Case Law Details
Jitendra Rana Vs PCIT (ITAT Jabalpur)
Introduction: The recent case of Jitendra Rana vs. PCIT before the ITAT Jabalpur highlights the significance of thorough assessments. The Pr. CIT revised the assessment under Section 263, pointing out a lack of inquiry by the AO. The subsequent detailed order from ITAT has implications for the fresh adjudication of the case.
Detailed Analysis: In this case, the assessee, Jitendra Rana, did not participate in the assessment proceedings. The AO served notices via email, which went unnoticed by the assessee. The AO adopted the sale consideration at Rs. 30 lacs, contrary to the property’s market value of Rs. 67.71 lacs. Surprisingly, there was no record of the AO’s queries or investigations into this substantial difference.
The lack of inquiry raised concerns about non-application of mind by the AO, prompting the Pr. CIT to revise the assessment under Section 263. The order emphasized the need for an inquiry, especially when the recorded reason referred to the property’s market value.
The ITAT upheld the Pr. CIT’s decision, citing established precedents that an absence of necessary inquiries renders the order erroneous and prejudicial to the Revenue’s interest. The matter was remanded for fresh adjudication, allowing the assessee an opportunity to be heard.
Conclusion: The ITAT Jabalpur’s decision in Jitendra Rana vs. PCIT underscores the importance of diligent assessments. The case reflects the statutory requirement for an AO to conduct thorough inquiries, especially when there are substantial variations in reported values. The revision under Section 263 paves the way for a fair and comprehensive reassessment, ensuring due process and safeguarding the interests of all parties involved.
Admittedly, the assessee did not join the assessment proceedings, which Shri Bardia explained before us as being on account of the notices granting opportunity of hearing having been served through email, while the assessee did not check his email account. There is, accordingly, no question of the assessee clarifying the adoption of the sale consideration at Rs. 30 lacs in the assessment. There is in fact nothing on record to even suggest of the AO having queried the assessee in the matter. There is in fact nothing to show that the AO himself enquired in the matter, seeking justification for the same; there being no reference thereto in the assessment proceedings nor anything to that effect being brought on record. This is all the more surprising inasmuch as the reason recorded itself bears reference to the sale of IP valued at Rs. 67.71 lacs. It is a clear case of an omission and, thus, non-application mind by the AO in the matter. That an absence or lack of enquiry, which ought to have been made under the circumstances, renders the order as erroneous in-so-far as it is prejudicial to the interest of the Revenue, liable for revision u/s. 263.
The requirement in fact stands since co-opted on the statute book itself by way Explanation 2 (a) to sec. 263. We find no reason not to uphold the impugned order whereby the matter has been kept open by the Pr. CIT, revering it back for adjudication on merits after hearing the assessee by the AO (which was read out during hearing).
FULL TEXT OF THE ORDER OF ITAT JABALPUR
This is an Appeal by the Assessee directed against the Order under section 263 of the Income Tax Act, 1961 (‘the Act’ hereinafter) dated 23/02/2021 in respect of assessee’s assessment u/s. 147 read with section 144 of the Act dated 15/12/2018 for Assessment Year (AY) 2011-12.
2. The assessee-individual, who did not file his return of income for the relevant year u/s. 139, was on the basis of Annual Information Report (AIR) discovered to have sold an immovable property, valued at Rs. 67.71 lacs, during the relevant previous year. The assessee responded to the notice u/s. 148(1) dated 28/03/2018 by returning income at Rs. 1,40,120, including long-term capital gain (on the stated property) at Rs. 3,00,115, claiming exemption u/s. 54F, on 05/06/2018. Subsequent notices u/ss. 143(2) & 142(1) to the assessee, however, remained un-responded despite their service through the email provided by the assessee per his return of income. The Assessing Officer (AO) gathered information from the office of the Sub-Registrar, Jabalpur, and show-caused the assessee u/s. 144 on 28/10/2018, proposing to assess long-term capital gain at Rs. 23,78,640. The claim of exemption u/s. 54F was found ineligible as the date/s of home loan/s was prior to the sale (transfer) of the immovable property on 03/05/2010. The assessee failing to respond thereto, assessment was completed by including the long-term capital gain at Rs. 23.79 lacs to the returned income vide order u/s. 144, dated 15/12/2018. The same was subsequently subject to revision by Principal Commissioner of Income Tax-1, Jabalpur (‘Pr. CIT’) inasmuch as the AO had failed to consider and apply the provision of s.50C, deeming the market value of Rs. 67.71 lacs as the sale consideration, and had instead adopted the same at Rs. 30 lacs, i.e., as shown in the sale deed and as indeed returned by the assessee. The matter, in the opinion of the ld. Pr. CIT, even if disputed by the assessee would be required to be referred by the AO to the Departmental Valuation Officer (DVO), which was not done by him. He, accordingly, set aside the assessment with the direction to decide the matter afresh as per law after hearing the assessee in the matter.
3. We have heard the parties, and perused the material on record.
Admittedly, the assessee did not join the assessment proceedings, which Shri Bardia explained before us as being on account of the notices granting opportunity of hearing having been served through email, while the assessee did not check his email account. There is, accordingly, no question of the assessee clarifying the adoption of the sale consideration at Rs. 30 lacs in the assessment. There is in fact nothing on record to even suggest of the AO having queried the assessee in the matter. There is in fact nothing to show that the AO himself enquired in the matter, seeking justification for the same; there being no reference thereto in the assessment proceedings nor anything to that effect being brought on record. This is all the more surprising inasmuch as the reason recorded itself bears reference to the sale of IP valued at Rs. 67.71 lacs. It is a clear case of an omission and, thus, non-application mind by the AO in the matter. That an absence or lack of enquiry, which ought to have been made under the circumstances, renders the order as erroneous in-so-far as it is prejudicial to the interest of the Revenue, liable for revision u/s. 263, is trite law, explained time and again by the Apex Court, beginning CIT v. McMillan & Co. [1958] 33 ITR 182 (SC), as indeed by the Hon’ble jurisdictional High Court as in CIT vs. Deepak K. Garg [2008] 299 ITR 435 (MP); CIT v. Mahavar Traders [1996] 220 ITR 167 (MP). The requirement in fact stands since co-opted on the statute book itself by way Explanation 2 (a) to sec. 263. We find no reason not to uphold the impugned order whereby the matter has been kept open by the Pr. CIT, revering it back for adjudication on merits after hearing the assessee by the AO (which was read out during hearing).
We accordingly decline interference. We decide accordingly.
4. In the result, the assessee’s appeal is dismissed.
Order pronounced in open Court on June 17, 2022
