2023 (12) TMI 1130 - HC - Income Tax

Revision u/s 263 - Tribunal upheld the order passed by the Principal Commissioner of Income Tax, in directing the Assessing Officer to recompute the taxable capital gain u/s 54F and pass revised assessment order, after providing opportunity to the assessee - as submitted on the side of the appellant / assessee that the appeal filed against the order of assessment passed by the Assessing Officer is pending adjudication before the appellate authority - HELD THAT - This court is of the view that the parties need not agitate the factual matrix in this appeal and it would be appropriate to raise all the grounds raised herein before the appellate authority, with whom the appeal is pending, in order to avoid multiplicity of proceedings. Substantial questions of law involved herein are left open to be decided by the appellate authority with whom the appeal against the assessment order passed under section 144 is pending. Accordingly, the appellate authority shall consider the same along with the grounds raised in the appeal and pass appropriate orders, on merits and in accordance with law, after providing due opportunity of personal hearing to the appellant / assessee, without being influenced by any of the observations made by the Tribunal, within a period of twelve (12) weeks from the date of receipt of a copy of this judgment. The appellant / assessee is at liberty to raise all the grounds before the appellate authority with supportive materials, at the time of personal hearing.

Summary

Issues involved:
The appeal against an order relating to assessment year 2017-18 passed by the Income Tax Appellate Tribunal, Chennai is being challenged. The appellant, an individual deriving income from various sources, faced discrepancies in the computation of capital gains related to the sale of a residential property. The Assessing Officer disallowed certain expenditures claimed by the appellant, leading to a revision under Section 263 of the Income Tax Act. The key issues revolve around the genuineness of transactions, the correctness of the Tribunal's order, and the application of relevant provisions for claiming exemptions.

Issue 1: Disallowance of Expenditures
The appellant incurred expenses for removing encumbrances and building construction, which were disallowed by the Assessing Officer due to lack of satisfactory evidence and missing signatures on vouchers. The appellant's explanations were not fully accepted, leading to discrepancies in the computation of capital gains.

Issue 2: Revision under Section 263
The first respondent initiated revision proceedings under Section 263, contending that the original assessment order was detrimental to revenue interests due to incorrect exemption granted. The Tribunal upheld the revision order, directing the Assessing Officer to recompute taxable capital gains under Section 54F instead of Section 54, causing further dispute regarding the proper application of exemption provisions.

Issue 3: Appellate Authority's Jurisdiction
Parallel proceedings against the assessment order were ongoing, with an appeal filed by the appellant and revision proceedings initiated by the Principal Commissioner of Income Tax. The High Court emphasized the need to avoid multiplicity of proceedings and directed the appellate authority to consider all grounds raised in the appeal pending before them, ensuring a comprehensive review of the issues involved.

In conclusion, the High Court disposed of the tax case appeal, leaving the substantial questions of law to be decided by the appellate authority where the appeal against the original assessment order is pending. The court stressed the importance of a thorough review of all grounds and supporting materials, independent of the Tribunal's observations, within a specified timeframe to streamline the resolution process and avoid unnecessary legal complexities.