Jurisdiction of PCIT will sustain if AO failed to rightly compute Capital Gain on Sale of Land: ITAT upholds Revisional Order [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal (ITAT), held that if AO failed to rightly compute capital gain on the sale of the land then the revisional jurisdiction of PCIT will sustain and uphold the revisional order.

The assessee challenged the order passed by the Principal Commissioner of Income Tax, Coimbatore-1, dated 25.03.2021, u/s.263 of the Income Tax Act, 1961.

The assessee company has filed a return of income admitting a total income of Rs. Nil. it was noticed that the assessee has declared long-term capital gain from the transfer of a property vide document No.2239/2006 for a consideration of Rs.2,62,30,000/- and the Assessing Officer(AO), after considering relevant submissions of the assessee computed long-term capital gain at Rs.1,55,52,949/.

The PCIT issued by stating that the assessment order passed by the AO was erroneous, insofar as it was prejudicial to the interests of revenue, because although, there was a difference in guideline value of the property as on date of registration and consideration stated to be received for transfer of property, but the AO has failed to examine the issue in light of provisions of section 50C of the Income Tax Act, 1961.

The assessee stated that the issue of capital gain computed by the assessee from the transfer of property has been examined by the AO. Further stated that the difference in consideration received as per provisions of section 50C of the Act cannot be the subject matter of revision proceedings for the impugned assessment year.

It was viewed that the assessee itself had declared capital gain from the transfer of property for the assessment year 2015-16 on the ground that possession of the property has been handed over to the buyer in the financial year 2014-15 and it was clear that there was a difference between the stated consideration received for transfer of property and the guideline value of the property as on the date of registration.

The Tribunal observed that the AO has failed to apply his mind in light of the facts of the case to relevant provisions of section 50C of the Act while completing the assessment and the PCIT has rightly exercised jurisdiction u/s.263 of the Act.

Shri Mahavir Singh, vice-president and Shri G Manjunatha, AM while dismissing the appeal upheld the order of PCIT which set aside the assessment order by AO.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.