of land. The failure to enquire where warranted would render the order erroneous and prejudicial to the interests of Revenue, justifying revision under section 263. The revisionary authority directed the Assessing Officer to examine the matter afresh and decide in accordance with the law.

Assessment of Stamp Value:
The contention that 'purchases' do not amount to 'receipt' and the matter should have been referred to the Valuation Officer was not appreciated by the Tribunal. The revisionary authority did not adjudicate on the merits but only set aside the assessment for fresh examination. The stamp value being higher than the stated sale consideration implies a prima facie case of under-valuation, and the burden to show otherwise lies on the assessee. The argument that 'purchase' is not 'receipt' was considered misplaced without a legal basis. The Tribunal upheld the impugned order and dismissed the appeal.

Conclusion:
The Tribunal found no reason for interference with the impugned order and upheld it, dismissing the appeal filed by the assessee. The order was pronounced on June 12, 2023, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.