Allahabad High Court
PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHERversusSH. CHANDRA PRAKASH GOEL
- Decided
Holding
The High Court dismissed the revenue’s appeals, holding that the tax dispute was below the Rs 2 crore threshold and the Tribunal erred in allowing the appeals despite the assessment order not being erroneous.
Summary
The revenue appealed against Tribunal orders that had allowed the assessee, Sh. Chandra Prakash Goel, to set aside assessment orders for AY 2010-11 and 2011-12 on the basis of differing valuation reports. The Tribunal held that the Assessing Officer could rely on the Approved Valuer’s report and that the assessment order, though possibly prejudicial to revenue, was not erroneous, thereby allowing the appeals. The High Court examined two questions of law raised by the revenue concerning whether an assessment order below the declared income, made on new facts, is erroneous and whether the Tribunal was justified in ignoring the lack of application of mind by the Assessing Officer under Section 263. The Court observed that the tax difference was modest (about Rs 7 lakh) and that the dispute fell below the Union’s policy threshold of Rs 2 crore for High Court litigation. Consequently, the Court dismissed the revenue’s appeals, holding that the matter did not merit High Court consideration due to its small monetary value.
Issues considered
- Whether an assessment order passed below the income declared by the assessee, on the basis of new facts, is erroneous and prejudicial to the revenue without application of mind.
- Whether the Tribunal was justified in allowing the assessee’s appeal against the order under Section 263, disregarding the finding that the assessment order lacked application of mind and was therefore erroneous and prejudicial.
Legislation cited
- Income Tax Act, 1961 — s. 143(3), 254, 263, 55A(a), Explanation 2 to section 263
Subjects
- valuation
- Deputy Valuer Officer
- Section 263
- assessment order
- prejudicial to revenue
- monetary limit
- tax dispute
- capital gains
- Income Tax Act
Judgment
HIGH COURT OF JUDICATURE AT ALLAHABAD
INCOME TAX APPEAL No. - 191 of 2026
Principal Commissioner Of Income Tax And
Another .....Appellant(s)
Versus
Sh. Chandra Prakash Goel
.....Respondent(s)
Counsel for Appellant(s) : Shalini Goel
Counsel for Respondent(s) :
Along with
INCOME TAX APPEAL DEFECTIVE No. - 110 of 2026
Principal Commissioner Of Income Tax And
Another .....Appellant(s)
Versus
Sh. Chandra Prakash Goel
.....Respondent(s)
Counsel for Appellant(s) : Shalini Goel
Counsel for Respondent(s) :
Court No. - 39
HON'BLE SAUMITRA DAYAL SINGH, J.
HON'BLE SWARUPAMA CHATURVEDI, J.
1. Heard Ms. Shalini Goel, learned counsel for the revenue and perused
the record.
2. Present appeals have arisen against the impugned order dated
06.03.2026 in ITA No.883/DEL/2021 for A.Y. 2010-11 and ITA
No.884/DEL/2021 for A.Y. 2011-12 passed in assessee's appeals. By that
order, the tribunal has allowed the appeals filed by the assessee against
the order of the Principal Commissioner of Income Tax, Ghaziabad dated
08.03.2021 under Section 263 of the Income Tax Act, 1961 (hereinafter
referred to as 'the Act'). Revenue claims exception to the Circular
governing the institution of revenue appeals, on the strength of the
proceedings arise under Section 263 of the Act.
3. The Tribunal has allowed the appeals on the following reasoning:
IAPL No. 191 of 2026
2
"16. Considering the peculiar facts, record and reliance on the decision of Anil Kripalani,
as per ratio of the above decision, it was held that the provisions of Section 55A(a) of the
Act cannot be applied and no reference is possible to be made to the DVO for determining
the market value of the property at a figure less than that shown by the Assessee. However,
in our considered view, in this case also the income declared by the assessee in the
original return of income was without the valuation report, in the set aside proceedings,
the AO had the convenience to appreciate the actual valuation to determine the actual
income under the head's capital gain and business income. There is no possibility to refer
to the DVO since the AO had accepted the valuation report moreover, the estimation was
made not for the present value, but it is for value as on 01.04.1981. Even the DVO would
have estimated based on the value as existed at that point of time and again it is also
subject to adoption of estimations. It is evident from the fact that the Assessing Officer in
the order giving effects to the proceedings under Section 263 of the Act, it is brought to our
notice that the Assessing Officer has obtained the repart from the DVO, who assessed the
FMV as on 01.04.1981 at Rs. 9.82 per sq. meters (Rs. 25 per sq. yards). In our considered
view, the above report was not challenged by the assessee at this stage. Both the reports
are extreme to each other. Considering the overall facts on record, both the valuers
adopted different estimates to value which as existed at 01.04.1981. As discussed above,
there is certain FMV based on stamp duty, which varies from Rs. 90 to Rs. 330 based on
whether the land is adjacent to the road or not. Considering the overall information
available with the registered valuer had estimated the FMV for specific purpose of capital
gain.
17. Considering the above facts on record and the case law relied by the Ld DR are
distinguishable, in our considered view, the order passed by the AO may be prejudicial to
the interest of the revenue but not erroneous, therefore, the order pansed u/s 263 is set
aside. Therefore, the assessment order passed u/s 143(3)/254 of the Act dated 24.12.2018
is not erroneous in so far as it is prejudicial to the interest of the Revenue. Accordingly, we
are inclined to allow the appeal filed by the assessee.
18. With regard to ITA No. 884/Del/2021, we observed that the issue involved is exactly
similar to the facts in ITA No. 883/Del/2021and the findings are applicable mutatis
mutandis to ITA No. 884/Del/2021, accordingly, the appeal filed by the assessee is
allowed.
19. In the result, both appeals of the assessee are allowed."
4. Learned counsel for the revenue has pressed the following two
questions of law:
IAPL No. 191 of 2026
3
"1. WHETHER on the facts and circumstances of the case and in law, passing of
assessment order below the returned income declared by the assessee by entertaining new
facts, do not render the assessment order erroneous and prejudicial to the interest of
revenue, without application of mind?
2. WHETHER, on the facts and circumstances of the case and in law, the ITAT is justified
in allowing the appeal of the assessee against the order passed by the Principal
Commissioner of Income Tax, Ghaziabad under section 263 of Income Tax Act, 1961,
ignoring the finding that the Assessing Officer had passed the assessment order without
application of mind and fulfilling the conditions specified under Explanation 2 to section
263 of the Act, thereby rendering assessment order dated 24.12.2018 erroneous as well as
prejudicial to the interest of revenue ?"
5. Having heard learned counsel for the revenue and having perused the
record, we find that the Tribunal has reasoned that the valuation made by
the DVO, though values the property higher than the valuation disclosed
by the assessee, at the same time, it could not be doubted that the
valuation disclosed by the assessee was also based on an Approved
Valuer's report. To that extent, the Tribunal has reasoned that though the
revenue may claim that the order is prejudicial to the interest of the
revenue, it may not be erroneous inasmuch as the order may have been
passed on the strength of the report of the Approved Valuer, as well.
6. Leaving that issue apart, at present, we note, against loss return
Rs.2,29,920/-, if the DVO report is accepted, the tax difference would be
about Rs. 7 lakhs.
7. We recognize that by way of a principle, the revenue may be entitled to
claim exception to the applicability of the CBDT Circular (governing the
monetary limit for filing appeals), arising out of proceedings under
Section 263 of the Act), at the same time, it cannot be lost sight, that that
exception may not have been carved out to overlook the tax effect, in
every case.
8. The general policy of the Union of India being that no litigation
involving tax dispute below Rs. 2 crores may reach any High Court at the
instance of the revenue, the quantum of dispute may still remain relevant.
Here, there is no allegation of the repeated nature of transaction as may
IAPL No. 191 of 2026
4
involve that or issue of multiplicity of proceedings. Sale of land
transactions, by very nature, are standalone transactions. Occasioned by
change of land use, the agricultural land earlier owned by the assessee
may have been converted and sold after plotting.
9. In view of that light, the revenue dispute is small, and in any case the
tax effect is miniscule, as may not merit consideration in view of the
general policy of the Union, to litigate only in cases involving tax dispute
in excess of Rs. 2 crores.
10. Thus, leaving the question of law being raised to be adjudicated in
proper set of facts, where substantial dispute may be involved, the present
appeals are, accordingly, dismissed as below monetary limit.
(Swarupama Chaturvedi,J.) (Saumitra Dayal Singh,J.)
September 30, 2026
Anurag/-
Digitally signed by :-
ANURAG JAISWAL
High Court of Judicature at Allahabad
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