2022 (9) TMI 189 - Income Tax

Revision u/s 263 - As per CIT assessment order passed u/s 147 of the Act erroneous - Revision made as AO had failed to verify the capital gain returned by the assessee on property sold during the year with respect to the provisions of Section 50C - As per CIT AO had failed to substitute the sale consideration of the property sold by the assessee with its stamp duty value which was higher, applying the provisions of Section 50C of the Act, while computing the capital gain earned by the assessee - HELD THAT:- We find merit in the contention of assessee that the assessment order passed by the AO could not be said to be erroneous since the issue of examination of long term capital gain on sale of land was beyond his domain as per section 147 of the Act.

A bare perusal of the provisions of section 147 reveals that the jurisdiction of the AO is confined to assess issues on which he has reason to believe that income has escaped assessment and it is only if during the course of assessing these incomes that he is made aware of any other income escaping assessment that he can assess the other such income also.

In the facts of the present case the issue raised by the Ld. PCIT being not the subject matter of reassessment nor it being the case of the Revenue that the issue had come to the notice of the AO during reassessment proceedings, the assessing officer could not have considered this issue in reassessment proceedings. Therefore the assessment order passed u/s 147 of the Act in the present case cannot be said to be erroneous on the ground of the AO not having examined an issue which clearly was beyond his powers.

The order passed under section 263 of the Act is accordingly held to be not sustainable in law. - Appeal of assessee allowed.