The Income Tax Appellate Tribunal (ITAT) Chennai bench held that the assessing officer passed the assessment order without examining taxability of land sold by the assessee. Therefore the order is erroneous and in so far as it is prejudicial to the interest of Revenue.Hence the bench upheld the revision order passed under Section 263 of the income tax act, 1961.
Assessee’s assessment was completed under section 143(3) of the Income Tax Act, 1961. Subsequently, the PCIT, by exercising powers under section 263 of the Act held that assessment order passed under section 143(3) of the Act appears to be erroneous and in so far as it is prejudicial to the interest of Revenue. Further said that AO passed the assessment without examining the taxability of land sold by the assessee to complete the assessment.
Before PCIT, assessee submitted that case was selected for limited scrutiny for verification of the cash deposits hence So far as details of agricultural land sale deposits were furnished to the Assessing Officer and the agricultural land sale consideration are exempted from capital gains.
Accordingly, without considering the submission PCIT passed a revision order. Aggrieved by the order the assessee filed an appeal before the tribunal .
No one appeared for the assessee during the appeal proceedings.
V. Nandakumar, Counsel for Revenue argued that the Assessing Officer has not examined the taxability of land sold by the assessee.
It was observed by the tribunal that PCIT set aside the assessment order passed by the Assessing Officer on the ground that the Assessing Officer has not considered to invoke the provisions of section 50C(1) of the Income Tax Act.
Thus the bench stated that first of all the Assessing Officer has to examine whether the sale consideration received by the assessee was as per SRO value or not. Thereafter, the Assessing Officer has to decide the land is agricultural land or not.
After considering the facts submitted and circumstances, the two member bench of Manoj Kumar Aggarwal (Accountant Member) and V. Durga Rao, (Judicial Member) held that the assessment order passed by AO was without examining taxability of land sold by assessee. Therefore the bench upheld the revision order.
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