TMI Blog2022 (6) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 2.1. The grounds raised by the assessee in ITA No. 395/Hyd/2022 reads as under: 1. The Learned Principal Commissioner of Income Tax-Central / Hyderabad erred on facts of the case and the Law involved in so far as it is prejudicial to the interest of the Appellant. 2. The Principal CIT-Central/Hyd, has erred in passing orders u/s. 263, directing the Assessing Officer to invoke provisions of Section 56(2)(viib) without considering submissions made by the assessee. 3. On the facts and in the circumstances of the case, the Ld.DR. Principal CIT (Central), Hyderabad erred in assuming jurisdiction u/s. 263 of the Act in order to impose his own views on the Ld.DR. A.O. when the A.O. had taken a possible view. 4. For AY 2014-15, There being no incriminating material discovered pursuant to search in this case an as per proviso 2 to sec. 153A the assessment in this case was not pending, the Ld.DR. Pr. CIT erred alleging that the A.O. failed to carry out necessary enquiry and investigation, more so when the impugned assessment pertains to unabated assessment of the assessee. 5. The impugned order passed by the A.O. originally being neither erroneous nor prejudicial to t interest of the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sq.yards out of total land of 599 Sq.yards in S.y No. 110/1 of Bholakpur village, Situated at Ranigunj Main Road, Secunderabad. (Doc No. 2341/13) 15. Land in S.Y No. 17, admeasuring Ac.0.18 gts, Situated at Gachibowli village, Serilingampally Mandal, R. R. Dist. (Doc No. 3035/14)(1/2 Share) 16. Premises bearing m.no.5-4-177, admeasuring 95.05 sq. yards situate at Ginwala Compound, Ranigunj, and Secunderabad. (Doc No. 365/14) 4.3. The Assessing Officer after considering reply and the documents submitted by the assessee during the course of assessment proceedings had accepted the claim made during the assessment proceedings. 4.4. Further the assessment order was passed by the Assessing Officer after obtaining approval from the Additional Commissioner of Income Tax, Central Range 3, Hyderabad u/s 153D of the Income Tax Act, 1961. 5. After completion of the assessment proceedings, the ld.PCIT has issued notice on 05.02.2021 and in the said notice at Para 2 it was mentioned as under: 2. During the year under consideration, you have purchased 5 properties, the stamp duty value of which is more than the amounts paid by you to the tune of Rs. 2,40,41,000/- as detailed below: Property Sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o which the value of the properties are very less and traded at under value, That doesn t mean that the buyer of the property got benefited by purchasing the under-valued properties at lower price. 3. In view of presence litigation in connection with title of the property, the property received by the assesses is not immovable property, it s rights to fight legal battle. 4. Sec 56(2)(viib) is applicable where any person receives in any previous year, from any person or person any property received for a consideration which is less than the aggregate fair market value and the difference is more than Rs. 50,000/ -, the such difference is taxable. However, the fair market value of the above said properties which have litigations have very low market value comparatively other properties in the surrounding areas. Hence, the provisions of Sec 56(2)(viib) are not applicable in this case. 5. Apart from the solid evidences produced before your good offices, the fact that there are legal cases pending on the subject properties are also mentioned in the sale deeds. That shows that the title of the properties are not clear and the assessee did not get the full right over the subject properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld.DR. Commissioner of Income-tax would not be justified in interfering 8 ITA Nos.1108 to 1113/PUN/2014 in the approval according by the Addl. CIT for framing the assessment order and thus there was no case for setting aside the assessment order for the assessment years in question. 14.1 We find the Hyderabad Bench of the Tribunal in the case of CH. Krishna Murthy Vs. ACIT vide ITA No. 766/Hyd/2012 order dated 13- 02-2015 following the decision of the Lucknow Bench of the Tribunal in the case of Mehtab Alam (Supra) held that CIT(A) is not justified in assuming jurisdiction u/s. 263 when the order has been passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl.CIT u/s. 153D cannot be subject to revision u/s. 263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under : 5.4. The Ld.DR. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in this case since there was no incriminating material unearthed during the search, the Assessing Officer has not made any additions in his assessment order dated 31.03.2016, based on incriminating material since there was none unearthed. We take note that it is not the case of ld.DR. Principal CIT that AO failed to made any additions/disallowances based on incriminating material seized/unearthed during search. On this finding of fact by us, we cannot term the assessment order passed by the AO u/s 153A/143(3) dated 31.03.2016 as erroneous. It is important here to note that revision u/s 263 of the Income Tax Act, 1961 has to be made within well-defined limits subject to satisfaction of pre- conditions, as explained by us above, and therefore, similar limitation may have to be read in the instant provision. In relation to the years whose assessment is completed, it is laid down by law that in such situations of completed assessment, assessment u/s 153A of the Income Tax Act, 1961 however shall be to the extent of undisclosed income which is found during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty under litigation and other property based on SRO value cannot be equated and therefore, the provisions of section 56 in respect of the property under litigation cannot be the basis of proposing addition under section 263 of the Act. 11. Lastly, the ld.AR had submitted that twin conditions of section 263 of the Act are required to be fulfilled namely that (a) the order must be erroneous and (b) it must be prejudicial to the interest of the Revenue. 12. Per contra, the ld.DR had submitted the Assessing Officer have not applied his mind and passed a detailed order considering the documents of the assessee received by the Assessing Officer pursuant to the reply. 13. In rebuttal, ld.AR had submitted that the Assessing Officer is not required to write detailed order in respect of facts on which he was convinced for and in support thereof, ld.AR relied upon the decision of ITAT, Hyderabad in the case of Futuretech Industries Vs. DCIT. Further, the ld.AR had submitted that even the issuance of the notice by the ld.PCIT is not in accordance with law as notice was sent even for the property where admittingly there was no difference between the SRO value and the purchasing price, hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad provided all information to the Assessing Officer, therefore, ld.PCIT s finding in para 4.1 was factually incorrect, as it was not born out of the record. Moreover, we agree with the view taken by the Kolkata Tribunal in the case of M/s. Indian Roadways Corporation Ltd. Vs. PCIT (supra) 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 . 14.5 However, 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 of the Act. The coordinate Bench in the case of Dhariwal Industries Limited, Pune Vs. CIT (supra) 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. 14.6 There is yet 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessment is erroneous and prejudicial to the interest of revenue. 17. The assessing officer in his limited scrutiny, has verified the source of funds, noted the sale consideration paid, the expenses incurred for stamp duty and other charges. Furthermore, the assessee in their reply dated 11-1-2019 to the show cause notice dated 26-10-2018 issued by the PCIT has specifically stated that the assessment was getting time barred, assessing officer took upon himself the role of a valuation officer under section 50LD.DR(2) and found that the guideline value was not actual fair market value of the property and the actual consideration paid was the fair market value and therefore, he did not choose to make any addition under section 50LD.DR of the Act. 18. The PCIT, has not dealt with this specific objection, but, would fault the assessing officer for not invoking Section 56(2)(vii)(b)(ii) merely on the ground that the market value was higher. As point out earlier, the guideline value is only an indicator and that will always not represent the fair market value of the property and therefore, the invocation of the power under section 263 of the Act by the PCIT is not sustainable i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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