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2007 (9) TMI 710 - AT - Income Tax

Issues Involved:
1. Validity of the Section 263 order by the Commissioner.
2. Condonation of delay in filing appeals.
3. Assessment of capital gains for the assessment year 1997-98.

Summary:

Condonation of Delay:
The appeals by the assessees were time-barred by 1045 days. The delay was attributed to the advice of their chartered accountant, who believed that no appeal was necessary against the Section 263 orders since the capital gains issue was already decided for the assessment years 1998-99 to 2000-01. The Tribunal condoned the delay, citing the Limitation Act Section 5, which allows relaxation of the time-limit when there is a bona fide explanation. The Tribunal accepted the "sufficient cause" for the delay, emphasizing that the duration of the delay is not material but the valid and sufficient reasons for not filing the appeal within the time allowed.

Validity of Section 263 Order:
The Commissioner exercised his discretionary power u/s 263, finding the assessment orders erroneous and prejudicial to the interest of the revenue, as the assessing officer omitted to include capital gains from the transfer of property. The Tribunal quashed the Section 263 order, stating that the assessing officer had perused the material on record and concluded that no transfer took place during the assessment year 1997-98. The Tribunal held that the assessment order was neither erroneous nor prejudicial to the interest of the revenue, as the capital gains were rightly charged in the subsequent assessment years 1998-99 to 2000-01.

Assessment of Capital Gains:
The Tribunal noted that the assessing officer had determined that no sale took place during the assessment year 1997-98 and that the amount received was an advance. The Tribunal supported this view, referencing the decision of the Hon'ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia v. CIT, which held that the year of chargeability is the year in which the transaction was entered into. The Tribunal concluded that the assessing officer's decision was based on records and was one of the possible views, thus not erroneous.

Outcome:
The appeals in ITA Nos. 859 and 860/Mds/2007 were allowed, quashing the Section 263 orders. The appeals in ITA Nos. 917 and 918/Mds/2006 were dismissed as infructuous, as the orders giving effect to the Section 263 orders had no legs to stand.

 

 

 

 

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