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2022 (6) TMI 1470 - AT - Income TaxRevision u/s 263 by CIT - Addition u/s 56(2)(viib) - PCIT said AO has neither enquired about the claim of the assessee that the property was under litigation during the course of assessment proceedings nor brought to the notice of the Assessing Officer by the assessee - as argued AO has passed order after seeking an approval of the ACIT, u/s 153D - AR had admitted that details of the property were disclosed by the assessee in pursuant to the notice issued u/s 142(1) and the same was duly examined by the AO and no additions were made on the basis of the documents filed by the assessee. Moreover it was submitted that notice u/s 153A r.w.s 143(3), the addition can only be made by the AO in respect of the documents / incriminating material found during the course of search HELD THAT:- As during the assessment proceeding u/s 153A r.w.s. 143(3), AO is duty bound to make the addition in respect of the incriminating documents found during the course of search or in respect to the additions which are relatable to the material seized during the search. AO is not required to make any addition in respect of the material / document came to its possession on account of post search enquiries, though this issue may be debatable within the jurisdiction of Hon’ble Telangana High court. CIT in the impugned orders had nowhere stated that the documents were filed by the assessee in response to notice under section 142(1) of the Act and that the documents found during the course of search were incriminating in nature. Unless the requirement of law, namely existence of the incriminating document is fulfilled, the Assessing Officer could not make the addition and therefore, the Assessing Officer has rightly not made any addition. The reliance on explanation 2 to section 263 of the PCIT was incorrect, as Assessing Officer had made enquiries from the assessee and assessee had provided all information to the Assessing Officer, therefore, PCIT’s finding was factually incorrect, as it was not born out of the record. Moreover, we agree with the view taken in the case of M/s. Indian Roadways Corporation Ltd. [2018 (10) TMI 1495 - ITAT KOLKATA] wherein the identical view was decided by the Kolkata Tribunal in favour of the assessee. Therefore, on this count alone, the order passed by the ld.PCIT is required to be annulled . There is another reason for annulling the order passed by the ld.PCIT, as in the present case, the Assessing Officer before passing the assessment order has taken the approval of ld.ACIT under section 153D Also in the case of Dhariwal Industries Limited, Pune [2017 (1) TMI 260 - ITAT PUNE] on similar facts, had annulled the order passed by ld.PCIT. Therefore, we have no hesitation to take a similar view, more particularly, when one of us (namely Hon’ble A. M.) was a party to the decision. Another reason to annul the order passed by the ld.PCIT was that the ld.PCIT had directed the Assessing Officer to make the additions after invoking the provisions of section 56(2)(vii)(b) of the Act on the premise that there is difference in consideration for which the property was purchased vis-à-vis the SRO value. In our view, the addition under section 56(2)(vii)(b) is a deeming provision, based on this notional addition can be made. We hereby hold invocation of jurisdiction section 263 of the Act by ld.PCIT was not correct. In our considered opinion, once all the material including the sale deeds and other litigation documents were available on the record before the PCIT, then it is the duty of the ld.PCIT to give a specific finding as to how the provisions u/s 56(2)(vii)(b) are applicable and why the order of Assessing Officer was passed without proper enquiry. Therefore, PCIT’s finding that the order passed by AO was erroneous and prejudicial to the interest of the Revenue, can not be upheld. Decided in favour of assessee.
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