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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI `B' BENCH,
NEW DELHI
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
MS. SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No. 984/DEL/2016
[A.Y 2011-12]
Shri Neeraj Puri Vs. The Pr. C.I.T
74-C, Rajpur Road Dehradun
Dehradun
PAN : AKGPP 4617A
[Appellant] [Respondent]
Date of Hearing : 15.01.2019
Date of Pronouncement : 16.01.2019
Assessee by : Shri Rohit Tiwari, Adv
Revenue by : Ms. Shefali Swaroop, CIT-DR
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
With this appeal, the assessee has challenged the assumption of
jurisdiction u/s 263 of the Income-tax Act, 1961 [hereinafter referred
to as 'the Act'] by the ld. PCIT, Dehradun.
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2. The assessee alleges that the order dated 18.01.206 framed u/s
263 of the Act by the ld. PCIT, Dehradun is bad in law.
3. It is the say of the ld. AR that during the course of scrutiny
assessment proceedings, the Assessing Officer had made necessary
enquiries in respect of property sold and has accepted the long term
capital gains shown by the assessee on the sale of the said property.
The ld. AR pointed out that due to an inadvertent mistake, the
property has been shown as closing stock as on 31.03.2010, whereas
the same was investment. The ld. AR further pointed out that the
assessee was filing return of income under presumptive tax and,
therefore, was not maintaining any books of account and the balance
sheet was only prepared for internal use. The ld. AR concluded by
saying that the assessment order dated 26.11.2013 framed u/s 143(3)
of the Act is neither erroneous nor prejudicial to the interest of the
Revenue, and, therefore, the assumption of jurisdiction u/s 263 of the
Act is bad in law.
4. Per contra, the ld. DR strongly supported the order of the ld.
PCIT.
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5. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd., 243
ITR 83, has laid down the following ratio:-
"A bare reading of section 263 of the Income-tax Act, 1961,
makes it clear that the prerequisite for the exercise of
jurisdiction by the Commissioner suo motu under it, is that
the order of the Income-tax Officer is erroneous in so far as
it is prejudicial to the interests of the Revenue. The
Commissioner has to be satisfied of twin conditions, namely,
(i) the order of the Assessing Officer sought to be revised is
erroneous; and ( i i ) it is prejudicial to the interests of the
Revenue. If one of them is absent--if the order of the
Income-tax Officer is erroneous but is not prejudicial to the
Revenue or if it is not erroneous but is prejudicial to the
Revenue-- recourse cannot be had to section 263( 1) of the
Act. The provision cannot be invoked to correct each and
every type of mistake or error by the Assessing Officer, it is
only when an order is erroneous that the be attracted. An
incorrect assumption of facts or an incorrect will satisfy the
requirement of the order being erroneous'.
6. All that we have to see if that whether the twin conditions have
been fulfilled or not, which means that the assessment order should
not only be erroneous but also prejudicial to the interest of the
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Revenue. It is true that in the balance sheet for the year ending
31.03.2010 the assessee has shown the following properties as stock in
trade:
Sl. No. Particulars of Property Value
1. K. Colony Rs. 4,49,000
2. Sahastradhara Rpad Rs. 6,99,320
3. Bhagirath [Dilaram] ½ Rs. 27,64,582
4. Malsi Rs. 15,00,000
5. Total Rs. 54,13,002
7. During the year under consideration, the assessee has sold
Property Malsi for a consideration of Rs. 15 lakhs and the gains arising
out of the said property has been shown under the head `Capital
Gains'. The balance sheet may have been prepared for some internal
use, but the fact of the matter is that, the property has been shown as
stock in trade. We find that while framing the assessment u/s 143(3)
of the Act, the Assessing Officer has completely ignored this fact,
which resulted in appreciation of wrong facts by the Assessing Officer.
Moreover, the assessee could not demonstrate by bringing any cogent
material evidence on record that the properties were, in fact,
investment made by the assessee and have been wrongly shown as
stock in trade. Without making any specific enquiry on this aspect, the
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Assessing Officer has accepted the capital gains returned by the
assessee, which makes the assessment order not only erroneous but
prejudicial to the interest of the Revenue. We, therefore, do not find
any reason to interfere with the findings of the ld. PCIT. Accordingly,
order framed u/s 263 is upheld.
8. In the result, the appeal of the assessee in ITA No. 984/DEL/2016
is dismissed.
The order is pronounced in the open court on 16.01.2019.
Sd/- Sd/-
[SUCHITRA KAMBLE] [N.K. BILLAIYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 16th January, 2019
VL/
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
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Date of dictation
Date on which the typed draft is placed before the
dictating Member
Date on which the typed draft is placed before the Other
Member
Date on which the approved draft comes to the Sr.PS/PS
Date on which the fair order is placed before the
Dictating Member for pronouncement
Date on which the fair order comes back to the Sr.PS/PS
Date on which the final order is uploaded on the website
of ITAT
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar
for signature on the order
Date of dispatch of the Order
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