Verification of large deductions claimed u/s 54-B, 54-C, 54-D, 54-G of the Income Tax Act

This case involved an assessee challenging a revisional order by the Principal Commissioner of Income Tax (PCIT). The PCIT had directed a fresh assessment order, claiming the original assessment was erroneous and prejudicial to the revenue's interest, particularly concerning deductions claimed under Sections 54-B, 54-C, 54-D, and 54-G of the Income Tax Act. The assessee argued that the PCIT wrongly assumed jurisdiction under Section 263, as the original assessment had already considered these deductions. The Income Tax Appellate Tribunal ultimately allowed the assessee's appeal, cancelling the revisional order.

IN THE INCOME TAX APPELLATE TRIBUNAL
“RAIPUR” BENCH, RAIPUR
BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
& SHRI N. K. CHOUDHRY, JUDICIAL MEMBER

I.T.A. No. 19/RPR/2021

Assessment Year : 2016-17

Ramdev Mandhani HUF,
C-295, Shai lendra Nagar,
Raipur, Chhat tisgarh - 492001

vs

Income Tax Officer-3(2),
Raipur

Appellant by : Shri R.B. Doshi, AR

Respondent by : Shri P.K. Mishra, CIT-DR

As per its grounds of appeal , the assessee has challenged the revisional action of the PCIT whereby the Assessing Officer was directed to pass the assessment order de novo after making enquiries on the points set out in the not ice which has already examined and considered during the original assessment proceedings concerning AY 2016-17. The assessee has challenged the assumption of jurisdiction by the PCIT under Sect ion 263 of the Act on the ground that the
Assessment Order under revision is neither erroneous nor prejudicial to the interest of the revenue.

2. Briefly stated, the assessee fi led return of income for AY 2016- 17 declaring total income at Rs.14,35,500/ -. The case was selected for scrutiny on the reasons for verification of large deduct ions claimed under Sect ion 54-B, 54-C, 54-D, 54-G of the Act and whether deduct ions from capital gains have been claimed correctly. The assessment was completed under Sect ion 143(3) of the Act allowing the deduct ions claimed. Thereafter, the PCIT called for the
assessment records and opined that the assessment order so passed is erroneous insofar as prejudicial to the interest of the Revenue. A show cause not ice was issued to assessee seeking his response. It will be pertinent to reproduce the show-cause not ice issued by the PCIT for appreciation of controversy.

3. In conclusion, the learned Counsel submitted that the revisional order is neither sustainable in law in the absence of mandatory requirement of opportunity enshrined in Sect ion 263 itself nor on merits as the PCIT has totally misconstrued the facts of the case and grossly misapplied the law. He accordingly urged for cancellation of the revisional order and restoration of assessment order.

4. In the result , the appeal of the assessee is al lowed. Pronounced on 21.10.2021 as per Rule 34(4) of the Income Tax
Appel late Tribunal Rules, 1963.

Please find attached the enclosed file for the full judgement.