Lack of Enquiry at right time, to prejudice Interest of Revenue, invokes Revisionary Jurisdiction u/s 263: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Jabalpur held that, Lack of enquiry at right time, to prejudice interest of Revenue, invokes revisionary jurisdiction under Section 263 of the Income Tax Act.

The assessee-individual, Jitendra Rana, did not file his return of income for the relevant year u/s. 139, was on the basis of the 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) 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. 54. 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, 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 of the home loan was prior to the sale of the immovable property. The assessee failed to respond thereto, the assessment was completed by including the long-term capital gain at Rs. 23.79 lacs to the returned income vide order u/s. 144.

The same was subsequently subject to revision by the Principal Commissioner of Income Tax (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 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.

The Bench consisting of Sanjay Arora, Accountant Member, and Manmohan Das, Judicial Member held that “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.”

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