RAJSHRI PICTURES PVT LTD,MUMBAI vs. THE ASST. COMMISSIONER OF INCOME TAX , MUMBAI

There is a delay of 343 days in filing the appeal before the Tribunal. The assessee filed an affidavit along with a petition for condonation of delay. The ld. AR with regard to condonation submitted that the assessee was under the bonafide belief that the order giving effect under section 143(3) r.w.s. 263 is what needs to be appeal against and hence waited for the AO to pass such order. The ld. AR further submitted that during the consultation with the tax counsel with regard to appeal against order under section 143(3) r.w.s. 263 the counsel advised that the revision order passed under section 263 is appealable order and the assessee was advised to prefer appeal against the said order before the Hon'ble Tribunal. The ld. AR also submitted that the assessee accordingly filed the appeal with the delay of 343 days and prayed that the delay may be condoned considering the facts and circumstances of the case. The ld. DR on the other hand vehemently opposed to the condonation of delay.

Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167

On merits the ld. AR submitted that the PCIT has held the order to be erroneous and prejudicial to the interest of the revenue for the reason that the AO did not make any addition under section 56(2)(x) of the Act. The ld. AR further submitted that all the relevant details pertaining to the issue were submitted before the AO and in this regard drew our attention to the notices issued under section 142(1) and the reply submitted before the AO (page 8 to 19 of the PB). The ld. AR also submitted that the AO has verified all the details submitted and took a conscious decision after application of mind to accept the income returned by the assessee. The ld. AR submitted that the difference between the stamp duty value and the actual consideration is 8.14% which is less than the 10% tolerance limit as allowed by the statute and therefore the AO has taken a view in favour of the assessee by not making any addition. The ld. AR therefore argued that the order of the AO cannot be held to be erroneous or prejudicial to the interest of the revenue on this ground. The ld. AR relied on the decision of the co-ordinate bench in the case of Rajpal Mehra (HUF) Vs. ACIT (ITA No. 2817/Mum/2023 dated 17.01.2024) to submit that though the tolerance limit of 10% was introduced by the Finance Act, 2020, the Tribunal in the above case have held that the said amendment is to be applied retrospectively. The ld. AR accordingly submitted that there no error prejudicial to the interest of the revenue in the order passed by the AO.

The ld. DR on the other hand submitted that the 10% tolerance limit came into effect from 01.04.2021 and therefore for the year under consideration the difference between the stamp duty value and the actual consideration which more

We heard the parties and perused the material on record. The case of the assessee was selected for limited scrutiny for the reason that the stamp duty value and actual transaction value are different. We notice that the AO during the course of hearing has called for various details pertaining to the impugned transaction and that the assessee has submitted the relevant details. The PCIT has exercised the powers under section 263 for the reason that the AO failed to make an addition under section 56(2)(x) towards the difference between the stamp duty value and the actual consideration. We notice in assessee's case that the case was selected for the specific reason that there is difference between the purchase value and stamp duty, and that the assessee has submitted the necessary details as called for by the AO during the course assessment with regard to the purchase of additional space. Accordingly we are of the view that the assessing officer has taken a plausible view in the facts and circumstances of the case and that even if the PCIT has drawn certain adverse inferences from the records, yet it can seen that the issue of whether the addition should be made under section 56(2)(x) when the difference is within the tolerance band of 10% is debatable in nature. Further, as noticed earlier, the PCIT has not brought any material on record by making enquiries or verifications to substantiate his inferences and not shown that the view taken by AO is not sustainable in law. Thus, we are of the view that the PCIT has passed the impugned revision orders under section 263 of the Act with the objective of substituting his views with that of the AO and therefore the PCIT was not justified in law in holding that the impugned assessment orders were erroneous.

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