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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the ld. Principal Commissioner of Income Tax, Thane 1 [hereinafter “the ld. Pr. CIT"] dated 27/03/2025 framed u/s 263 of the Act.
The grievance of the assessee is as under:- "
The Hon. Pr. CIT erred in holding the order framed by the ld. AO u/s 143(3) r.w.s.144B of the I. Tax Act on 26.12.2022, to be erroneous and prejudicial to the interest of revenue and accordingly the assumption of juri iction by the Hon. Pr. CIT u/s 263 of the I.T Act, 1961 is unjustified and therefore not valid.
The Hon. Pr. CIT erred in setting aside to the file of the assessing officer, the assessment framed u/s 143 (3) r.w.s.144B of the I. Tax Act, 1961 on 26.12.2022, by relying upon the provisions of sec. 263 of the I. Tax Act, 1961, directing the Id AO to examine the applicability of section 56(2)(x)(b)(B)/section 50C to the transaction of purchase of flat no.3602 at Planet Godrej, Mahalaxmi (E), Mumbai vide agreement dt.03.08.2021, when undisputedly the said transaction of purchase of residential flat does not fall in the previous year relevant to AY 2021-22 but falls in AY 2022-23 and therefore the Hon. Pr. CIT is in error in setting aside the assessment for AY 2021-22. The appellant prays that the order u/s 263 dt.29.03.2019 be held to be bad-in-law and quashed.
The appellant craves leave to add, alter, amend and/or vary any of the grounds at any time before the decision of the appeal." Representatives of both the sides were heard at length, case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated the facts of the case are that the assessee is a proprietor of M/s. Sab Realty engaged in real estate business. The assessee filed its return of income on 15/03/2022 declaring total income at Rs.4,20,31,010/-. The return was selected for scrutiny assessment and assessment order was framed on 26/12/2022 u/s 143(3) r.w.s.144B of the Act after making an addition of Rs.6,03,81,465/- by disallowing the claim of deduction u/s 80IBA of the Act.
Assuming juri iction conferred upon him by the provisions of Section 263 of the Act, the ld. Pr. CIT vide notice dated 06/03/2025, asked the assessee to showcause why the assessment order dated 26/12/2022 be not treated as erroneous and prejudicial to the interest of the revenue. The showcause notice reads as under:- GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX PCIT, Thane-1 India To, JOHAR HASAN ZOJWALLA PAN: AAAPZ5650K
Assessment Year: 2021-22 Dated: 06/03/2025 DIN & Notice No: ITBA/COM/F/17/2024-25/1074123861(1) Sir/Madam/ M/s, Subject: Proceeding u/s 263 of the Income-Tax Act, 1961 - Notice Sub: Show-cause u/s.263 of the Income-Tax Act, 1961 for A.Y.2021-22-reg.. Please refer to the above.
In this case, return of income was filed on 15.03.2022 declaring total income at Rs.4,20,31,010/-. Assessment order u/s.143(3) r.w.s.144B of the I.T. Act was passed by the Faceless Assessing Officer (FAO) on 26.12.2022 for A.Y.2021-22 assessing total income at Rs.10,50,09,385/-.
On perusal of records, it is seen that you have purchased a residential property being Flat No.3602 at Planet Godrej, Mahalaxmi East, Mumbai at a consideration of Rs.5,32,50,000/- whereas the Market Value of the property determined by the Stamp Valuation Authority is Rs.5,91,49,665/-. As per Section 56(2)(x)(b)(B) of the Act, if the stamp duty value exceeds the consideration amount by more than 10% of the consideration, the differential amount is chargeable to income tax under the head 'Income from Other Sources'.
The purchase price of the property is for Rs.5,32,50,000/- while the value determined by the Stamp Valuation Authority is at Rs.5,91,49,665/-. i. Stamp Duty Value Rs.5,91,49,665/- ii. Sale Value Consideration Rs.5,32,50,000/- iii. 10% of the Consideration Rs.53,25,000/- iv. Sale Value Consideration+ 10% of consideration (ii + iii) Rs.5,85,75,000/- Thus, Stamp Duty Value of Rs.5,91,49,665/- is more Rs.5,85,75,000/- (i.e.10% of consideration plus sale value consideration ). In view of these facts, the difference between the value determined by the Stamp Valuation Authority and actual consideration in respect of the said property works out to Rs.58,99,665/- (5,91,49,665 – 5,32,50,000) which was to be added to your total income u/s.56(2)(x)(b)(B) of the Act, under the head 'Income from Other Sources'.
Keeping in view the aforementioned facts, assessment order u/s.143(3) r.w.s.144B of the I.T. Act dated 26.12.2022 for A.Y.2021-22 is erroneous in so far as it is prejudicial to the interest of the revenue, as the same has resulted in underassessment of income and short levy of tax. Therefore, your case is proposed to be revised u/s.263 of the Act.
In view of the above facts, you are given an opportunity to furnish your explanation on the above issue within 7 days of the receipt of this show-cause notice, alongwith all the relevant documentary evidences that you may wish to rely upon. You may submit your explanation through digital mode or on the official e-mail address of this Office i.e. thane.pcit1@ incometax.gov.in on or before the aforementioned date, which will be duly considered before finalization of the proceedings in your case. In case no compliance/submission is made on or before the said date, decision will be taken on merit as per the material available on record. INCOME TAX DEPARTMENT SUNIL KUMAR PCIT, Thane-1 (In case the document is digitally signed please refer Digital Signature at the bottom of the page)
We have given a thoughtful consideration to the aforementioned showcause notice. After going through the facts on record, we are of the considered view that the ld. Pr. CIT has assumed juri iction on wrong appreciation of facts. The impugned property was purchased by the assessee on 03/08/2021 falling in FY 2021-22 relevant to AY 2022-23 whereas the impugned assessment year is AY 2021-22. 7. All the apprehensions raised by the ld. Pr. CIT in justifying that the assessment order dated 26/12/2022 is erroneous and prejudicial to the interest of the revenue may be relevant for AY 2022-23 and not for the year under consideration. Since the assumption of juri iction is based upon wrong appreciation of facts, we have no hesitation in setting aside the impugned order of the ld. Pr. CIT dated 27/03/2025 and restore that of the AO dated 26/12/2022. 8. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 17th June, 2025 at Mumbai. (SAKTIJIT DEY) VICE PRESIDENT Mumbai, Dated 17/06/2025 (NARENDRA KUMAR BILLAIYA) ACCOUNTANT MEMBER आदेश की प्रतिलिपि अग्रेषित/