The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, while upholding an assessment order treating unsold flats as closing stock, held that revisional jurisdiction cannot be invoked, if AO adopted one of the two plausible views.
The aforesaid observation was made by the Pune ITAT, when an appeal was preferred before it by the Assessee, as directed against the order of the Pr. Commissioner of Income Tax (Central), Pune, dated 25.03.2022, emanating from assessment order dated 19.06.2019 under section 143(3) of the Income Tax Act, 1961, for the A.Y.2017-18.
The grounds of the assessee’s appeal being that, on the facts and circumstances prevailing in the case and as per provisions of Law, the order passed by the PCIT [Central], dated 25/03/2022 is perverse, unlawful, unwarranted and not sustainable in Law, and further that the order passed under Section 263 is without considering the detailed submission made by the assessee stating the reasons/ explanations in response to hearing notice under Section 263 of Income Tax Act, 1961, the facts in brief pertaining to these issues were that, the assessee was a builder , engaged in the business of construction, who had filed its return of income for the assessment year 2017-18 on 11/10/2017, declaring total income at Rs. 1,84,10,230/.
The case of the assessee was selected for scrutiny assessment under the CASS. And subsequently, the notice under Section 143(2) was issued on 13/08/2018 electronically, being duly served upon the assessee through this office mail id.
Further, a Notice under Section 142(1) of the income-Tax Act, 1961, dated 02/04/2019, was also issued and duly served upon the assessee. Thereafter, the Assessing Officer (AO) passed an assessment order under section 143(3), declaring the total income of the assessee to be Rs.1,84,10,230/-, without making any addition.
Subsequently, the Pr.CIT invoked section 263 of the Act, thus leaving the assessee aggrieved to prefer the instant appeal before the tribunal.
Hearing the opposing contentions of both sides as submitted by Shri Sarvesh Khandelwal, the AR on behalf of the assessee, and by Shri Sardar Singh Meena, the DR on behalf of the Revenue, and thereby perusing the materials available on record, the ITAT observed:
“The principle of the law emanating from the decisions of the Hon’ble Supreme Court, and the Hon’ble Bombay High Court is that when two views are legally possible and Assessing Officer adopts one view the Assessment Order cannot be said to be erroneous for the CIT to invoke jurisdiction u/s.263 of the Act.”
“In the case under consideration the AO has adopted one of the legally possible views qua Unsold Flats shown as closing stock.”, the ITAT Panel of S.S Godara, the Judicial Member, along with Dr. Dipak P. Ripote, the Accountant Member added.
Thus, the ITAT finally held:
“Therefore, the Assessment Order is not erroneous qua unsold flats shown as Stock. Accordingly, the grounds of the assessee are partially allowed. In the result, appeal of the Assessee is Partly Allowed.”
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