Asad Fazlurrehman Kagdi Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that revisional power under section 263 of the Income Tax Act correctly invoked as AO failed to examine the issue of purchase of land in the light of provisions of section 56(2)(vii)(b) of the Income Tax Act.
Facts- In the present case, the revisionary power was exercised By the Ld. PC/T was pertaining to the non-invocation by AO of Section 56(2)(vii)(b) of the Act to the transaction of immovable property, being land, purchased by the assessee as a co-owner along with other two persons. It was contended that the property was purchased for a sum far below its stamp duty value and thus warranted the addition to be made to the income of the assessee of the amount short paid as compared to its stamp duty value, as per the provisions of Section 56(2)(vii)(b) of the Act. AO having not invoked the said section, the assessment order passed by him therefore was found to be erroneous and prejudicial to the interest of the Revenue by the Ld. PC/T.
Conclusion- The Assessing Officer had clearly not examined the applicability of section 56(2)(vii)(b)in the light of the above facts and therefore, it was a clear case of error in the order of the Assessing Officer. It is not the case of the assessee that the stamp duty value taken by the Ld. PCIT was incorrect. Therefore, based on the facts before him, the Ld. PCIT had rightly found the non-examination of the issue of purchase of land by the assessee in the light of provisions of Section 56(2)(vii)(b) of the Act was an error in the order of the Assessing Officer causing prejudice to the Revenue and accordingly had set aside the assessment order to the Assessing Officer to examine this aspect after giving due opportunity of hearing to the assessee and in accordance with law.
Held that there is no infirmity in the order of the Ld. PCIT passed under Section 263 of the Act and the appeal of the assessee is liable to be dismissed. In effect, the appeal of the assessee is dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal filed by the assessee is directed against the order passed by the learned Principal Commissioner of Income-Tax, Ahmedabad-1 [hereinafter referred to as “PC/T”] dated 10.03.2021, in exercise of his revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year 2015-16.
2. The grounds of appeal raised by the assessee read as under:-
“1. That the Ld. Pr. CIT has erred in law in assuming jurisdiction under section 263 of the Income Tax Act on the ground that no inquiry has been conducted for the purchase of property by the assessing officer while passing order under section 143(3) of the Act
2. That the Ld. Pr. CIT has erred in law in assuming jurisdiction under section 263 of the Income Tax Act as the impugned assessment order is neither erroneous nor prejudicial to the interest of revenue.
3. That the Ld. Pr. CIT further erred in law and facts in not appreciating the detailed submission of the assessee dated 23rd December, 2019 in a right
4. That the Ld. Pr. CIT has also erred in law in setting aside the whole assessment order and directing the assessing officer to redo the assessment de
5. That the appellant seeks leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal.”
3. At the outset itself, it was stated that the issue on which the revisionary power was exercised By the Ld. PC/T was pertaining to the non-invocation by the Assessing Officer of Section 56(2)(vii)(b) of the Act to the transaction of immovable property, being land, purchased by the assessee as a co-owner along with other two persons. The contention being that the property was purchased for a sum far below its stamp duty value and thus warranted the addition to be made to the income of the assessee of the amount short paid as compared to its stamp duty value, as per the provisions of Section 56(2)(vii)(b) of the Act. The Assessing Officer having not invoked the said section, the assessment order passed by him therefore was found to be erroneous and prejudicial to the interest of the Revenue by the Ld. PC/T.
4. Our attention was first drawn to the facts of the issue requiring invocation of Section 56(2)(vii)(b) of the Act by the Assessing Officer as per the Ld. PC/T, from paragraph Nos. 2 & 3 of the order passed by the Ld. PC/T under Section 263 of the Act as under:-
“2. On perusal of records, it is observed that the assessee along with two other co-owners namely Shri Aslam Fazlurrehman Kagdi & Shri Mohammed Fazlurrehman Kagdi (all three having equal share of 1/3rd each) had purchased an immovable property being land situated at Block / Survey Number 219, Ishanpur, Ahmedabad on 05.11.2014. The said property was purchased vide deed number 2173/2014 for a total consideration of Rs 59,01,000/- from S/Sri Manubhai Somabhai Patel & Dashrathbhai Somabhai Patel (sellers). Mohammed Aslam Abdul Kader Kureshi was the confirming party in this land transaction. Thus, having 1/3rdshare in the said property, the assessee, Shri Asad Fazlurrehman Kagdi had paid Rs. 19,67,000/- (being 1/3rd of Rs.59,01,000/-). It was further observed that assessee, along with two co-owners, had also paid stamp duty of Rs. 7,90,800/- in connection while making the said purchase. The Stamp Duty Rates applicable in Gujarat is as under‑
