The Income Tax Appellate Tribunal, Rajkot bench held that the order passed u/s 263 will not sustainable when no error in the assessment order by AO.
The appellant was represented by Shri Mehul Ranura and the Respondent was represented by Shri Sanjeev Jain.
The assessee is a partnership firm engaged in the business of Real Estate. The PCIT, on examination of the assessment records, found that the assessee has a closing stock of the properties at Rs. 11,66,89,586.00. The PCIT viewed that the assessee was liable to declare the income under the head income from house property on a notional basis under section 22 read with section 23 of the Act but the assessee has not done so. The PCIT initiated the proceedings under section 263 of the Act.
The assessee contented the assessee that there was no provision for the year under consideration for charging the notional rent concerning units of properties held as stock in trade. The assessee also contended that the AO in the assessment proceedings after due verification and application of mind has framed the assessment without calculating the notional rent as alleged by the learned PCIT.
It was observed that the amendment for charging the tax on the notional rent concerning the properties held as stock in trade was applicable from the assessment year 2018-19 and not applicable for the year under consideration. Shri Waseem Ahmed, AM and Shri Siddhartha Nautiyal, JM viewed that the impugned order was without satisfying necessary twin conditions for invoking jurisdiction u/s 263 of the Income Tax Act,1961.
The Tribunal observed that there was no error in the order of the AO framed under section 143(3) of the Act which was prejudiced to the interest of revenue and quashed the revisional order passed by the PCIT. The appeal filed by the assessee was allowed.
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