Shri Yogeshkumar Shantilal Mehta, Paddhari, Dist. Rajkot (Guj.) V. The Income Tax Officer, Ward-2 (1) (4), , Rajkot

ITA 114/RJT/2022

AI Insights

The case revolves around an appeal by Shri Yogeshkumar Shantilal Mehta against the order of the Principal Commissioner of Income Tax, Rajkot-1, which was passed under section 263 of the Income Tax Act, 1961. The PCIT had set aside the re-assessment order concerning unexplained investment in property, alleging that the assessee had not adequately explained the source of funds for purchasing land, which was valued significantly higher than declared. The Tribunal examined the PCIT's order in light of several judicial precedents and found that the PCIT's revision was based on presumptions rather than concrete evidence, leading to the setting aside of the PCIT's order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138326 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2022
• Other Referred Cases: Gayatri Enterprise v. ITO, PCIT v. Dharmaja Infrastructure, CIT v. Dinesh Jain HUF, Vishnu Prasad Maharwal v. DCIT, CIT v. Discovery Estates (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Revision of order; Set aside
• Section: 263; 143(3); 50C; 69B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT ] Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Yogesh kumar Shantilal Mehta, Main Ro ad, At: P addh ari, Dist: Rajk ot-36011 0 PAN: AC PPM230 5K (Appellant) Vs The ITO, Ward-2(1)(4), Rajkot (Resp ondent) Asses see by : Shri Vimal Desai, A. R. Revenue by : Shri S hramdeep Sinha , CIT-D. R. Date of hearing : 15-03 -2023 Date of pronouncement : 19-04 -2023 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”. ITA No. 114/Rjt/2022 Assessment Year 2012-13 I.T.A No. 114/Rjt/2022 A.Y. 2012-13 Page No Shri Yogeshkumar Shantilal Mehta vs. ITO 2 2. 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 I.T.A No. 114/Rjt/2022 A.Y. 2012-13 Page No Shri Yogeshkumar Shantilal Mehta vs. ITO 3 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. 5. 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 I.T.A No. 114/Rjt/2022 A.Y. 2012-13 Page No Shri Yogeshkumar Shantilal Mehta vs. ITO 4 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 I.T.A No. 114/Rjt/2022 A.Y. 2012-13 Page No Shri Yogeshkumar Shantilal Mehta vs. ITO 5 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. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 19-04-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 19/04/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot