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2023 (10) TMI 1233 - AT - Income Tax


Issues involved: Revision of assessment order under Section 263 of the Income Tax Act based on alleged errors in the original assessment related to purchase of land in cash exceeding permissible limit.

Summary:

Issue 1: Alleged erroneous assessment due to cash purchase of land:
The appeal was directed against the revisional order passed by the Principal Commissioner of Income Tax, Rohtak, setting aside the assessment order passed by the Assessing Officer. The issue revolved around the alleged purchase of agricultural land in cash amounting to Rs. 25 lakhs, which the Assessing Officer failed to investigate. The Principal Commissioner considered this omission prejudicial to the interest of the Revenue, leading to the revision under Section 263.

Details for Issue 1:
The assessment for the relevant year was initially completed by the Assessing Officer under Section 143(3) r.w. Section 147, determining the total income at Rs. 3,73,530. The Principal Commissioner issued a notice under Section 263(1) based on the alleged cash purchase of land, seeking to set aside or modify the assessment order. The assessee contended that no land was purchased, but an advance was received for the sale of ancestral land, which was later returned due to the deal not materializing. Despite providing documentary evidence supporting this claim, the Principal Commissioner held the assessment to be erroneous and directed a fresh assessment.

Issue 2: Appeal against the revisional order:
The assessee appealed before the Tribunal challenging the revisional order under Section 263, arguing that the proceedings were based on erroneous assumptions and that no prejudice was caused to the Revenue. The counsel emphasized that the assertions made post-reassessment by the assessee's representative were inadvertent and did not reflect the actual transaction accurately.

Details for Issue 2:
The Tribunal considered the contentions of both parties. It noted that the Principal Commissioner's decision was primarily based on a post-reassessment correspondence, highlighting the need for a thorough inquiry before setting aside the assessment. The Tribunal found that the Principal Commissioner failed to provide a reasoned order, disregarding the evidence presented by the assessee and not conducting a proper assessment of the new material post-reassessment. Consequently, the Tribunal allowed the appeal, deeming the directions for verification of transactions without due process unsustainable and in violation of natural justice principles.

Conclusion:
The Tribunal allowed the appeal of the assessee, emphasizing the importance of a fair and thorough assessment process in revisionary proceedings under Section 263 of the Income Tax Act.

 

 

 

 

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