Assessee purchased two properties on 2-12-2011 and 1-2-2012. Thereafter, he sold certain parcels of agricultural land on 21-2-2012. He claimed exemption under section 54B against sale of such agricultural land. Assessing Officer (AO) had disallowed exemption in respect of one parcel of land and allowed exemption in respect of other.
Pr. Commissioner observed that the AO had rightly disallowed the exemption in respect of one parcel of land, but he failed to disallow the exemption in respect of other parcel where the land was purchased prior to the date of transfer. He observed that section 54B requires assessee to purchase land after the date of transfer.
He alleged that the AO had not looked into this crucial aspect and had finalised the assessment proceedings under section 143(3) without due diligence. By exercising power under section 263, the order of AO was set aside by Pr. Commissioner and AO was directed to look into the aforesaid decision afresh in accordance with law.
Assessee challenged the revisional order before the Tribunal. The Tribunal held that AO had not given any reason as to how purchase prior to date of transfer of capital asset was eligible for section 54B exemption. He had accepted the claim of deduction by oversight and without any application of mind. Therefore, claim of deduction accepted by the AO despite unequivocal language of the Act, was erroneous as contemplated under section 263. The action of the Pr. Commissioner was thus within the realm of powers vested in him under section 263. There was no irregularity in the assumption of jurisdiction by the Pr. Commissioner under section 263.
Ref:- Paras Chinubhai Jani v. PCIT, Ahmedabad - [2019] 107 taxmann.com 217 (Ahmedabad - Trib.)
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