Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Ms. Annapurna Gupta & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This assessee’s appeal for A.Y. 2012-13, arises from order of Principal Commissioner of Income Tax PCIT, Rajkot-1 dated 15-02-2022, in proceedings under section 263 of the Income Tax Act, 1961; in short “the Act”.
Page No 2 Shri Yogeshkumar Shantilal Mehta vs. ITO
The assessee has raised the following grounds of appeal:
“The Grounds of appeal mentioned herein below are without prejudice to one another.
1. The order u/s. 263 of the Act is bad in law.
2. The learned Pr. CIT has erred in law as well as on facts in not considering the submissions of the appellant on the strength of which the assessment order was neither erroneous nor prejudicial to the interest of revenue and therefore, the provisions of Section 263 of the Act were not applicable to the case of the appellant.
3. The learned Pr. CIT has erred in law as well as on facts in setting aside the re- assessment order passed by the Id. A.O. u/s. 143(3) r.w.s. 147 of the Act and directing de-novo assessment regarding verification of issue regarding alleged unexplained investment of Rs.55,00,000/- being difference between purchase consideration and stamp-duty valuation of the property purchased during the year. The appellant craves leave to add, alter, amend, delete or withdraw one or more grounds of appeal.”
3. The brief facts of the case are that the assessee had filed return of income for assessment 2012-13, disclosing income of � 2,18,290/-. The assessment was completed under section 143(3) r.w.s, 147 of the Act accepting the return of income filed by the assessee and determining the total income at � 2,18,190/- . The Principal CIT observed that the assessee had purchased land during the year under consideration but has not provided source of income for purchase of land with other co-owners. Further, he observed that assessee’s share in purchase of land was � 15 lakhs being 25% and assessee had shown loan of � 15 lakhs from Shri Kamalesh to explain the source of investment. However, the Principal CIT observed that from the registered sale deed, as per stamp duty valuation, the value of Page No 3 Shri Yogeshkumar Shantilal Mehta vs. ITO immovable property was � 2,80,70,000/-, which means that the assessee’s share comes to � 70 lakhs instead of � 15 lakhs as declared by the assessee. Accordingly, since the assessee has provided only source of � 15 lakhs as against for the purchase value of � 70 lakhs, therefore, the remaining source of investment of � 55 lakhs remained unexplained and the AO has failed to examine the same before completion of assessment. Accordingly, the PCIT held that the reopened assessment was finalized under section 143(3) r.w.s, 147 of the Act accepting the total income at � 2,18,190/- vide order dated 15-11-2019 and the same is erroneous and prejudicial to the interests of the Revenue. Therefore, the order passed by the Ld. Assessing Officer was held to be erroneous and prejudicial to the interests of the Revenue.
4. Before us, the Ld. Counsel for the assessee submitted that PCIT erred in not appreciating the fact that the case of the assessee is covered by several judicial precedents, on this very issue, in favour of the assessee. The PCIT is seeking to revise the assessment order on the basis of presumptions alone and hence the 263 order is liable to be set aside. In response, the Ld. DR placed reliance on the observations made by the PCIT in the 263 order.
We have heard the rival contentions and perused the material on record. In our view, the case of the assessee is covered in its favour by various judicial precedents on this issue. In the case of Gayatri Enterprise v. ITO, 116 taxmann.com 359 (Gujarat), the jurisdictional Gujarat High Court held that where Principal Commissioner invoked revisional jurisdiction for the reason that against consideration of Rs. 45.61 lakh paid by assessee for purchase of land, stamp duty of Rs. 22.90 lakh was paid and Page No 4 Shri Yogeshkumar Shantilal Mehta vs. ITO it was to be presumed that value of property would be higher and there was an undisclosed investment made by assessee since no addition could be made under said section merely on basis of presumption, impugned revision was unjustified. Again, in the case of PCIT v. Dharmaja Infrastructure107 taxmann.com 281 (Gujarat), during relevant year, assessee purchased a property for a consideration of Rs. 1.55 crore. However, value adopted by stamp duty authority as per market rate was Rs. 2.55 crores. The Assessing Officer, on basis of value so adopted by stamp duty authority, made addition to assessee's income under section 69B. The Gujarat High Court held that provisions of section 50C could not be applied for making addition under section 69B. Further, even otherwise, since there was no material on record to show that assessee had in fact made investments over and above that recorded in books of account, impugned addition was to be deleted. In the case of CIT v. Dinesh Jain HUF25 taxmann.com 550 (Delhi), the Delhi High Court held that unless there is any material that assessee invested more than what was recorded in its books of account, section 69B could not be invoked. In the case of Vishnu Prasad Maharwal v, DCIT 50 taxmann.com 90 (Jaipur - Trib.), the assessee was partner in a firm which during relevant year purchased a plot for certain consideration. The Assessing Officer held that market value of said plot was much higher than that shown by him and balance was undisclosed investment. The said amount was added in hands of partners in their profit sharing ratio on ground that partners arranged finance for payment of on money. The ITAT held that since Assessing Officer had not brought any positive material to show that assessee had made undisclosed investment in plot purchased in name of partnership firm, no addition was called for in Page No 5 Shri Yogeshkumar Shantilal Mehta vs. ITO hands of assessee. In the case of CIT v. Discovery Estates (P.) Ltd.31 taxmann.com 180 (Delhi), the Delhi High Court held that without any evidence of understatement, additions cannot be made to sale price or profits based merely on perceived general market conditions or notorious practices in trade circles.
5.1 In view of the above judicial precedents in favour of the assessee, we are of the considered view that the order passed by the Ld. Assessing Officer is not erroneous and prejudicial to the interests of the Revenue. Accordingly, the order passed by the PCIT u/s 263 of the Act is directed to be set aside.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 19-04-2023