GAURAV DUGAR,CHENNAI vs. PCIT-8, CHENNAI

आदेश /O R D E R

PER BENCH:

This appeal by the assessee is arising out of order passed by the

Principal Commissioner of Income Tax, Chennai-8 vide Order No.

ITBA/REV/F/REV5/2023-24/1063217330 (1) dated 22.03.2024. The

reassessment was framed by the Deputy Commissioner of Income Tax,

NFAC, Delhi for the assessment year 2014-15 u/s. 147 r.w.s 144 r.w.s

144Bof the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated

26.03.2022.

- 2 - ITA No. 948/Chny/2024 2. The only issue in this appeal of the assessee is as regards to

revision order passed by Pr.CIT u/s.263 of the Act and consequently

setting aside the assessment order dated 26-03-2022 on account of

following:-

i) Difference between stamp duty value and document value as

computed as Rs.83.70 Lacs which was not disclosed as income in view of the provisions of section 43CA of the Act.

ii) The assessee has acquired properties and there is variation in

documentary value and stamp duty value which worked out to

Rs.11,16,250/- and the same is to be treated as income of the assessee

in view of the provisions of section 56(2)(vii)(b)(ii) of the Act.

DCIT., Non-Corporate Circle-11, Chennai u/s.143(3) of the Act vide order

dated 30.05.2016 for the relevant assessment year 2014-15.

Subsequently, the assessment was reopened by issue of notice u/s.148 of the Act dated 31.03.2021 and accordingly, reassessment was

completed by National Faceless Assessment Centre., (NFAC) Delhi

u/s.147 r.w.s 144 r.w.s 144B of the Act vide order dated 26.03.2022.

Subsequently, the Principal CIT issued show-cause notice for revising

the reassessment order u/s.263 of the Act and show-cause notice dated

- 3 - ITA No. 948/Chny/2024 05.03.2024 was issued. The Pr.CIT has raised the following three

issues:-

“1. You have purchased and sold lands during the financial year 2013- 14. You have drawn trading account treating the land as opening and closing stock bearing the claim of development expense. The sale value of the land was adopted a per document value instead of stamp duty value. The difference between the stamp duty value and the document value was computed as 83,70,000/- which was not disclosed in the light of provision of section 43CA of the Act. 2. During the FY 2013-14 you have acquired many properties in this regard it is noted that there is variation in documents value and stamp duty value which works out to Rs.11,16,250/-. This value was not treated as income in the light of provision of section 52(2)(vii)(b)(ii) of the Act. 3. You have set off short term capital loss of pertain to the AY 2009-10 against the short term capital gain of Rs. 3,04,581/- for the AY 2014-15 for which no documentary evidence were available on record.”

and noted that difference between the stamp duty value compared

with registered sale deed, the amount received of Rs.83.73 lakhs was

taxable in term of provisions of section 43CA of the Act. Similarly, the

Pr.CIT also noted that the assessee has acquired properties during the

financial year 2013-14 and total difference in value as per stamp duty

compared with sale consideration paid as per registered sale deed was

Rs.11,16,250/- and that has to be brought to tax, in view of the provisions

of section 56(2)(vii)(b)(ii) of the Act. The assessee replied to the show-

cause notice on 11.03.2024, but, the Pr.CIT was not convinced, thus he

passed revision order by observing in para 5.1 to 6 as under:-

“5.1 The contention of the AR that the reopened proceedings u/s. 147were dropped by accepting the original assessment order as valid and therefore the question of treating the said order as erroneous and pre-judicial to the

- 4 - ITA No. 948/Chny/2024

interest of revenue does not arise is not acceptable as the AO has not dropped the proceedings but completed the assess met u/s. 147 r.w.s. 144 r.w.s 144(8). The word "Dropped" is never used in reassessment order. It is noted that except objection for reopening of assessment, the assessee has not produced any documentary evidence in support of his claim in the course of reassessment proceedings even after communicating the reason for reopening of assessment proceedings. Therefore, the assessee's ground that reassessment was 'dropped' is not valid.

5.2 The AR has pointed in the course of present proceeding that the AO has issued notice u/s. 143(2) of the Act, wherein the following details were called for. 1.Correct consideration for sale of lands during A.Y. 2014-15 to be ascertained for the applicability of the provisions of Sec. 43CA of the IT Act, 1961

2.Correct consideration for purchase of lands during A.Y. 2014-15 to be ascertained for the applicability of the provisions of Sec. 56(2)(vii)(b)(ii) of the IT Act, 1961 and therefore, submitted that the issue has already been examined.

It is a fact that the assessment was completed u/s. 147 r.w.s. 144 r.w.s. 144(8), accepting the returned income because the assesse has never furnished any details or any evidences with respect to the details called for vide notice u/s. 143(2) dt. 26.08.2021. The primary onus lies on the assessee to discharge the query raised by the AO by furnishing documentary evidences. The assessee failed to do so and therefore, it cannot be regarded as the issue has been considered by the Assesseeing Officer.

5.3 The relied judgment of the jurisdictional, High Court and the Hon'ble Supreme Court verdict is not applicable to the facts available in this case because the issue has never been examined. The AO has not disposed his examination/enquiry as how the provision of section 43CA/56(2)(vii)(b)(ii) has been fulfilled by the assessee. Here it is pertinent to mention that the case of the assesseee was originally selected for limited scrutiny under CASS for examining the high value property transaction as report u/s. 1941A. Therefore, the jurisdiction of the AO was limited to examine the value of transaction which has been declared in the ROI or not. That aspect has already been examined but the AO has failed to examine the other aspects of newly amended provisions of section 43CA and provision of section - 56(2)(vi)(b)(ii) of the Act which come into effect from 01.04.2014. This aspect has never 0een examined and the assessee also not stated at any point of time as how thee, provisions of section are not applicable.

5.4 It is pointed out by the AR that there is variation of Rs. 83,70,000/- mentioned in show cause notice u/s. 263 compared with the net consideration with the stamp duty value adopted by the registrar and accordingly submitted that the land is surrounded by huts and other drawbacks and therefore the stamp duty value adopted for the main area cannot be applied to the impugned land sold. And therefore, if mandatory the matter maybe referred to the Valuation Cell as permitted from this section 50C(2) of the Act and the correct market value of the property may

- 5 - ITA No. 948/Chny/2024 be adopted.lt is a fact that there is variation in stamp duty value and net consideration, and as this issue has never been referred to Valuation Cell to determine the exact value as on date of sale of property/acquisition of the property and therefore the issue is required to be revisited by ascertaining the correct market value as on date of acquisition/sale of the property in the light of provisions of section 43CA and 50C. 6. In view of the above, the issue is remitted back to the file of Assessing Officer to pass a fresh order in the light of provisions of section 43CA and 50C after giving sufficient opportunities to the assessee.”

Aggrieved, now the assessee is in appeal before the Tribunal.

circumstances of the case. The learned counsel for the assessee first of

all took us through the original assessment order passed by the

Assessing Officer u/s.143(3) of the Act dated 30.05.2016, wherein the

assessee has filed complete details and the Assessing Officer has

passed assessment order after verification of the details and this fact is

noted by the Assessing Officer in the assessment order at para-3. The

learned counsel for the assessee, subsequently took us through notice

issued u/s.148 of the Act and reasons recorded vide order dated

26.11.2021 for reopening of assessment, wherein two issues were

brought within the purview of reopening i.e., the assessee sold lands

during the financial year 2013-14 and treating the land as opening and

closing stock. The Assessing Officer for the reason to believe noted that

sale value of the land adopted and the document i.e., sale deed

registered and consideration noted in the document, there is difference

of Rs.83.70 Lacs, which escaped assessment in term of provisions of

- 6 - ITA No. 948/Chny/2024 section 43CA of the Act. The second aspect on which reopening was

done, that the assessee had acquired many properties and there was

variation on document value i.e., stamp duty value and consideration

recorded in sale feed for a sum Rs.11,16,250/- and this income has

escaped assessment in term of the provisions of section 56(2)(vii)(b)(ii)

of the Act. These two items are subject matter of reasons recorded and

the Assessing Officer has passed reassessment order u/s.147 r.w.s.

144 r.w.s. 144B of the Act vide order dated 26.03.2023 and accepted

the returned income and the relevant reassessment order reads as

under:-

“The assessee had filed Return of Income on 26-09-2014 declaring total Income at Rs. 30,39,220/-. The Return was processed u/s. 143(1) of the Income-tax Act, 1961 (the Act). The case was selected for Limited scrutiny under CASS. Order under section 143(3) was passed on 30-05-2016 by accepting the returned income. Subsequently, case was opened for reassessment u/s 147 of the Act by issue of a notice u/s 148 of the Act dated 31-03-2021 and the same was duly served on the assessee. Assessee filed return of income in response to the said notice on 12-04- 2021. The reasons recorded before issue of notice u/s 148 of the Act have been furnished to the assessee on 26-11-2021. The assessee has submitted its objection against the' reopening of assessment vide submission dated 25-01-2021.

Officer during the course of reassessment proceedings carried out enquiry

and accordingly, notice u/s.143(2) of the Act was issued on 26.08.2021,

- 7 - ITA No. 948/Chny/2024 which was replied by the assessee by filing all the details in regard to

above two transactions. The Assessing Officer, after examining these

transactions passed reassessment order, but accepted the returned

income. In view of the above, the learned counsel for the assessee

stated that on the very same set of facts and on very same issues i.e.,

difference in sale of land being escaped income and presumed by the Assessing Officer u/s.43CA of the Act, in the reopening of assessment

and also differential amount of Rs.11,16,250/-, variation in documentary

value and stamp duty value being escaped income treated by the

Assessing Officer for reopening of assessment u/s.56(2)(vii)(b)(ii) of the

Act are the subject matter of revision by the Pr.CIT u/s.263 of the Act.

The learned counsel for the assessee stated that the Assessing Officer

has formed an opinion at least twice, i.e, during the course of original

assessment proceedings and subsequently, in reassessment

proceedings and the Pr.CIT revising the reassessment order on the very

same set of facts, which is bad in law for the reason that the Assessing Officer has come to the conclusion that claim made by the assessee is

as per provisions of the Act. The learned counsel for the assessee hence

requested for quashing of the revision order passed by Pr.CIT.

learned counsel for the assessee was that issues under revision are on

simpliciter valuation of stamp duty and simpliciter valuation done on the

- 8 - ITA No. 948/Chny/2024 basis of guideline value adopted on the basis of stamp duty valuation is

just an estimate and that cannot be a subject matter of revision u/s.263

of the Act, because this issue has been settled by the Hon’ble Madras

High Court in the case of CIT Vs. Smt. Padmavathi 120 taxmann.com

187.

The third facet of argument made by the learned counsel for the 7.

assessee is that even, the Pr.CIT in his order has not carried out basic

exercise that original assessment or reassessment order is erroneous,

insofar as prejudicial to the interests of revenue as the twin conditions

must be satisfied before the Pr.CIT can exercise the power u/s.263 of the

Act. But, either of the condition is absent in the facts and circumstances

of the case and hence, the Pr.CIT has wrongly assumed his jurisdiction

u/s.263 of the Act, by setting aside the reassessment order in the

revision proceedings.

either in the assessment order or reassessment order passed by the AO

and there is no examination of these two issues as raised by the Pr.CIT

in his revision order and neither any verification nor enquiry conducted on

this aspect makes the assessment or reassessment order as erroneous,

insofar as prejudicial to the interest of the revenue. The CIT DR further

stated that even, there is assumed difference in value between the

- 9 - ITA No. 948/Chny/2024 documentary transaction as well as stamp duty valuation and once there

is a difference, the same is subject matter of addition, but the AO failed to

make any addition either in the assessment or reassessment

proceedings and hence, the reassessment order is erroneous as well as

prejudicial to the interests of the Revenue. In term of above, the CIT DR

requested the Bench to uphold the order of the Pr.CIT. He further made

an argument that no harm will be done to the assessee in case, enquiry

is conducted by the AO in set aside assessment proceedings, because

the assessee will be provided with reasonable opportunity of being

heard and principles of natural justice will be met.

i.e. assessment order and reassessment order are in consequent to

notice issued u/s.148 of the Act. Even, we have perused the assessment

order, reassessment order, revision order and assessee’s paper book

consisting of 75 pages in which various details were filed. We noted that

the assessee before the AO during the original assessment proceedings

filed copy of sale deed, purchase deed& properties sold and purchased

and other details, including land sold that is the subject of revision and

also properties purchased, that is subject matter of revision and the AO

reached a conclusion that no addition is warranted in this case.

Subsequently, reopening was also on the very same two issues, which

are raised by the Pr.CIT in his revision order and the Assessing Officer,

- 10 - ITA No. 948/Chny/2024 after considering all the details i.e., treating the account of trading,

opening and closing stock, wherein the assessee has sold the land and

there is difference in consideration received and stamp duty valuation

and also properties acquired and there is variation in documentary value,

but the AO has accepted in the reassessment order and no addition was

made on this count. It means, the AO has formed an opinion on these

two issues during reassessment proceedings. We have gone through the

facts and noted that while making assessment examining accounts,

make necessary enquires applies his mind to the facts and

circumstances of the case and determined the income offered by

accepting accounts or by making some additions by himself or no

addition. The Pr.CIT, on perusal of assessment records may be of the

opinion that there is difference in documentary transaction i.e.,

consideration recorded in sale deed and guideline value and value

adopted by the stamp duty authorities that he would have to estimate

income at figure higher than the one determined by the Assessing

Officer. That would not vest the by Pr.CIT with power to re-examine the

accounts and re-determine the income at higher figure. It is because, the

AO has exercised his quasi-judicial power vested in him, in accordance

with law and arrived at a conclusion and such a conclusion cannot be

termed as erroneous, insofar as prejudicial to the interests of the

revenue, because the Pr.CIT does not feel satisfied with the conclusion.

- 11 - ITA No. 948/Chny/2024 At the best, it can be said that in the opinion of the Pr.CIT, the order of

the AO is prejudicial to the interests of the revenue, but that by itself, it

does not give power to Pr. CIT for suo motu revision, because first

requirement is order is erroneous is absent. In the present case also, the

Pr.CIT has not recorded any finding, quo effect that there is any prejudice

caused to the revenue or the order is erroneous i.e., reassessment order.

In our view, any and every erroneous order cannot be subject matter of

revision, because, second requirement also is to be fulfilled i.e., error in

the order, which has not been pointed out by the Pr.CIT. This view has

been upheld by the Hon’ble Bombay High Court in the case of CIT Vs

Gabriel India Ltd. (1993) 203 ITR 108, wherein the Hon’ble Bombay High

Court held that there must be some franchise material on record to show

that tax which was lawfully exigible has not been imposed or that by

application of the relevant statue on an incorrect or incomplete

interpretation a lesser tax than what was just has been imposed. Thus

there must be material available on record called for by the Pr.CIT to

satisfy himself prima-face, that two requisite conditions i.e., erroneous

and prejudicial to the interest of the Revenue are present in the order of

the AO. Hence, on this first facet, we quash the revision order.

counsel for the assessee is that issues under revision are on simplicitor

- 12 - ITA No. 948/Chny/2024 valuation of stamp duty and simplicitor valuation done on the guideline

value adopted by the stamp valuation authority, which is just an

estimate and cannot be subject matter of revision u/s.263 of the Act. We

noted that this issue has been considered by the co-ordinate Bench of

this Tribunal in the case of Shri Shanmuga Sundaram Govindaraj Vs

ACIT in ITA No.377/Chny/2021 dated 22.07.2022, wherein the Tribunal

considering the decision of co-ordinate Bench of Mumbai Tribunal in the

case of Maria Fernandas Cheryl Vs.ITO (2021) 85 ITR (T) 674 (Mumbai

Trib) and thejudgement of the Hon'ble Supreme Court in the case of

C.B.Gautam Vs. Union of India (1993) 199 ITR 530 (SC), exactly on

identical facts held as under:-

“7.2 Further, as discussed by Hon’ble Madras High Court in the case of CIT vs. Smt. Padmavathi, [2020] 120 taxmann.com 187 (Madras), considering the very issue of revision proceedings u/s.263 of the Act, noted that in case there is some difference between the sale consideration as per sale deed and the guideline value fixed by Stamp Valuation Authority and merely because guideline value was higher than the sale consideration shown in the sale deed, it cannot be sole reason for holding that the assessment is erroneous and prejudicial to the interest of Revenue. Hon’ble Madras High Court in para 16 held as under:-

- 13 - ITA No. 948/Chny/2024

7.3 In view of the above, in the present case before us, the issue is whether assessment framed by the AO is erroneous and prejudicial to the interest of Revenue for the reason that there is difference of Rs.25 lakhs between the guideline value as per stamp valuation which is Rs.3.50 crores. However, as per registered sale deed the actual consideration is Rs.3.25 crores. The assessee has disclosed the investment as per consideration declared in sale deed at Rs.3.25 crores but the PCIT was of the view that the difference of Rs.25 lakhs in view of the guideline value fixed by Stamp Valuation Authority at Rs.3.50 crores is to be accepted and added to the return of income of the assessee. We are of the view that this is highly debatable issue and even the tolerance limit of 10% is to be considered or not is again a debate. Once there is a debate, the order cannot be held as erroneous in view of the decision of Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd., vs. CIT, (2000) 243 ITR 83. Hence, we quash the revision proceedings and allow the appeal of assessee.”

Pr.CIT in regard to difference between the stamp duty value and

documentary value for purchase and sale of lands and acquiring of the

properties during financial year 2013-14 relevant to the assessment year

2014-15 by the assessee is nothing but an estimate and this is highly

debatable issue. Even, the Hon’ble Madras High Court in the case of CIT

Vs. Mrs.Padmavathy (supra) has considered an identical issue and

therefore, held that revision is not possible merely because guideline

value was higher than the sale consideration shown in the deed of

conveyance and hence, same cannot be sole reason for holding that

- 14 - ITA No. 948/Chny/2024 assessment is erroneous, insofar as prejudicial to the interests of the

revenue. Hence, we quash the revision order on this facet also.

revision order passed by the Pr.CIT u/s.263 of the Act is bad in law and

hence, quashed.

Sd/- Sd/- (महावीर �संह ) (एस.आर. . . . रघुनाथा) (MAHAVIR SINGH) (S.R. RAGHUNATHA) उपा%य& /VICE PRESIDENT लेखा सद#य/ACCOUNTANT MEMBER चे(नई/Chennai, )दनांक/Dated : 30.08.2024 DS आदेशक���त+ल,पअ-े,षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकरआयु.त /CIT, Chennai. 4. ,वभागीय��त�न1ध/DR 5. गाड�फाईल/GF.