INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - CIT invoked amendment under section 55A prior to 1-7-2012 -

CIT noticed that assessee had purchased a piece of land at Rs, 24,700, dated 11-3-1981 which was valued as on 1-4-1981 at Rs. 5,50,000 for the purpose of working out capital gain under section 45. As per CIT value of property could not be increased to such high-value witin a short span of 22 days. Accordingly, CIT required the assessee as well as valuer who valued the property at Rs. 5,50,000 as on 1-4-1981. But both of them failed to make any satisfactory reply. Accordingly, CIT held order of AO as erroneous insofar prejudicial to the interest of revenue and directed to take value of the land as on 1-4-1981 at Rs. 24,700 while working out capital gain. Held: There was an amendment in provisions of section 55A where the word 'variance' was inserted but such amendment is applicable with effect from 1-7-2012 which is prospective in nature. Thus amended provisions could not be applied in the year under consideration. Accordingly, there was no infirmity in the assessment order and, therefore, order framed under section 263 was not sustainable because it was not the case where value of the asset shown as on 1-4-1981 was less than fair market value in terms of pre-amended section 55A.

REFERRED : CIT v. Gauranging S. Sodhan Indl. reported in (2014) 367 ITR 238 (Guj) : 2014 TaxPub(DT) 3200 (Guj-HC)

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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