Kosi Consultants Private Limited Vs ACIT/DICT (ITAT Ranchi)
Summary: The ITAT Ranchi allowed Kosi Consultants Private Limited’s appeal against the order dated 31.03.2026 passed by the ld. Pr.CIT (Central), Patna at Ranchi under Section 263 of the Income-tax Act for AY 2021-2022. During assessment, the Assessing Officer examined the assessee’s disclosure of sale of five flats to its sister concern for Rs.2,69,40,000/-, against which the assessee disclosed capital gain of Rs.1,06,06,667/- after reducing the purchase cost. The AO also referred the flats for valuation by the DVO and, after considering the DVO valuation, accepted the long-term capital gains disclosed by the assessee. Before the Tribunal, the assessee submitted that the PCIT had merely sought to substitute his opinion for that of the AO without identifying a specific error, whereas the Revenue contended that the AO had not adequately examined the relevant details. The Tribunal found that the assessment record showed that the AO had examined the purchase and sale of the flats and had even questioned their valuation and obtained DVO valuation. It held that the issue had been examined by the AO and that the Section 263 order was only for reverification of issues already considered during assessment, which was not permissible. Accordingly, the Tribunal quashed the Section 263 order and allowed the assessee’s appeal.
The issue is closely related to TaxGuru coverage on Section 263 revisions where the Assessing Officer has already conducted inquiry or verification. For related reading, see ITAT Delhi Quashes Section 263 Revision for Inadequate Inquiry by AO, Section 263 Revision Cannot Apply Where AO Conducted Specific Enquiry, and ITAT Nagpur: Section 263 Revision Invalid. TaxGuru’s ITAT Ranchi section also contains recent decisions of the Bench. A related TaxGuru ruling concerning Section 263 and DVO valuation is Section 263 Cannot Be Invoked Solely for Lack of DVO Report.
FULL TEXT OF THE ORDER OF ITAT RANCHI
This is an appeal filed by the assessee against the order passed u/s.263 of the Act by the ld. Pr.CIT (Central), Patna at Ranchi, dated 31.03.2026 passed in Revision No. PCIT(Central), Patna AT Ranchi/Revision-263/100001010663/2026 for the assessment year 2021-2022.
2. Shri Devesh Poddar and Shri R.R. Mittal, ld. ARs appeared on behalf of the assessee. Shri H. Robindro Singh, ld. CIT-DR appeared on behalf of the revenue.
3. It was submitted by the ld. AR that there was a search and seizure operation conducted on the assessee’s group on 28.07.2021. Returns have been filed by the assessee. In the course of assessment, the Assessing Officer had found that the assessee had disclosed the sale of 5 flats owned by the assessee to its sister concern for sale consideration of Rs.2,69,40,000/- and after reducing the cost of purchase, the capital gain was disclosed by the assessee at Rs.1,06,06,667/-. It was the submission that the Assessing officer had also sent the flats sold by the assessee for valuation by the DVO and after considering the valuation by the DVO had accepted the long term capital gains as disclosed by the assessee. It was submission that the Ld. PCIT invoked his powers u/s 263 of the Act to hold that the flats which have been sold by the assessee to its sisters’ concern could not have been sold insofar as the legal ownership and the registered transfer was not demonstrated. It was the submission that the Ld. PCIT has taken the stand that the flats have been shown as only advance paid for. It was the submission that the issues of the long term capital gain in respect of the sale of the 05 flats have been looked into details by the AO in the course of assessment proceedings. It was the submission that the order u/s 263 of the Act is being done only for replacing the opinion of the Ld. PCIT over that of the AO. It was the further submission that no specific error has been pointed out. It was the submission that all enquiries have been done by the AO. It was the prayer that the order passed u/s.263 of the Act is liable to be quashed. Ld. AR has also filed written submissions which reads as follows:-
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4. In reply, ld. CIT-DR vehemently supported the order of the ld. Pr.CIT. It was submission that the relevant enquiries which were required to be made by the AO had not been done. It was the submission that even though the AO has called for certain details but he has not examined them. It was the submission that the ld. Pr.CIT has recognized that the AO had only kept the submissions and that too only partial submissions on record and had proceeded to complete the assessment. It was the submission that the order passed by the ld. Pr.CIT is liable to be upheld.
5. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that in the course of assessment proceedings, the AO has examined the issue in regard to the sale of the flats. The AO has also examined the details in regard to the purchase of the flats. A perusal of the page 6 of the assessment order shows that all these details have been placed before the AO and the AO has recorded the same in his assessment order. The AO has questioned the valuation of the flat sold. The AO had the flats valued by the DVO. It is only after all these examinations, the AO had accepted the returned income. The claim of the ld. Pr. CIT that the AO had called for certain details but did not examine them does not stand to reason insofar as the assessment order says otherwise. The claim of the ld. Pr.CIT that the AO had only kept the submissions and that too only partial submissions on record and moved on to complete the assessment also does not stand to reason, insofar as the AO has gone to the extent of even questioning the valuation of the flats. This being so, as it is noticed that the issue has been adjudicated and looked into threadbare by the AO, the order u/s.263 of
the Act is found only for the purpose of reverification of the issues which have already been considered by the AO in the assessment proceedings. This is not permissible under the provisions of Section 263 of the Act. This being so, the order passed u/s.263 of the Act by the ld. Pr.CIT is not found to be substantiable and same stands quashed.
6. In the result, appeal of the assessee is allowed.. Order dictated and pronounced in the open court on 30/07/2026.
