MEENA RAJESH SANGHVI,AHMEDABAD vs. PCIT (CENTRAL) , AHMEDABAD

The assessee derived income from salary, house property, business income from partnership firms and interest income. The original return of income was filed on 19-02-2022 declaring income of Rs. 4,63,110/-. A search and seizure action u/s. 132 of the Act was carried out on 23-11-2021 in the case of “Ratnamani Group” and its key associates. The premises of the assessee was searched and the assessee’s case was selected for compulsory scrutiny. Notice u/s. 143(2) of the Act was issued on 27-06-2022 and scrutiny assessment u/s. 143(3) of the Income Tax Act, 1961 was completed on 26-12-2012 accepting the return income offered by the assessee as assessed income. The Pr. CIT observed that the assessee possessed three house properties, however on verification of ITR, the assessee has shown income from let out property for the year under consideration from one flat only. The Pr. CIT invoked section 263 by issuing notice on 22-02-2025. The Pr. CIT asked the assessee related to the other properties why the said were not offered in respect of deemed rental income from the said other two properties. The assessee filed reply and after taking cognizance of the said reply, the Pr. CIT held that the Meena Rajesh Sanghvi, A.Y. 2021-22 assessment order is extremely short and non-speaking and therefore held to be erroneous in so far as it is prejudicial to the interest of Revenue. The Pr. CIT set aside the assessment order and directed the Assessing Officer to examine the issues and pass fresh assessment order.

Being aggrieved by the order u/s. 263 of the Act, the assessee filed appeal before us.

The ld. A.R. submitted that the said two properties were not offered for deemed rental income as the said properties has gone for development and for that matter the ld. A.R. has produced annexure 2 copy of Rajachitthi (Development Permission) obtained by the builder for development of the said properties. Thus, the ld. A.R. submitted that all these facts were demonstrated before the Assessing Officer and hence the Assessing Officer has taken a proper view thereby assessing the total income at the original return of income.

The ld. D.R. relied upon the order of the Pr. CIT passed u/s. 263 of the Act. The ld. D.R. further submitted that the Rajachitthi/development permission does not indicate that the assessee has not earned any income from the said two flats. Thus, the ld. D.R. submitted that the Pr. CIT has rightly invoked the section 263 of the Act.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that though the assessee is giving the copy of annexure 2 and Rajachitthi i.e. development permission obtained by builder for development. The fact remains that the development process Meena Rajesh Sanghvi, A.Y. 2021-22 has included the demolition of these two flats which clearly suggest that the assessee has not received any rental income or income on the said two flats in the said assessment year. Therefore, the invocation u/s. 263 of the Act by the Pr. CIT is not justified as the Assessing Officer in the assessment order u/s. 143(3) has taken a plausible view and passed the assessment order as per Income Tax Provisions. Thus, the assessment order is not at all erroneous or prejudicial to the interest of revenue and the Pr. CIT was not right in invoking Section 263 of the Act. Hence, the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed.