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2015 (7) TMI 616 - AT - Income TaxRevision u/s 263 by CIT(A) - claim of deduction on account of interest was allowed u/s 24 of the Act against the income from house property and was disputed by the CIT by observing that the same is not allowable as per third proviso to section 24B of the Act as the assessee had not furnished required certificate from the party or parties to whom this amount of interest was paid - Held that - On careful consideration of orders of the Tribunal as related by the ld. counsel of the assessee and provisions of section 153D of the Act and hierarchy of the income tax department, we are of the considered view that admittedly, the impugned assessment order which was demolished by the CIT by invoking provisions of section 263 of the Act was passed with prior approval of ACIT, Central Range-2, New Delhi vide F.No.153A-03-Mahesh Mehta/11-12/607 dated 28.12.11. The CIT in any terms cannot be equated with ACIT because CIT holds higher position in the hierarchy of the department. In this situation, benefit of the ratio of the orders of the Tribunal as relied by the ld. counsel of the assessee is not available and hence legal contention of the assessee is hereby jettisoned. Under third proviso to section 24(b) of the Act, the assessee is required to submit a certificate for making claim of interest under this provision and there is no prescribed form of certificate. During the assessment proceedings on the specific query of the AO, the assessee furnished detailed explanation supported by repayment schedule, copy of the bank statement to substantiate its claim and the amount of interest has not been disputed either by the AO or by the CIT. In this situation, merely non-compliance of directory provisions of the Act cannot make assessment order as erroneous and prejudicial to the interest of revenue, especially when the claim of the assessee regarding interest u/s 24(b) of the Act is accepted as genuine and no incorrectness or infirmity has been brought out by the ld. CIT or any other revenue authorities therein. If for a moment it is accepted that order is erroneous on account of required certificate but at the same time, the same cannot be held as prejudicial to the interest of the revenue as the claim of interest paid by the assessee has not been alleged as bogus or not correct or not genuine by the ld. CIT. Thus we are inclined to note that the view taken by the AO was a reasonable and plausible view which cannot be said as unsustainable or not in accordance with law and other relevant provisions of the Act on the issue of allowability of deduction or interest paid by the assessee. Unaccounted cash payment on purchase of property - Held that - While the assessee has shown unaccounted consideration in the statement of capital gain filed along with the return of income, then it further explains the source of unaccounted payment of consideration of purchase of property bearing no. 56/7, DG Gupta Road, hence, no addition pertaining to undisclosed investment could have been made. However, as a vigilant tax collecting authority, the AO adopted a conservative approach and deducted ₹ 1 crore from capital gain and taxed the same under the head of income from other sources which obviously attracts higher tax rate, then this action of the AO is more favourable to the revenue which cannot be held as erroneous and prejudicial to the interest of revenue. At this juncture, it would be appropriate to consider the ratio of the decision of Jurisdictional High Court of Delhi in the case of CIT vs DG Housing (2012 (3) TMI 227 - DELHI HIGH COURT ) wherein it was held that the Commissioner cannot remit the matter for a fresh decision to the AO to conduct further inquiries without a finding that the order is erroneous as a condition precedent for exercise of jurisdiction us/ 263 of the Act. From operative part of the order of the CIT we note that the CIT has held that the assessment on the issues raised in the show cause notice was made without proper examination, inquiry and verification, therefore, revisional jurisdiction u/s 263 of the Act is warranted in a case where assessment has been made without inquiry or verification. In this para, the CIT contradicts himself in the first sentence. He mentions that the assessment was framed without proper examination, inquiry and verification whereas in the second sentence, he writes that the assessment has been made without inquiry or verification which vitiate the impugned order. Sale of several other properties during the relevant previous year - Held that - The tax liability on capital gain attracts which was placed by the assessee along with her return of income available at page 10 of the paper book. The AO after consideration of capital gain statement accepted the amount of ₹ 1 crore as unaccounted consideration received by the assessee on sale of property and paid by the assessee on purchase of property on the very same date and the AO instead of taxing the capital gain taxed ₹ 1 crore under the head of income from other sources which is a more favourable view for the revenue. In this situation, view taken by the AO in framing assessment order on all three issues cannot be held as unsustainable and not in accordance with law. In this situation, while the CIT himself is not sure about the issue of erroneousness of impugned assessment order, which is vivid from the contents of the notice issued to the assessee u/s 263 of the Act and in totality of the facts and allegations mentioned in the notice u/s 263 of the Act and in the impugned order passed u/s 263 of the Act, we note that the CIT simply alleged conclusion of the AO and held that the AO has failed to conduct proper inquiry and verification on the issues cited above and without holding any specific erroneousness and without any finding that the views taken by the AO on all three are unsustainable and not in accordance with law. The CIT cannot remit the matter for reassessment to AO. Thus invoking of provision of section 263 of the Act by issuance of notice and passing impugned order, directing the AO to revisit the issue and to make further inquiry cannot be held as valid. Thus impugned order passed u/s 263 of the Act are quashed. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Deduction under Section 24(b) of the Income Tax Act. 3. Unaccounted income of Rs. 1 crore from property transactions. 4. Reference to valuation cell for verifying the sale consideration of other properties. 5. Assumption of jurisdiction on issues already under appeal. 6. Setting aside the assessment order for de novo adjudication. Issue-wise Detailed Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act: The assessee contested the assumption of jurisdiction under Section 263 by the Commissioner of Income Tax (CIT). The CIT observed that the assessment order dated 28.12.2011 was erroneous and prejudicial to the interest of revenue due to inadequate inquiry and verification. The Tribunal, referencing the case of ITO vs. DG Housing Projects Ltd. (343 ITR 329), held that the CIT cannot remand the matter for fresh decision to the Assessing Officer (AO) without a finding that the order is erroneous. The Tribunal concluded that the CIT's action in assuming jurisdiction under Section 263 was not justified as the AO had conducted adequate inquiries and verification. 2. Deduction under Section 24(b) of the Income Tax Act: The CIT disputed the deduction of Rs. 6,36,111 on account of interest under Section 24(b), alleging that the requisite certificate was not furnished. The Tribunal noted that the assessee had submitted detailed explanations, bank statements, and repayment schedules to substantiate the claim. The Tribunal held that the AO had made proper inquiries and verification, and the CIT's objection was based on non-compliance with a directory provision, which did not make the assessment order erroneous or prejudicial to the interest of revenue. 3. Unaccounted Income of Rs. 1 Crore from Property Transactions: The CIT observed that the AO failed to tax Rs. 1 crore as unaccounted cash payment for the purchase of property at 56/7, Deshbandhu Gupta Road, Karol Bagh. The Tribunal noted that the AO had considered the statement of the assessee's husband and other relevant documents, and had taxed Rs. 1 crore under the head of "income from other sources" instead of "capital gain," which was more favorable to the revenue. The Tribunal held that the AO's approach was reasonable and plausible, and the CIT's assumption of jurisdiction under Section 263 was not justified. 4. Reference to Valuation Cell for Verifying the Sale Consideration of Other Properties: The CIT alleged that the AO did not make a reference to the valuation cell for verifying the sale consideration of other properties sold by the assessee. The Tribunal found that the AO had made detailed inquiries and had considered all relevant documents and explanations provided by the assessee. The Tribunal held that the AO's view was a reasonable and plausible one, and the CIT's direction for further inquiry was not warranted. 5. Assumption of Jurisdiction on Issues Already Under Appeal: The assessee argued that the CIT erred in assuming jurisdiction to pass a revisional order under Section 263 on issues that were already the subject matter of appeal. The Tribunal did not find any specific mention of this issue in the CIT's order and focused on the adequacy of the AO's inquiries and verification. 6. Setting Aside the Assessment Order for De Novo Adjudication: The CIT set aside the assessment order for de novo adjudication on the grounds of inadequate inquiry and verification. The Tribunal, referencing the case of CIT vs. DG Housing Projects Ltd., held that the CIT cannot remand the matter for fresh decision without a clear finding that the order is erroneous and prejudicial to the interest of revenue. The Tribunal concluded that the AO had conducted adequate inquiries and verification, and the CIT's order was not sustainable. Conclusion: The Tribunal quashed the notice issued by the CIT under Section 263 and the impugned order, allowing the appeal of the assessee. The Tribunal held that the AO's assessment order was based on reasonable and plausible inquiries and verification, and the CIT's assumption of jurisdiction under Section 263 was not justified. The Tribunal emphasized that the CIT must provide a clear and unambiguous finding that the AO's order is erroneous and prejudicial to the interest of revenue before invoking Section 263.
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