No Fresh Assessment can be Directed by CIT if AO Choose not to Make Any Addition on Income Tax: ITAT Condones Delay of 319 Days [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal (ITAT), condoned delay of 319days in filing the appeal and held that when once Assessing Officer (AO) took one of the possible views and chose not to make any addition the Commissioner of Income Tax (CIT) was not justified in directing fresh assessment by referring the valuation to valuation officer.

The assessee Deepika Subramanian purchased certain property during this year for consideration of Rs.66 Lakhs as against stamp duty value of Rs.77.87 Lakhs. During the course of assessment proceedings, notice under Section 142(1) of the Income Tax Act, 1961 was issued calling for various details including detail of sale / purchase of property. The assessee responded to these notices. Considering the details furnished by the assessee AO accepted the return of income and chose not to make any addition on this account.

The Revenue filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], The Principal (Pr.) Commissioner of Income Tax by exercising its revisionary jurisdiction under Section 263 of the Income Tax Act opined that AO should have invoked the provisions of under Section 56(2)(vii) of the Income Tax Act and made addition for the differential amount but he failed to do so. Accordingly, rejecting assessee’s submissions, the assessment framed under Section 143(3) of the Income Tax Act was set aside and AO was directed to redo the assessment by referring the matter to valuation officer.

Aggrived by the order the assessee filed an appeal before the Tribunal

Ms. G. Vardini Karthik appeared on behalf of assessee and S.Senthil Kumaran as Departmental Representative.

The Two Bench comprising of Mahavir Singh, Vice President and  Manoj Kumar Aggarwal, Accountant Member  condoned the delay of 319 days in filing appeal on the ground that the assessee was not aware of the fact that the order passed by CIT(A) was an appealable order and held misconception that she had to wait for assessing officer to pass consequential order.

The Bench observed that when once AO took one of the possible views and chose not to make any addition, Pr. CIT was not justified in directing fresh assessment by referring the valuation to valuation officer. The Pr. CIT has not rendered any finding that the market value of the property was higher than the one shown by the assessee.

Further the bench stated that merely because guideline value was higher than sale consideration shown in deed of conveyance, it cannot be sole reason for holding that assessment was erroneous and prejudicial to interest of revenue.

Hence quashed the impugned order of the CIT(A). 

To Read the full text of the Order CLICK HERE

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