MEENA RAJESH SANGHVI,AHMEDABAD V. PCIT (CENTRAL) , AHMEDABAD

ITA 1048/AHD/2025

AI Insights

The case revolves around an appeal by Meena Rajesh Sanghvi against the order of the PCIT, which revised the scrutiny assessment order for the assessment year 2021-22. The PCIT had invoked section 263 of the Income Tax Act, 1961, claiming that the original assessment was erroneous and prejudicial to the interest of the revenue because the assessee did not report deemed rental income from two properties. However, the assessee contended that these properties were under development and not generating any income, a fact supported by the development permission document presented during the proceedings. The Tribunal, after considering the submissions and evidence, ruled in favor of the assessee, stating that the original assessment was correct and the PCIT's revision was unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712801 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: PARIN SHAH
• Keywords: Set aside; Business income; Salary income; Search and seizure; Revision of order
• Section: 143(3); 263; 132

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Meena Rajesh Sanghvi, 47, Highway Park Society, Ramnagar Road, Sabarmati, Ahmedabad PAN: AHEPS2764A (Appellant) Vs The PCIT (Central), Ahmedabad (Respondent) Assessee by: Shri Parin Shah, A.R. Revenue by: Shri R P Rastogi, CIT-D.R. Date of hearing : 08-07-2025 Date of pronouncement : 29-07-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 25-03- 2025 passed by PCIT(Central), Ahmedabad for assessment year 2021-22. 2. The grounds of appeal are as under:- “1. Ld Pr CIT erred in law and on facts revising a scrutiny assessment order which is neither erroneous nor prejudicial to the interest of revenue. 2. This action of Ld Pr CIT invoking provisions of sec 263 to revise scrutiny order passed by AO after raising relevant queries and extensive verification of the details submitted during assessment by the appellant is without any justification. 3. Ld Pr CIT erred in law and on facts holding that assessment completed without raising any query regarding 2 flats, whereas full details for all 3 flats ITA No. 1048/Ahd/2025 Assessment Year 2021-22 Printed from counselvise.com I.T.A No. 1048/Ahd/2025 Meena Rajesh Sanghvi, A.Y. 2021-22 2 were furnished to AO and AO passed the order after satisfaction and nothing was pointed out in Order u/s 263 that AO has not gone into the details or not verified the information on records or not applied his mind. 4. Ld. Pr CIT erred in law and on facts in revising order passed u/s 143(3) of the Act not appreciating that full information was submitted and processed by AO. 5. Ld. Pr. CIT erred in law and on facts revising scrutiny assessment order merely because he held a different opinion than AO in the matter 6. Ld Pr CIT erred in law and on facts holding assessment order as erroneous and prejudicial to the interest of revenue since AO failed to make addition. 7. That PCIT has erred in not considering the submission made by appellant during the proceeding u/s 263 in judicious manner. 8. Your appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal before the appeal is heard and decided.” 3. The assessee derived income from salary, house property, business income from partnership firms and interest income. The original return of income was filed on 19-02-2022 declaring income of Rs. 4,63,110/-. A search and seizure action u/s. 132 of the Act was carried out on 23-11-2021 in the case of “Ratnamani Group” and its key associates. The premises of the assessee was searched and the assessee’s case was selected for compulsory scrutiny. Notice u/s. 143(2) of the Act was issued on 27-06-2022 and scrutiny assessment u/s. 143(3) of the Income Tax Act, 1961 was completed on 26-12-2012 accepting the return income offered by the assessee as assessed income. The Pr. CIT observed that the assessee possessed three house properties, however on verification of ITR, the assessee has shown income from let out property for the year under consideration from one flat only. The Pr. CIT invoked section 263 by issuing notice on 22-02-2025. The Pr. CIT asked the assessee related to the other properties why the said were not offered in respect of deemed rental income from the said other two properties. The assessee filed reply and after taking cognizance of the said reply, the Pr. CIT held that the Printed from counselvise.com I.T.A No. 1048/Ahd/2025 Meena Rajesh Sanghvi, A.Y. 2021-22 3 assessment order is extremely short and non-speaking and therefore held to be erroneous in so far as it is prejudicial to the interest of Revenue. The Pr. CIT set aside the assessment order and directed the Assessing Officer to examine the issues and pass fresh assessment order. 4. Being aggrieved by the order u/s. 263 of the Act, the assessee filed appeal before us. 5. The ld. A.R. submitted that the said two properties were not offered for deemed rental income as the said properties has gone for development and for that matter the ld. A.R. has produced annexure 2 copy of Rajachitthi (Development Permission) obtained by the builder for development of the said properties. Thus, the ld. A.R. submitted that all these facts were demonstrated before the Assessing Officer and hence the Assessing Officer has taken a proper view thereby assessing the total income at the original return of income. 6. The ld. D.R. relied upon the order of the Pr. CIT passed u/s. 263 of the Act. The ld. D.R. further submitted that the Rajachitthi/development permission does not indicate that the assessee has not earned any income from the said two flats. Thus, the ld. D.R. submitted that the Pr. CIT has rightly invoked the section 263 of the Act. 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that though the assessee is giving the copy of annexure 2 and Rajachitthi i.e. development permission obtained by builder for development. The fact remains that the development process Printed from counselvise.com I.T.A No. 1048/Ahd/2025 Meena Rajesh Sanghvi, A.Y. 2021-22 4 has included the demolition of these two flats which clearly suggest that the assessee has not received any rental income or income on the said two flats in the said assessment year. Therefore, the invocation u/s. 263 of the Act by the Pr. CIT is not justified as the Assessing Officer in the assessment order u/s. 143(3) has taken a plausible view and passed the assessment order as per Income Tax Provisions. Thus, the assessment order is not at all erroneous or prejudicial to the interest of revenue and the Pr. CIT was not right in invoking Section 263 of the Act. Hence, the appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29-07-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 29/07/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे 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/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद Printed from counselvise.com "