| The Tax Publishers2020 TaxPub(DT) 4667 (Mum-Trib) INCOME TAX ACT, 1961
Section 263
Where AO at no stage raised any query on the aspect of assessing ALV of unsold flats held by assessee as part of its inventory of stock-in-trade, under the head 'house property', the said issue being not inquired into by the AO while framing the assessment, would clearly bring the assessment order within the realm section 263 and accordingly, the CIT was justified in invoking his jurisdiction under section 263 on the ground that the assessment order passed by the AO was erroneous and prejudicial to the interest of Revenue.
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Revision under section 263 - Erroneous and prejudicial order - Issue as to whether or not ALV of unsold flats was to be assessed under the head 'house property' had not been inquired into by AO -
Assessee firm was engaged in business of a builder and developer. It was holding unsold flats as part of its inventory of stock-in-trade during year under consideration. CIT observed that there was failure on the part of AO in not taking cognizance of the fact that the ALV of the unsold flats held by the assessee as closing stock, was not offered by it for tax under the head 'House property'. Therefore, he was of the view that the order of the AO was erroneous and prejudicial to the interest of Revenue in terms of section 263. Assessee submitted that the view of the AO that the ALV of the property held by the assessee as stock-in-trade was not liable to be brought to tax under the head 'House property', was supported by certain orders of the coordinate benches of the Tribunal. It was further submitted that the AO while framing the assessment, deliberated upon the said aspect and arrived at a possible view. Held: On perusal of queries raised by AO during course of assessment proceedings and reply filed by assessee, it was revealed that the AO while framing the assessment, had not queried on the issue as to whether or not ALV of unsold flats was to be assessed under the head 'House property'. Further, on perusal of the assessment order also revealed that the AO at no stage raised any query on the aspect of assessing the ALV of the unsold flats held by the assessee as part of its inventory of stock-in-trade, under the head 'House property'. Therefore, as the said issue had not been inquired into by the AO while framing the assessment, the same, thus, would clearly bring the assessment order within the realm of section 263 and accordingly, the CIT was justified in invoking revisionery jurisdiction under section 263 on the ground that the assessment order passed by the AO was erroneous and prejudicial to the interest of Revenue.
REFERRED : CIT v. Ansal Housing Finance & Leasing Co. Ltd. & Ors. (2012) 354 ITR 180 (Del) : 2013 TaxPub(DT) 0681 (Del-HC).
FAVOUR : Against the assessee
A.Y. : 2014-15
IN THE ITAT, MUMBAI BENCH
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