The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the power of attorney should be verified in the sale of an inherent property.
The assessee is a housewife earning income from house property. She filed her return of income electronically for the Assessment Year 2016-17 admitting a total income of Rs. 65,090/- which was subjected to limited scrutiny through CASS for the reason that cash deposit for the demonetization period is reported as per SFT-14 reporting.
The assessee did not file the return of income for the preceding assessment year. Notice under section 143(2) and section 142(1) of the Income Tax Act, 1961 was served upon the assessee. The assessee uploaded copies of the return of income tax, ITR-2, statement of total income, receipts & payment account, Bank statement, sale deed & purchase deed including an explanation letter.
The Assessing Officer [AO] verified the same and found it to be correct. It was observed by the assessing officer that, the assessee has sold her house for Rs. 1,00,00,000/- to an NRI party, and the payment was received in cash.
It was further observed that the assessee had made an advance of Rs. 9,00,000/- to buy a house and the same was renovated at a cost of Rs. 49,30,400/- the capital gain of Rs. 30,12,614/- was claimed as an exemption under section 54F of the Income Tax Act.
The case was taken up for revision under Section 263 of the Income Tax Act and a show cause notice was issued and served on the assessee to explain why the assessment order should not be subject to proceedings under Section 263 of the Income Tax Act.
As no reply was filed by the assessee in response, another notice was issued to the assessee by the Principal Commissioners of Income Tax (PCIT). In response to the notice, the assessee filed a written submission.
The Authorized Representative (AR) submitted that the assessment was for limited scrutiny only and the assessing officer verified the same and found it to be correct. It is his submission that as the assessment was for limited scrutiny, the PCIT should not travel beyond the purpose of the limited scrutiny.
The Departmental Representative (DR) submitted that the assessee had not furnished the return of income for the preceding assessment year and the current year’s return filed after 07-11- 2016. The purchaser of the property had paid the consideration amount in cash. The Departmental Representative (DR) supports the Revision order passed by the PCIT.
The two-bench members comprising of Manjunatha. G (Accountant member) and Manomohan Das (Judicial member) held that the PCIT has rightly observed that the assessment order as framed by the assessing officer is erroneous and prejudicial to the interest of Revenue.
Therefore, the order of the PCIT was confirmed which he had set aside the assessment order and directed the assessing officer to frame the assessment after making necessary enquiry and verification in accordance with the law in respect of the issues discussed by the PCIT in the exercise of powers under section 263 of the Income Tax Act.
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