Section 263 – If a matter is examined by the Assessing Officer during the course of assessment and consciously accepts the plea of the assessee, the order can still be subjected to revision u/s. 263 of the Act if the view adopted by the A.O. is unsustainable in law

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[2019] 104 taxmann.com 155 (Ahmedabad)

Babulal S. Solanki vs. ITO

ITA No. 3943/Mum/2016

A.Y.: 2012-13

Dated: 4^th March, 2019

Section 263 – If a matter is
examined by the Assessing Officer during the course of assessment and
consciously accepts the plea of the assessee, the order can still be subjected
to revision u/s. 263 of the Act if the view adopted by the A.O. is
unsustainable in law

FACTS

The
Commissioner, on verification of assessment records of the assessee, observed
that while computing capital gains from transfer of land by the assessee, sale
consideration was taken instead of the jantri value, which was higher,
and therefore the difference between the jantri value and sale
consideration remained untaxed. He opined that the assessment order passed by
the A.O. was erroneous and prejudicial to the interest of the Revenue.

The
assessee, however, submitted that this aspect was specifically examined by the
A.O. and his claim was allowed after due verification of the records and
details pertaining to the sale of land.

The Commissioner
did not accept the contention of the assessee and held that since there was no
mention by the A.O. as to why the stamp duty value was not adopted as full
value of consideration, the matter was not examined and thus he directed the
revision of the assessment order u/s. 263 of the Act. Aggrieved, the assessee
preferred an appeal to the Tribunal.

HELD

The
Tribunal noted the decision of the Supreme Court in the case of Malabar
Industrial Co. Ltd. vs. CIT (243 ITR 83) wherein it was held that where
two views are possible and the ITO has taken one view with which the
Commissioner does not agree, it cannot be treated as an erroneous order
prejudicial to the interests of the Revenue unless the view taken by the ITO is
unsustainable in law.

The
Tribunal held that even if the matter was examined by the A.O. and it was his
conscious call to accept the plea of the assessee, such a situation would not
take the matter outside the purview of section 263 as the view adopted by the
A.O. in the present case was clearly unsustainable in law.

Further,
the Tribunal observed that the Commissioner had directed examination of the
claim on merits and therefore the revision order of the Commissioner did not
call for any interference.

The appeal filed by the assessee was dismissed.