Ghanshyam Lal Vs PCIT (ITAT Raipur)
No Enquiry on Capital Gains – PCIT’s 263 Revision Upheld for Urban Land Sale Falling Within Bilaspur Municipal Limits
Raipur ITAT upheld the revisional order u/s 263, holding that AO’s assessment was erroneous & prejudicial to Revenue.
Assessee, a farmer, had filed return declaring Rs.1,54,590/- & claimed exempt agricultural income from sale of alleged agricultural land at Bodri , Bilaspur. During scrutiny, AO made addition only for unexplained cash deposit of Rs.16,10,000/- u/s 68 but completely ignored the sale of three properties aggregating to Rs.65,68,200/-.
PCIT examined the records & found that Bodri village had been included within Bilaspur Municipal Corporation limits through State Government Gazette Notification dated 31.07.2019, making the land an urban land & hence a “capital asset” u/s 2(14). Since AO conducted no enquiry on capital gains despite clear material, PCIT invoked Explanation-2 to s.263 & held that failure to enquire resulted in under-assessment & under-levy of tax of Rs.14,80,974/- plus interest.
ITAT rejected the Assessee’s contention that the revisional order lacked reasoning, holding that PCIT had clearly demonstrated AO’s non-application of mind. Relying on Rampyari Devi Saraogi, Tara Devi Aggarwal, Malabar Industrial Co., & Paville Projects (SC 2023), Tribunal held that an assessment passed without enquiry is per se erroneous & prejudicial. Consequently, the s.263 order was affirmed & the Assessee’s appeal dismissed.
