TMI Blog2021 (9) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... y Hon`ble Gujarat High Court in the case of Mukesh Kishor Barot Coowners, [ 2013 (10) TMI 147 - GUJARAT HIGH COURT]. Hence order passed by the assessing officer is neither erroneous nor prejudicial to the interest of the Revenue. Sale consideration received on transfer of said immovable property - assessee is found to have shown contract amount of ₹ 60,00,000/- and has claimed expenses under various heads. The ld PCIT noticed that these are not contract receipts but sale consideration received on transfer of said immovable property - We note that during the assessment stage, the assessing officer had verified this issue. The assessing officer, (vide his notice under section 142(1) of the Act), has asked the assessee to furnish details of expenses, Trading account, Profit and loss account and Balance Sheet etc. The assessing officer has examined the nature of amount of ₹ 60,00,000/-, therefore, order passed by him under section 143(3) of the Act, is neither erroneous nor prejudicial to the interest of revenue. Since, we find that the Assessing Officer has made enquiries and the action of Assessing Officer in accepting the claim of assessee, after detailed enqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 15,65,860/-. 3.The AO i.e. ITO, Ward-4, Navsari and the Range head i.e. Jt. CIT, Navsari Range, Navsari, vide their letters dated 28.02.2017 and 08.03.2017, respectively have proposed that the assessment order in this case is erroneous as well prejudicial to the interest of revenue and therefore, the same should be revised u/s 263 of the I.T. Act, 1961. 4.After going through the report of the AO, the Range head and examination of the assessment record of the AO, it is seen that the assessment framed by the ITO, Ward-4, Navsari suffers from following errors/mistakes which make it not only erroneous but also prejudicial to the interest of revenue. The order is erroneous as well as prejudicial to the interest of revenue on account of the following:- (i)The AO has not carried out the requisite inquiries regarding the valuation of the property as per the circle rate/stamp duty rate in respect of the plot of land sold during the year. The assessee has declared the sale consideration of ₹ 60,00,000/- as against the valuation of ₹ 1,69,26,000/-as per the stamp duty/circle rates. Therefore, the applicability of provisions of section 50C which is prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, that is, the applicability of the provisions of the section 50C, have not been examined by the assessing officer. The capital gains arising on conversion of the immovable property, as per the provision of section 45(2) of Income Tax Act, have not been examined by the assessing officer. Besides, the assessee is found to have shown contract amount of ₹ 60,00,000/- and has claimed expenses under various heads. The AO has failed to make the requisite inquiries about this issue. 5. In view of the above, the ld PCIT held that order of the Assessing Officer, dated 26.02.2015, framed under section 143(3) of the Act, is erroneous as well as prejudicial to the interest of revenue. Therefore, ld PCIT has set aside the order of assessing officer and directed the assessing officer to make fresh assessment order after making detailed inquiries on the issues mentioned hereinabove. 6. Aggrieved by the order of learned PCIT, the assessee is in appeal before us. 7. Shri Mehul R. Shah, Learned Counsel for the assessee, pleads that during the assessment proceedings, assessing officer has examined the issues raised by the ld PCIT in his order under section 263 of the Act, and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 60,00,000/- and has claimed expenses under various heads. Examination of records show that these are not contract receipts but sale consideration received on transfer of said immovable property. The Assessing Officer has failed to make the requisite inquiries about this issue. 10. So far the first issue is concerned, which relates to sale consideration of the property of ₹ 60,00,000/-, as against the valuation of ₹ 1,69,26,000/- as per the stamp duty circle rate. We note that the said issue raised by the ld PCIT, has been examined by the Assessing Officer during the assessment proceedings. We observed that Assessing Officer has issued notice under section 142(1) of the Act, dated 22nd July 2014, (vide pb-14), wherein he has asked the assessee to furnish the following: 19. You have sold one immovable property for ₹ 1,69,26,000/- as per information available with this office. You are requested to furnish copy of sale deed and computation of capital gain. Therefore, we note that Assessing Officer has asked the assessee to file the sale deed and computation of capital gain in respect of immovable property of ₹ 1,69,26,000/-, therefore, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding difference of ₹ 19,364/-, the A.R. of the assessee has submitted penalty order No.CH/NA/Sharatbhang/case no. 1/2005 dated 15.06.2010 passed by the Collector, Navsari. The aforesaid penalty has been paid by the assessee and added into the value of closing stock, which is not allowable. The A.R, of the assessee offered no objection in this regard and hence an amount of ₹ 19,364/- is added back to the total income of the assessee. 12. Apart from this, the assessing officer has asked the details by issuing notice under section 142(1) of the Act. The relevant para of the notice under section 142(1) of the Act, is reproduced below: 18. Please provide complete details of closing stock in terms of quantity and value along with basis of valuation for AY 2011-12 and details of opening stock for AY 2012-13 Therefore, it is clear that during the assessment stage, the AO has examined the issue raised by the PCIT, about the conversion of the immovable property into stock-in-trade in F.Y. 2010-11 i.e. A.Y.2011-12. We note that when transferred asset was held as stock in trade, in that situation, section 50C would not apply, as held by Hon`ble Gujarat High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . 15. Taking note of the aforesaid dictum of law laid down by the Hon ble Apex Court, let us examine the assessee`s facts. We note that in assessee`s case, ld PCIT has raised three issues in his order under section 263 of the Act. About these three issues, we have already discussed the facts in para nos. 9 to 13 of this order and noted that assessing officer has raised questions by issuing notice under section 142(1) of the Act and assessee has replied, these questions along with evidences. The assessing officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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