The Chennai bench of the Income Tax Appellate Tribunal (ITAT)has held that revisional jurisdiction cannot be invoked on highly debatable issues.
The assessee, Shri Shanmuga Sundaram engaged in the business of construction of residential and commercial buildings i.e., real estate business where the assessment was completed u/s.143(3) after verifying the details called for.
The PCIT by assuming jurisdiction u/s.263 of the Income Tax Act revised the assessment order by directing the AO to add back a sum of Rs.25 lakhs being the difference in the purchase price of the property as per the consideration recorded in the sale deed and value fixed as per guideline of sub-registrar of the registration department to be added as per the provisions of section 56(2)(viib)(ii) of the Act.
It was observed that if there was some difference between the sale consideration as per the sale deed and the guideline value fixed by Stamp Valuation Authority and merely because the guideline value was higher than the sale consideration shown in the sale deed, it cannot be the sole reason for holding that the assessment is erroneous and prejudicial to the interest of Revenue.
The Tribunal observed that the assessee disclosed the investment as per consideration declared in the sale deed at Rs.3.25 crores but the PCIT was of the view that the difference of Rs.25 lakhs given the guideline value fixed by Stamp Valuation Authority at Rs.3.50 crores is to be accepted and added to the return of income of the assessee.
Shri Mahavir Singh, vice president and Shri Manoj Kumar Aggarwal, accountant member while quashing the revisional order viewed that this is a highly debatable issue and the order cannot be held as erroneous in light of the decision in the case of Malabar Industrial Co. Ltd., vs. CIT, (2000).
The appeal filed by the assessee was allowed. The appellant was represented by Shri N. Arjunraj for Shri S. Sridhar and the respondent was represented by Shri Guru Bashyam.
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