Revisionary jurisdiction cannot be assumed based on an inappropriate technical perspective

Sarita Gupta Vs PCIT (ITAT Delhi)

Facts:

1. The assessee sold property and declared an income of Rs. 6,42,470/- in the original return.
2. During assessment, the Assessing Officer examined property details and capital gains.
3. The Assessing Officer accepted the declared income and allowed a deduction under section 54 for investment in a new property.

Observations:

1. The Principal Commissioner of Income Tax (PCIT) found fault with the assessment, claiming that the capital gain wasn’t deposited in the capital gain account scheme, and therefore set aside the assessment order.
2. The Appellate Authority noted that the Assessing Officer had thoroughly investigated the capital gain issue during assessment and had sought details of the exemption claimed under section 54.
3. The revisionary authority’s decision was based solely on the non-deposit of the capital gain in the specified account and was seen as hyper-technical.

Conclusion:

1. The Appellate Authority found the PCIT’s approach overly technical, especially when the conditions for claiming deduction under section 54(1) were met.
2. As per section 54(1) of the Act, the assessee was entitled to the deduction, and there was no prejudice to the Revenue.
3. The exercise of power under section 263 was deemed invalid, and the assessment order was restored, quashing the order passed under section 263.

In essence, the appeal succeeded because despite a technical lapse regarding depositing capital gains in the specified account, the conditions for claiming the deduction were fulfilled, resulting in the restoration of the initial assessment order.

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