MC Ponnappa Vs PCIT (ITAT Bangalore)
The Bangalore ITAT quashed the revision order passed under Section 263, holding that the assessment order was neither erroneous nor prejudicial to the interests of Revenue.
On the issue of valuation of property (FMV as on 01.04.2001):
- The AO had examined the sale deed, valuation report of a registered valuer, and supporting documents during assessment.
- The PCIT’s objection that AO failed to refer the matter to DVO u/s 55A was rejected, as such reference is discretionary, not mandatory.
- The Tribunal noted that even as per PCIT, the difference between guidance value (₹1.50 lakh per cent) and adopted value (₹1.55 lakh per cent) was marginal and within reasonable limits.
- PCIT failed to bring any cogent material to prove overvaluation and merely substituted his opinion for that of AO.
Accordingly, the ITAT held that where AO adopts a plausible view after enquiry, Section 263 cannot be invoked merely due to a different opinion.
On the issue of non-initiation of penalty u/s 271(1)(c):
- The Tribunal held that penalty proceedings are independent and separate from assessment proceedings.
- Mere failure to initiate penalty does not render the assessment order erroneous.
- Section 263 cannot be used to compel initiation of penalty.
Final Result:
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