Case Number: ITA 643/DEL/2021
Appellant: Apace Developers Private Limited, Delhi
Respondent: Pr. CIT-1, Delhi
Assessment Year: 2016-17
Case Filed On: 2021-06-01
Order Type: Final Tribunal Order
Date of Order: 2022-09-22
Pronounced On: 2022-09-22
This article provides an in-depth analysis of the case ITA No. 643/DEL/2021, where Apace Developers Private Limited contested a computational error in the assessment for the assessment year 2016-17. The case explores significant issues regarding jurisdiction under Section 263 of the Income Tax Act and the accuracy of assessment figures.
Apace Developers Private Limited, the appellant, is a company based in Delhi engaged in real estate development. For the assessment year 2016-17, the Principal Commissioner of Income Tax (Pr. CIT), Delhi-1, issued an order under Section 263 of the Income Tax Act, which the appellant contested. The appeal was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘A’ consisting of Sh. C. N. Prasad, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member.
The primary issue was whether the Pr. CIT was justified in assuming jurisdiction under Section 263 of the Income Tax Act. Section 263 grants the Pr. CIT the authority to revise any order passed by the Assessing Officer (AO) if it is considered erroneous and prejudicial to the interests of the revenue.
The appellant argued that the Pr. CIT’s order was based on a computational mistake regarding the work-in-progress and the percentage completion method followed for the projects ‘Royal Home Town’ and ‘Ellora Infratech’. The appellant claimed that the correct figure of Rs. 1,37,38,732 was not considered, and instead, an erroneous figure of Rs. 2,61,23,620 was used, leading to an incorrect additional amount of Rs. 94,52,860 being directed for addition by the Pr. CIT.
The appellant, represented by Shri Akhilesh Kumar, Adv., and Shri Pushkar Pandey, Adv., argued that the Pr. CIT assumed jurisdiction under Section 263 erroneously, as detailed inquiries were already conducted by the AO, and the additions were pending before the CIT(A). They highlighted that the computational mistake significantly affected the assessment’s accuracy, leading to an incorrect addition which should be rectified.
The respondent, represented by Shri R. K. Gupta, CIT DR, acknowledged the computational mistake and agreed that the issue could be rectified. The respondent, however, defended the Pr. CIT’s jurisdiction under Section 263, emphasizing the need to ensure accurate assessments.
The tribunal carefully considered the arguments and the case records. It acknowledged the computational mistake regarding the work-in-progress and the percentage completion method. The tribunal noted that correcting this mistake would show that the AO’s order was not erroneous or prejudicial to the interests of the revenue, thus questioning the necessity of the Pr. CIT’s order under Section 263.
The tribunal concluded that the computational mistake could be rectified under Section 154 by the Pr. CIT, eliminating the need for the tribunal to exercise its power under Section 263. Consequently, the tribunal set aside the Pr. CIT’s order and remanded the case back to the Pr. CIT for correction of the computational error.
Final Judgment:
In the Income Tax Appellate Tribunal, Delhi Bench ‘A’ New Delhi
Before: Sh. C. N. Prasad, Judicial Member & Dr. B. R. R. Kumar, Accountant Member
Order:
The appeal filed by Apace Developers Pvt. Ltd. is allowed. The order under Section 263 by the Pr. CIT is set aside, and the case is remanded back to the Pr. CIT for correction of the computational mistake under Section 154 of the Income Tax Act. The tribunal emphasized the importance of accurate computations in ensuring fair and just assessments.
Order Pronounced in the Open Court on 22nd September 2022.
Signed:
Dr. B. R. R. Kumar, Accountant Member
C. N. Prasad, Judicial Member
Date: 22nd September 2022
Apace Developers vs. Pr. CIT: Addressing Computational Error in Assessment for AY 2016-17
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