2006 (2) TMI 201 - AT - Income Tax

Revision - powers of the CIT u/s 263 - reopening of assessment u/s 147 - issued notice u/s 148 - determination of the income chargeable to tax under the head 'Capital gains' on conversion of the land and structure as stock-in-trade - HELD THAT:- The Bombay High Court decision in the case of Gabriel India Ltd.[1993 (4) TMI 55 - BOMBAY HIGH COURT] has clearly held that if the Assessing Officer has raised queries and the assessee has filed written submission/explanation, merely because there is no elaborate discussion in the Assessing Officer's order, it cannot be said that such order becomes erroneous. No new material came to the notice of the ld. CIT and he made certain assumptions without any basis or material.

In our view, the powers vested in the CIT u/s 263 are extraordinary powers and completed assessment proceedings cannot be reopened unless there is some cogent material to show that there is total non-application of mind on the part of the Assessing Officer or that the Assessing Officer has committed any glaring mistake of fact or law. The assessee filed proper explanations with regard to the cost of construction, assessee's claim for deduction u/s 54 and the valuation as on 1-4-1981, which was supported by valuation report of registered valuer. The entire material was available before the Assessing Officer during the course of the assessment proceedings. As a matter of fact, all this material was filed before the Assessing Officer in response to the queries raised by him. In our view, there is hardly any basis to assume that there was non-application of mind on the part of the Assessing Officer. Thus, we hold that the ld. CIT has wrongly invoked his jurisdiction u/s 263 of the Income-tax Act. We, therefore, quash his common order passed u/s 263 for the assessment years 1997-98 and 1998-99.

In the result, the assessee's appeals stand allowed.