M/S DHANALAKSHMI MILLS LTD,TIRIPUR vs. DCIT,CIRCLE-1, TIRUPUR

The learned DR, on the other hand, supporting order the learned PCIT submitted that facts brought on record in the order of the PCIT, clearly proves that the Assessing Officer has failed to apply his mind in light of provisions of section 50C of the Act, which rendered the assessment order to be erroneous, insofar as it is prejudicial to the interests of revenue and thus, the PCIT has rightly set aside assessment order by exercising his powers conferred u/s.263 of the Act, and their orders should be upheld.

We have heard both the parties, perused material available on record and gone through orders of the authorities below. The facts with regard to impugned dispute are that the assessee has sold property vide document No. 2239 / 2006 for consideration of Rs.2,62,30,000/-. Further, although transaction of sale took place in financial year relevant to the assessment year 2006-07, but the assessee itself had declared capital gain from transfer of property for the assessment year 2015-16 on the ground that possession of property has been handed over to buyer in the financial year 2014-15 relevant to the assessment year 2015-16. From the above, it is very clear that for the purpose of computation of capital gains transfer had been taken place for the assessment year 2015-16. It was further noted that there is difference between stated consideration received for transfer of property and guideline value of property as on date of registration, as per which the assessee claims to have received consideration of Rs.2,62,30,000/-, whereas guideline value of property has been fixed by the Registration Department at Rs.4,10,70,379/- and said value has been determined by the Stamp & Registration Department on 11.02.2009. From the above, it is very clear that there is difference between stated consideration in the document and guideline value of property.

In light of above factual background, if you examine the assessment order passed by the Assessing Officer and order of the PCIT passed u/s.263 of the Act, we need to understand whether the PCIT is right in exercising his powers u/s.263 of the Act or not. Admittedly, the Assessing Officer has caused necessary inquiries with regard to computation of long term capital gain derived transfer of property and has computed capital gain by taking into account cost of acquisition claimed by the assessee without disturbing consideration received from transfer of property, even though, there is difference in guideline value of property. From order of the Assessing Officer, what we could notice is that although, provisions of section 50C could have been applied in the given facts and circumstances of the case, but the Assessing Officer has failed to apply provisions of section 50C to determine correct consideration received for transfer of property. The PCIT, after verifying necessary evidences in light of various facts bought on record by the Assessing Officer has opined that the assessment order passed by the Assessing Officer is erroneous, insofar as it is prejudicial to the interests of revenue on the issue of computation of long term capital gain from transfer of property, because the Assessing Officer has failed to apply provisions of section 50C of the Act, while completing assessment. In our considered view, the Assessing Officer has failed to apply his mind in light of facts of the case to relevant provisions of section 50C of the Act, while completing assessment. Hence, the PCIT has rightly exercised his jurisdiction u/s.263 of the Act and set aside the assessment order, because the assessment order passed by the Assessing Officer is erroneous, insofar as it is prejudicial to the interests of revenue. Therefore, we are of the considered view that there is no error in the reasons given by the ld. PCIT to set aside the assessment order and thus, we are inclined to uphold findings of the learned PCIT and dismiss appeal filed by the assessee.