An assessment order is erroneous and prejudicial to the revenue if an Assessing Officer fails to inquire into material issues or applies incorrect statutory provisions during reassessment, justifying the exercise of revisionary jurisdiction under Section 263 of the Income Tax Act.

O R D E R

PER KHETTRA MOHAN ROY, AM:

This appeal filed by the assessee is directed against the order of Ld. Principal Commissioner of Income Tax, Nagpur-1, (for short, “PCIT”), dated 24/03/2025 passed under section 263 of the Income Tax Act, 1961 (for short, “Act”) for Assessment Year 2015-16.

2. The assessee has raised the following grounds of appeal:

1. That on the facts and circumstance of the case and in law, order dated 24 March 2025, passed under section 263 of the Income tax Act, 1961 ("the Act") by Hon'ble Principal Commissioner of Income Tax, Nagpur-1 is bad in law and liable to be quashed.

2. That, on the facts and circumstances of the case and in law, Hon'ble PCIT, Nagpur-1 has erred in initiating revisionary proceedings on the ground that subject issues have not been examined properly by Assessing Officer during course of assessment proceedings.

3. That, on the facts and in circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in passing the order u/s. 263 by invoking Explanation 1 and 2 of Section 263 of the Act, although the assessment order passed u/s. 147 r.w.s 143(3) of the I. T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue.

4. That on the facts and circumstances of case and in law, PCIT, Nagpur -1 has not assumed proper jurisdiction to revise order passed by the A.O. u/s 147 where assessee being an eligible assessee to avail benefit of VSV scheme 2024, filed an application in Form 1 on 23/01/2025 and awaited Form 2 from PCIT. Thus, the notice issued u/s 263 after filing of Form 1 under VSV scheme is bad in law.

5. That on the facts and circumstances of case and in law, PCIT, Nagpur -1 has erred in invoking Section 263 to revise the reassessment order for not applying section 56(2) (vii) (b) of the Income Tax Act on purchase of property, ignoring the fact that said property is a business purchase of assessee and section 56(2)(vii)(b) is not applicable to trading purchases.

6. That on the facts and circumstance of the case and in law, order dated 24 March 2025, passed under section 263 of the Income tax Act, 1961 ("the Act") by Hon'ble Principal Commissioner of Income Tax, Nagpur-1 setting aside the reassessment order and directing the JAO to pass fresh order.

7. The above grounds are independent and without prejudice to each other. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.

3. Facts of the case, in brief, are that assessee is an individual who had not filed his return of income for the Assessment Year 2015-16. Based on the information available with the Department through Annual Information Return (AIR)/other sources, it was noticed that assessee had entered into high-value financial transactions aggregating to Rs.2,14,58,000/-. The said transactions comprised sale of immovable property amounting to Rs.22,50,000/- and purchase of immovable property amounting to Rs.1,92,08,000/-. Accordingly, the Assessing Officer formed a belief that income chargeable to tax had escaped assessment and initiated reassessment proceedings by issuing notice under section 148 of the Act, which was duly served upon the assessee. In response to the said notice, assessee filed his return of income on 09.07.2022 declaring total income of Rs.4,08,090/-. During the course of reassessment proceedings, the assessee furnished various details and documentary evidences including copy of bank account statements, Form No.26AS, computation of income, details of immovable properties sold and purchased along with copies of registered sale deeds and purchase deeds. On verification of the sale d