SCN Issued for Property Purchase to Wrong Assessment Year: ITAT Quashes PCIT Order [Read Order]
The Tribunal quashed the PCIT’s order under Section 263 and ruled that the show cause notice was issued for a property purchase transaction pertaining to the wrong assessment year, rendering the assumption of jurisdiction invalid.
![SCN Issued for Property Purchase to Wrong Assessment Year: ITAT Quashes PCIT Order [Read Order]](https://images.taxscan.in/h-upload/2025/07/18/2064906-property-purchase-wrong-assessment-itat-mumbai-taxscan.webp "SCN Issued for Property Purchase to Wrong Assessment Year: ITAT Quashes PCIT Order [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT ) set aside the order of the Principal Commissioner of Income Tax (PCIT) passed under Section 263 of the Income Tax Act, 1961, holding that the show cause notice (SCN) was issued for a property purchase falling in Assessment Year (AY) 2022-23, not the relevant AY 2021-22 under consideration. Johar Hasan Zojwalla...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT ) set aside the order of the Principal Commissioner of Income Tax (PCIT) passed under Section 263 of the Income Tax Act, 1961, holding that the show cause notice (SCN) was issued for a property purchase falling in Assessment Year (AY) 2022-23, not the relevant AY 2021-22 under consideration.
Johar Hasan Zojwalla (assessee), proprietor of M/s Sab Realty engaged in the real estate business, filed his return of income for AY 2021-22 on 15/03/2022, declaring a total income of Rs. 4,20,31,010.
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The return was selected for scrutiny, and the Assessing Officer (AO) completed the assessment making an addition of Rs. 6,03,81,465 by disallowing the deduction claimed under Section 80IBA of the Income Tax Act.
The PCIT, assuming jurisdiction under Section 263, issued a show cause notice alleging that the AO failed to examine the applicability of Section 56(2)(x)(b)(ii) or Section 50C to the purchase of Property. The PCIT held the assessment order was erroneous and prejudicial to revenue interests and set it aside, directing the AO to re-examine the transaction.
Aggrieved by the PCIT’s order, the assessee appealed to the ITAT. The assessee’s counsel argued that the property purchase on 03/08/2021 pertained to the previous year 2021-22, relevant to AY 2022-23, and not AY 2021-22. Thus, the PCIT’s jurisdiction under Section 263 for AY 2021-22 was invalid due to wrong appreciation of facts.
The two-member bench comprising Saktijit Dey (Vice President) and Narendra Kumar Billaiya (Accountant Member) observed that the transaction date of 03/08/2021 clearly fell in the previous year relevant to AY 2022-23.
The bench noted that the PCIT’s SCN and order were based on an incorrect assessment year, rendering the revision unsustainable. It observed that the assumption of jurisdiction under Section 263 must be based on accurate facts, and the PCIT’s error in identifying the relevant assessment year invalidated the proceedings.
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The Bench held that any potential issues regarding Sections 56(2)(x)(b)(ii) or 50C could be relevant only for AY 2022-23.
The Tribunal set aside the PCIT’s order and restored the AO’s assessment order. The appeal of the assessee was allowed.
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