ITAT Jabalpur Judgments — October 2020

The Tribunal held that the assessee's claim for cost of improvement was unproved and unexamined, and the AO had acted with haste without due application of mind. The Tribunal found no reason to interfere with the revisionary order.

The Tribunal held that the property was 'received' by the assessee during the financial year 2012-13 (relevant to AY 2013-14) and not in the financial year 2013-14 (relevant to AY 2014-15). The Tribunal relied on the principle of de facto ownership recognized in CIT vs. Podar Cement (P.) Ltd. and CIT vs. Mormasji Mancharji Vaid. It was reasoned that Section 2(47)(vi) of the Act recognizes a de facto transfer on the execution of the agreement, leading to de facto ownership. The execution of the sale deed on March 30, 2013, where both parties fulfilled their part of the contract, constituted a de facto transfer and receipt of the property. While legal ownership is complete on registration (April 24, 2013), the de facto transfer and receipt occurred earlier. Therefore, the taxable event under Section 56(2)(vii)(b) took place in AY 2013-14. For that year, the law did not bring the short consideration to tax, only receipt without consideration. Consequently, the Revenue's action in invoking Section 56(2)(vii)(b)(ii) for AY 2014-15 was not sustainable. The impugned order of the CIT(A) was upheld.

The Tribunal held that once the section 263 order is quashed, the consequent assessment order is without basis in law. Therefore, the CIT(A) was justified in quashing the assessment.