Starshine Land Developers Private Ltd. Vs PCIT (ITAT Mumbai)
ITAT Mumbai held that PCIT is empowered to issue a show- cause notice and pass a revision order u/s. 263 of the Act when reassessment order passed by AO was quite cryptic. Accordingly, order of PCIT upheld and appeal of assessee dismissed.
Facts- The only ground of appeal raised herein is that Principal Commissioner of Income Tax erred in invoking provisions of section 263 of the Income Tax Act on the ground that AO has not conducted inquiries/verification which ought to have been made. The appellant pleaded that the relevant inquiries were conducted by AO before making assessment and hence the order of Ld. PCIT is erroneous and hence this order u/s. 263 is required to be quashed.
Conclusion- Held that the decisions of Malabar Industrial Company and Max India Limited are not applicable to the facts of this particular case because the Ld. AO has not applied his mind while passing the reassessment order as mentioned above which was quite cryptic and does not convey any meaning. In such circumstances, Ld. PCIT is empowered to issue a show- cause notice and pass a revision order u/s. 263 of the Act. The case relied on by Ld. AR of the appellant will come into play where there are two views are possible and the Ld. AO has passed an order with application of mind. In the instant case, as mentioned above, the order of the Ld. AO is very cryptic and no inquiries/verification were made even though assessment was reopened for that very specific purpose. The Ld. PCIT has issued a show cause notice with a specific purpose as to leaving tax on unsold inventories of Rs. 54.26 crores when the project was 100% complete. The Bench agrees with the view of Ld. PCIT who relied on the judicial precedent laid down by Hon’ble Delhi High Court in the case of Ansal Housing Financial and Leasing Company Ltd. and decision of ITAT Ahmedabad decision in the case of Emtci Engineering Ltd., where it was specifically held that the “income from house property” has to be offered for tax purpose on the unsold inventories.
