Arunaben Kishorkumar Mandali Vs PCIT (ITAT Ahmedabad)
PCIT Cannot Invoke Section 263 on Change of Opinion: ITAT Ahmedabad Quashes Revision Where AO Conducted Detailed Enquiry in 153C Assessment
The Ahmedabad Bench of the ITAT allowed the assessee’s appeals for AYs 2017-18, 2018-19 and 2020-21 and quashed the revisionary orders passed by the PCIT under section 263. The Tribunal held that the foundational twin conditions for invoking section 263—namely that the assessment order must be erroneous and prejudicial to the interests of the Revenue—were not satisfied in the present case.
The assessments had been completed under section 143(3) read with section 153C pursuant to a search in the case of a third-party land broker, where certain digital images/notes (alleged “Sauda Chitthi”) were found. During assessment, the AO issued detailed notices under section 142(1), raised specific queries on the seized material, examined the assessee’s explanations, recorded statements, and consciously accepted the returned income without making any addition. The Tribunal noted that the PCIT failed to demonstrate any lack of enquiry and merely sought to substitute his own view for that of the AO, which amounts to an impermissible change of opinion.
On merits as well, the Tribunal observed that the alleged land transaction never materialised due to failure to convert agricultural land into non-agricultural land; advances received through banking channels were refunded prior to search; no evidence of cash/on-money receipt was found; and even otherwise, alleged on-money (if any) would form part of sale consideration assessable as capital gains and could not be taxed as unexplained money under section 69A. In the absence of any demonstrated error or prejudice, the ITAT held that section 263 could not be invoked to order a roving or purposeless enquiry. Accordingly, the revision orders were quashed and all appeals were allowed
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
