This case involves an appeal by the assessee, Gurbakshish Singh Batra, against the order of the Pr. CIT – 12, New Delhi, which invoked the provisions of section 263 of the Income Tax Act, questioning the original assessment order concerning the fiscal year 2016-17.
The appellant, an individual taxpayer, filed his return on October 6, 2016, declaring a total income of Rs.44,86,160. The return was processed under section 143(1) and was later selected for limited scrutiny focusing on the correctness of sales turnover/receipts and capital gains on property sales.
The Pr. CIT noted several alleged deficiencies in the assessment order and questioned the adequacy of the inquiries conducted by the Assessing Officer (AO). The main issues were whether capital gains from property sales were accurately reported and if the property was correctly assessed under section 50C of the Income Tax Act.
The Tribunal found that the AO had indeed conducted sufficient inquiries during the assessment proceedings. It noted that the AO had issued multiple notices under sections 143(2) and 142(1), to which the assessee responded comprehensively. The Tribunal held that the AO’s conclusions were based on a plausible interpretation of the facts and law, and thus, the order was neither erroneous nor prejudicial to the interests of the revenue.
The judgment emphasized the limits of the Pr. CIT’s revisional powers under section 263. It clarified that for an assessment order to be revised under this section, it must be both erroneous and prejudicial to the interests of the revenue. The Tribunal concluded that the Pr. CIT had overstepped these boundaries by re-assessing the case without substantial evidence of any error or prejudicial impact on revenue.
The Tribunal’s decision in ITA No. 396/Del/2021 highlights the need for administrative authorities to adhere strictly to statutory provisions and the principles of natural justice. It underscores the importance of detailed inquiries during the original assessment and the limits of revisionary powers without concrete evidence of errors affecting the revenue.
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