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2025 (1) TMI 1169 - AT - Income TaxRevision u/s 263 - computation of short term/long term capital gain in respect of three properties - HELD THAT - Considering the behavior of the assessee and also the relevant facts on record we observed that the AO stumbled upon the information during the course of recovery and subsequently on verification the assessee herself accepted the fact that the relevant transaction was in fact carried on by the assessee and failed to offer the same and agreed to offer the same in due course. Therefore the information stumbled upon by the AO is found to be correct and the information submitted by the AO even though captioned as proposal u/s 263 however in actual the same was the information brought to the notice of the ld. PCIT for further course of action. After considering the overall facts on record we do not see any reason to disturb the findings of ld. PCIT in this regard and the proceedings u/s 263 is properly initiated and concluded. Accordingly the submissions made by the ld. AR on the validity of the 263 based on the information supplied by the AO are found to be defective and accordingly the above submission is dismissed. Prayer of the assessee that the initiation of proceedings u/s 147 of the Act was sanctioned by the ld. PCIT-21 whereas the present proceedings were initiated by ld. PCIT-12 - As observed that from the order passed by the ld. PCIT and the proposal was submitted by the Assessing Officer before present ld. PCIT-12 it shows that the ld. PCIT has initiated proceedings u/s 263 with the clear observation that during recovery proceedings the AO found that the assessee had sold immovable properties and also leased out the property at Gurgaon. The abovesaid facts were found to be correct and also the same was accepted by the assessee before the authorities. AO has brought to the notice of ld. PCIT-12 and accordingly the proceedings initiated show that the jurisdiction of the AO lies with ld. PCIT-12. The relevant assessment order was passed on 28.12.2018 and at that point of time jurisdiction may be with ld. PCIT-21 and accordingly the same was approved and now the present proceedings were initiated on 22.02.2021. AO has approached ld. PCIT-12 to initiate the proceedings shows that the jurisdiction of the AO lies with ld. PCIT-12 therefore the proceedings were initiated by the ld. PCIT-12. Therefore now the assessee cannot raise this issue as critical and seeking for cancellation of the proceedings u/s 263 of the Act in our view is not justified and also we observed that even before ld. PCIT the assessee has agreed to settle the dispute and still failed to submit any proper documents within the time frame allowed by the authorities and even before ld. PCIT assessee has herself submitted a calculation determining the tax liability and failed to substantiate by filing the relevant documents. Therefore considering the factual matrix on record we do not see any reason to disturb the findings of the ld. PCIT u/s 263 of the Act. Appeal filed by the assessee is dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Validity of Order under Section 263 The relevant legal framework involves Section 263 of the Income Tax Act, which allows the PCIT to revise an order if it is erroneous and prejudicial to the interests of the Revenue. The Court examined whether the PCIT was correct in assuming jurisdiction under Section 263, given that the original assessment order was subject to an appeal. The Court reasoned that the PCIT's order was valid as the issues raised in Section 263 proceedings were not the same as those under appeal. The PCIT identified additional income sources not considered in the original assessment, justifying the revision. Key evidence included the assessee's non-compliance with notices and failure to declare income from property sales and leases. The Court found that the PCIT acted within jurisdiction by addressing these omissions. The Court concluded that the order under Section 263 was justified, as the original assessment failed to consider significant income sources, rendering it erroneous and prejudicial to the Revenue. Jurisdictional Authority of PCIT The issue of jurisdiction was analyzed under the framework of the Income Tax Act, which delineates the authority of different PCITs. The Court evaluated whether the PCIT-12 had the jurisdiction to initiate Section 263 proceedings when the initial proceedings were sanctioned by PCIT-21. The Court observed that the jurisdictional authority had shifted to PCIT-12 by the time the Section 263 proceedings were initiated. The assessee's argument that the proceedings should have been under PCIT-21 was dismissed, as the jurisdiction was correctly with PCIT-12 at the time of the proceedings. The Court concluded that the proceedings were validly initiated by PCIT-12, as the jurisdictional authority had appropriately transitioned. Additions under LTCG and STCG The legal framework involved Sections 45, 54, and 54F, which govern the computation of capital gains. The Court analyzed whether the PCIT's directions to add LTCG and STCG were valid without considering these provisions. The Court noted that the assessee failed to provide relevant documents to substantiate claims under Sections 54 and 54F. The PCIT's directions were based on the information available, and the assessee's non-cooperation justified the additions. The Court upheld the PCIT's additions, emphasizing that the assessee could seek remedies regarding capital gains computation through appropriate appeals. Conduct of the Assessee The Court considered the assessee's conduct, including non-filing of returns and non-compliance with notices. The legal framework emphasized the duty of the taxpayer to comply with tax obligations. The Court found the assessee's conduct obstructive, noting repeated adjournment requests and failure to provide necessary documentation. The PCIT's decision to proceed with the available information was deemed appropriate. The Court concluded that the assessee's conduct justified the PCIT's actions and the subsequent proceedings under Section 263. SIGNIFICANT HOLDINGS The Court established several core principles:
The final determination was that the appeal filed by the assessee was dismissed, upholding the PCIT's order under Section 263.
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