INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry on AO's part -

Pr. CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground of no enquiry made by AO as regards assessee's claim qua the cost of improvement while computing capital gains. Assessee's case was that due enquiry regarding cost of improvement was made by AO causing, in fact, physical verification of improvement effected through his Inspector who reported favourably. Held: There was Inspector's Report, which form the fulcrum of assessee's case was an unsigned document, not bearing even the name of Inspector who had ostensibly carried out inspection. The same, therefore, had no sanctity, much less evidentiary value, in law. There was complete absence of any other evidence led by assessee toward its claim. There was, in fact, no query in respect of 'cost of improvement'. Even, builder before its AO, rather than confirming, refuted assessee's stand as to payment thereto toward cost of improvement. To clarify matters, there was in fact no enquiry by assessee's AO with the Builder. Accordingly, there was complete lack of enquiry on AO's part and, therefore, allowance of cost of improvement was erroneous and prejudicial.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2009-10

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