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2024 (1) TMI 104 - AT - Income TaxRevision u/s 263 - as alleged assessee failed to produce evidences for the Land levelling, Fencing, Consultation charges, and Land development expenses claimed in the computation of Long Term Capital Gain - HELD THAT - PCIT failed to consider the other replies filed by the assessee which clearly spelt about the Long Term Capital Gain and Non-production of the alleged expenses which incurred in the year 2007. However such expenditure was not disallowed by the Assessing Officer while framing the assessment for that particular assessment year. As rightly pointed out by assessee, as per clause (b) of section 142(1) of the Act, the A.O. cannot call for the details pertaining to period more than three years to the previous year and as per Rule 6F of the Income Tax Rules, the assessee was expected to keep the records, books of accounts for the last six assessment years. Now by this Revision proceedings, the Ld. PCIT holds that the assessee failed to produce evidences for the Land levelling, Fencing, Consultation charges, and Land development expenses of Rs. 49,08,263/- claimed in the computation of Long Term Capital Gain. It is well settled principle of law that where two views are possible and one view has been adopted by the AO then existence of other possible view alone would not be sufficient to exercise powers under section 263. Assessee claimed carry forward loss for the present Assessment Year 2018-19 which is not yet been fully set off as against the Assessment Year 2022-23. Thus there is no Revenue loss to the department by invoking this Revision proceedings. PCIT partially looking into the assessment records and initiated the Revision proceedings on the ground that the assessee failed to submit evidences in support of the expenses, which is factually incorrect. Unless both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld in case of Malabar Industrial Co. Ltd 2000 (2) TMI 10 - SUPREME COURT However, an assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. Assessee appeal allowed.
Issues Involved:
1. Validity of the Revision Order under Section 263. 2. Alleged Lack of Proper Verification by the Assessing Officer (AO). 3. Examination of Expenses Claimed by the Assessee. Summary: 1. Validity of the Revision Order under Section 263: The appeal was filed by the Assessee against the Revision order dated 28.03.2023 passed by the Principal Commissioner of Income Tax (PCIT), Ahmedabad-1, under Section 263 of the Income Tax Act, 1961, for the Assessment Year 2018-19. The PCIT issued a show cause notice on 10-03-2023 questioning why the assessment order dated 16-12-2020 should not be revised due to the AO's alleged failure to conduct proper enquiries. 2. Alleged Lack of Proper Verification by the Assessing Officer (AO): The PCIT argued that the AO did not adequately verify the expenses claimed by the Assessee in the computation of capital gain, specifically: - Land levelling and fencing work of Rs. 3,20,341/- - Consultation charges of Rs. 6,32,247/- - Land development charges of Rs. 39,55,675/- The PCIT held that the assessment order was erroneous and prejudicial to the interest of Revenue, as per explanation 2 of Section 263, and directed the AO to pass a fresh assessment order. 3. Examination of Expenses Claimed by the Assessee: The Assessee contended that during the assessment proceedings, detailed replies and evidence were submitted in response to notices issued under Section 143(2). The AO had accepted these submissions and completed the assessment without making any additions. The Assessee argued that the expenses were part of the land cost capitalized in previous years, and the AO's acceptance of these expenses in earlier assessments should not be questioned. Tribunal's Findings: The Tribunal noted that the PCIT primarily relied on the Assessee's reply dated 03.10.2020 and failed to consider other replies dated 10.01.2020, 06.08.2020, and 24.11.2020. The Tribunal held that the AO's decision was a plausible view and that the PCIT's revision was not justified. The Tribunal emphasized that as per clause (b) of Section 142(1) and Rule 6F of the Income Tax Rules, the AO could not call for details beyond three years prior to the previous year. The Tribunal also cited several judicial precedents supporting the view that a different opinion by the PCIT does not justify invoking Section 263 if the AO's view is plausible. Conclusion: The Tribunal quashed the Revision order passed by the PCIT, holding that the assessment order was neither erroneous nor prejudicial to the interest of Revenue. The appeal filed by the Assessee was allowed. Order Pronounced: The order was pronounced in the open court on 27-10-2023.
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