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2023 (12) TMI 878 - AT - Income TaxRevision u/s 263 - assessee had transferred capital asset which is an agriculture land which resulted in capital gain within the scope of section 45(3) - in respect of capital gain revealed that capital asset was held by the assessee for less than two years and deduction claimed u/s 54B was therefore incorrectly claimed by the assessee - As per CIT AO while framing the assessment order u/s 143(3) of the Act has not looked into this issue, which is erroneous and prejudicial to the interest of the Revenue - HELD THAT - The assessee herein is one of the co-owners of the land. Even in this case, the assessee and the legal heir failed to produce any material evidence in support of the grounds raised in the appeal. In the absence of the same, we do not find any infirmity in the order passed by the Ld. PCIT, that the assessment order passed by the Assessing Officer is an erroneous order and prejudicial to the interest of Revenue, which is correctly revised by invoking power u/s. 263 of the Act. Thus the grounds raised by the assessee are devoid of merits and the same are hereby rejected.
Issues Involved:
1. Jurisdiction and validity of the order under section 263 of the Income Tax Act, 1961. 2. Verification of Short Term Capital Gain and deduction claimed under section 54B. 3. Conversion of agricultural land into stock-in-trade. Summary: 1. Jurisdiction and Validity of the Order under Section 263: The Assessee challenged the order passed by the Principal Commissioner of Income Tax (Pr.CIT) under section 263 of the Income Tax Act, 1961, as being without jurisdiction and bad in law. The Tribunal noted that the Pr.CIT issued a show cause notice under section 263 on 12.01.2016, and the assessment order was passed without making proper inquiries or verification regarding the deduction under section 54B. The Tribunal upheld the Pr.CIT's jurisdiction and found the order valid, citing Explanation 2 to section 263, which deems an order erroneous if the Assessing Officer (AO) has not made proper inquiries or verification. 2. Verification of Short Term Capital Gain and Deduction Claimed under Section 54B: The Pr.CIT observed that the AO did not properly verify the Short Term Capital Gain arising from the transfer of agricultural land and the deduction claimed under section 54B. The Assessee contended that the actual transfer date was 15.08.2010, not 15.04.2010, due to a typographical error. However, the Pr.CIT found no evidence in the assessment records to support this claim. The Tribunal confirmed that the AO's failure to verify the period for which the capital asset was held and the investments made for claiming the deduction rendered the assessment order erroneous and prejudicial to the Revenue's interest. 3. Conversion of Agricultural Land into Stock-in-Trade: The Pr.CIT noted that the land was converted into non-agricultural land on 16.12.2010, and the deduction under section 54B could not be allowed for investments made before this date. The Tribunal agreed, stating that the Assessee could not adopt any date for the transfer of the capital asset to suit the deduction claim. The Tribunal upheld the Pr.CIT's finding that the AO incorrectly allowed the deduction under section 54B, as the investments in lands were made before the date of transfer of the capital asset. Conclusion: The Tribunal dismissed the Assessee's appeal, confirming the Pr.CIT's order that set aside the assessment order as erroneous and prejudicial to the Revenue's interest. The Tribunal directed the AO to make a fresh assessment as per law. The grounds raised by the Assessee were found to be without merit and were rejected.
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