M/s. Visu Casement Pvt. Ltd., Vadodara V. The Pr. CIT -2, Vadodara

ITA 306/AHD/2020

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The case revolves around an appeal by M/s. Visu Casement Pvt. Ltd. against the order of the Principal Commissioner of Income-tax-2, Vadodara, which was based on an assessment order under section 263 of the Income Tax Act, 1961, for the Assessment Year 2015-2016. The primary issue was the valuation of a property sold by the assessee, which was significantly lower according to the DVO's report compared to the assessee's declared value. The PCIT found the initial assessment erroneous as it was prejudicial to the interest of revenue, leading to the appeal. The tribunal examined whether the PCIT's actions were justified under section 263, considering the timing and availability of the DVO's report during the original assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135808 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 07-06-2020
• Other Referred Cases: Reliance Jute and Industries Ltd. Vs. ITO reported in 150 ITR 643
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRIHEMCHHAJED

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’B’’BENCH,AHMEDABAD BEFOREMsSUCHITRAKAMBLE,JUDICIALMEMBER And SHRIWASEEMAHMED,ACCOUNTANTMEMBER आयकरअपीलसं./ITANo.306/AHD/2020 धििाधरणवरध / Asstt.Year:2015-2016 M/s.VisuCasementPvt.Ltd., P.O.BoxNo.163, MaikrupaSociety, ChanniRoad, Channi, Vadodara-390002.. PAN:AAACV6597J Vs. ThePrincipalCommissioner ofIncome-tax-2, Vadodara. (Applicant)(Respondent) Assesseeby:ShriHemChhajed,A.R Revenueby:ShriSudhenduDas,CIT.D.R सुिवाईकीतारीख/DateofHearing:31/07/2023 घोरणाकीतारीख /DateofPronouncement:20/10/2023 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedPrincipalCommissionerofIncomeTax-2,Vadodara, arisinginthematterofassessmentorderpassedunders.263oftheIncomeTax Act,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear 2015-2016. ITAno.306/AHD/2020 A.Y.2015-16 2 2.TheonlyissueraisedbytheassesseeisthatthelearnedPCITunder section263oftheActerredinholdingtheassessmentframedundersection 143(3)oftheActaserroneousinsofarprejudicialtotheinterestofrevenue. 3.Thenecessaryfactsofthecasearethattheassesseeinthepresentcaseis aprivatelimitedcompanyandengagedinthebusinessofrealestate.The assesseeintheyearunderconsiderationhassoldpartofthelandadmeasuring 12181squaremetresamountingto₹5,90,16,060.00only.Thecorrespondingcost ofthepartofthelandsoldbytheassesseewasRs.23,83,588.00whichwas valuedbytheregisteredvaluerason1April1981at₹71,98,971whichwas indexedat₹2,64,55,981only.Thus,theassesseeineffecthasdisclosedlong- termcapitalgainamountingtoRs.2,52,02,906.00only. 4.However,thelearnedPCITonexaminationoftherecordsofthe assessmentproceedingsfoundthattheDVOundersection55AoftheActhas valuedsuchlandat₹9,26,771.00onlyason1-4-1981andindexedcoststandsat ₹94,90,132whereastheassesseehasclaimedindexedcostofRs.2,64,55,981.00 whichisinexcessby₹1,69,65,849only.Accordingly,theld.PCITwasoftheview thattheincomeoftheassesseehasbeenunderassessedonaccountoftheerror bytakingthewrongvalueofthepropertyason1 st April1981.Thus,thelearned PCITconcludedthatassessmentframedbytheAOiserroneousinsofarjudicialto theinterestofrevenueonaccountofnon-examinationofthenecessaryfacts. Accordingly,thelearnedPCITdirectedtheAOtoframetheassessmentafreshin thelightoftheabovestateddiscussionaspertheprovisionsoflawandafter givingtheopportunitytotheassessee. 5.BeingaggrievedbytheorderofthelearnedPCIT,theassesseeisinappeal beforeus. 6.ThelearnedARbeforeushasfiledthewrittensynopsisofhisarguments runningfrompages1to5whichwassupportedbyvariousjudicial ITAno.306/AHD/2020 A.Y.2015-16 3 pronouncement.ThelearnedARinhissynopsishasassailedtheorderoflearned PCITonvariouscounts.OneoftheargumentsofthelearnedARwasthat assessmenthasbeenframedbytheAOafterdueverificationandapplicationof mind.Therefore,theorderoftheAOcannotbesaiderroneousinsofarprejudicial totheinterestofrevenueonaccountofnon-verification.AsperthelearnedAR thelearnedAOhastakenoneofthepossibleviewsbyadoptingthecostof acquisitionason1April1981shownbytheassesseebasedontheregistered valuationreport.Thus,thereisnoinfirmityintheorderoftheAOincasetheAO doesnotadoptthevalueofthepropertyason1.4.1981determinedbytheDVO undersection55AoftheAct. 6.1ThelearnedARfurthercontendedthatthevaluationreportoftheDVOwas receivedbytheAOdated3January2018whereastheassessmentwasframedon 29December2017.Thus,thereisnoambiguitytothefactthatthevaluation reportfromtheDVOwasnotavailableatthetimeofassessment,meaning thereby,suchreportoftheDVOwasnotformingpartoftherecordsofthe assessmentandthereforenocredencecanbegiventosuchreport. 7.Ontheotherhand,thelearnedDRcontendedthattheobjectofthe provisionsofsection263oftheActistoensurethatthereshouldnotbeanyloss totherevenueonaccountoftheerrorcommittedbytheAO.Asperthelearned DR,thereisanerrorintheorderoftheassessmentwhichiscausingprejudiceto theinterestofrevenueasdiscerniblefromtheDVOreport.Accordingly,the learnedDRvehementlysupportedtheorderoftheld.PCIT. 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.TheCommissionerundersection263oftheActmay callfortheassessmentrecordsandexaminethesame.Onexaminationofthe assessmentrecords,ifthelearnedPCITfindsanyerrorintheorderoftheAO causingprejudicetotheinterestofrevenue,thenhecaninitiatetheproceedings undertheprovisionsofsection263oftheAct.However,whatwefindisthisthat ITAno.306/AHD/2020 A.Y.2015-16 4 thelearnedPCITunderthestatuteisempoweredtoexaminetherecordsofthe proceedingsundertheAct.Thus,itisimpliedthatthelearnedthePCIThasto drawinferencebasedontheexaminationoftherecordswhichwereavailablein theproceedings.Admittedlyinthecasebeforeus,thereportfromtheDVOwas receivedbytheAOdated3January2018aftertheassessmentorderpassed whichevidencethatsuchreportwasnotavailableorpartoftheassessment records.Accordingly,basedonthedocumentswhichwasnotpartofthe assessmentrecords,thelearnedPCITisprecludedtoinitiatetheproceedings undersection263oftheAct.Inholdingso,wedrawsupportandguidancefrom thejudgementofHon’bleCalcuttaHighCourtinthecaseofRelianceJuteand IndustriesLtd.Vs.ITOreportedin150ITR643whereinitwasheldasunder: Thevaluationproceedingwasliabletobequashedonthegroundsthat:(a)theopinionof theITOwhichwasanessentialprerequisiteformakingareferenceforvaluationunder section55Awasabsentinthepresentcase,and.(b)thepurposeforwhichalonea valuationreportcouldbeutilised,namely,forcompletionoftheassessmentinconformity withthevaluationreportwasnolongerexistent,theassessmenthavingbeencompletedin themeantime.Insuchcircumstances,toallowtheassailedvaluationproceedingto continue,wouldmilitateagainstwell-knowncanonsofstrictconstructionoftaxingstatutes. 8.1Inviewoftheabove,weholdthatthebasistoinitiatetheproceedings undersection263oftheActbythelearnedPCITismisplacedasitwasbasedon thedocumentwhichwasnotformingpartofanyproceedings.Therefore,wehold thattheorderpassedbythelearnedPCITisnotsustainable.Accordingly,we quashthesame.Hence,thegroundofappealoftheassesseeisherebyallowed. 9.Intheresult,theappealfiledbytheassesseeisallowed. OrderpronouncedintheCourton20/10/2023atAhmedabad. Sd/-Sd/- (SUCHITRAKAMBLE)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad:Dated20/10/2023 Manish