2018 (1) TMI 1507 - AT - Income Tax

Revision u/s 263 - non application of 50C by assessee - assessment is framed on the basis of the revised return filed - A.O. did not take into account original return of income - As per CIT non disclosing correct valuation on account of long term capital gains as applicability of section 50C ignored - HELD THAT - There was an Agreement to Sale between Assessee-HUF and Shri Shanti Bhushan in September, 1966, whereby, the purchaser agreed to purchase the property for ₹ 1 lakh and paid earnest money of ₹ 5000 through cheque. It is, therefore, established on record that the purchaser has entered into an Agreement to Sale to purchase the property for a sum of ₹ 1 lakh in September, 1966 but due to litigation in Civil Court, the Sale Deed was executed later on 29.11.2010. Therefore case of Sanjeev Lal 2014 (7) TMI 99 - SUPREME COURT clearly applicable to the facts and circumstances of the case and the Date of Agreement to Sale to be taken as Date of Transfer of Original Asset. On peculiar facts of the case, the sale deed dated 29.11.2010 as per provisions of Law for calculating long term capital gains shall have to be considered as executed on September 1966. Thus, the provisions of Section 50C of the I.T. Act which were not applicable in that year could not be invoked against the assessee. It is well settled Law that two conditions need to be satisfied for invoking powers under section 263 by the Commissioner which are (1) the Order of the A.O. sought to be revised is erroneous and (2) it is prejudicial to the interests of the Revenue. At the same time this provision cannot be invoked to correct each and every type of mistake or error committed by the A.O. The order of the A.O. cannot be termed prejudicial simply because A.O. adopted one of the course permissible in Law and it has resulted in loss of Revenue or where two views are possible and A.O. has taken one view with which the Commissioner did not agree. Where two views are possible and A.O. has taken one view and the Commissioner does not agree with the view taken by the A.O, the assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue. Section 50C would not be applicable to the facts and circumstances of the case. In assessment year under appeal, because the date of Sale Deed shall have to be reckoned on the date of Agreement to Sale i.e., September, 1966, therefore, the view of the A.O. is sustainable in Law and if the Ld. CIT does not agree with him, such order could not be treated as erroneous and prejudicial to the interests of the Revenue. On minor issue, assessee filed reply but no order have been passed by the Pr. CIT. It is a case where A.O. made enquiry into the matter by calling explanation of assessee and was satisfied with the claim of assessee. Therefore CIT should not have exercise jurisdiction under section 263. We, therefore, of the view that the order of CIT is not sustainable in Law - Decided in favour of assessee.

Issues Involved:
1. Validity of the revised return filed by the assessee.
2. Applicability of Section 50C regarding the sale consideration for property sold to Shri Shanti Bhushan and others.
3. Enquiry into income from house property and income from other sources.

Issue-wise Detailed Analysis:

1. Validity of the revised return filed by the assessee:
The Ld. CIT found that the revised return filed by the assessee on 1st July 2013 was non-est because it was filed after the expiry of one year from the end of the relevant assessment year, contrary to the provisions of Section 139(5) of the IT Act. The A.O. made the assessment based on this non-est return, which rendered the assessment order erroneous and prejudicial to the interests of the Revenue. The assessee contended that the revised computation was to correct the long-term capital gains, and the A.O. completed the assessment after due enquiry. However, the Ld. CIT held that any claim for deduction not made in the original return could only be entertained through a valid revised return, as per the Supreme Court ruling in Goetze (India) Ltd. v. CIT [2006] 284 ITR 323.

2. Applicability of Section 50C regarding the sale consideration for property sold to Shri Shanti Bhushan and others:
The Ld. CIT noted that the A.O. should have considered the value of the plot at ?19,07,79,830 for computing long-term capital gains, as per Section 50C, instead of ?1 lakh as per the Conveyance Deed. The Sub-Registrar had valued the portion sold to Shri Shanti Bhushan and others at ?19,07,79,830, which should have been adopted for stamp duty purposes. The assessee argued that the Agreement to Sale dated back to 1966, and due to litigation, the Sale Deed was executed in 2010. The assessee relied on the Supreme Court decision in Sanjeev Lal v. CIT [2014] 365 ITR 389, which held that the date of the Agreement to Sale should be considered the date of transfer for capital gains purposes. The Tribunal agreed with the assessee, holding that the sale consideration should be taken as per the 1966 agreement, and Section 50C would not apply.

3. Enquiry into income from house property and income from other sources:
The Ld. CIT found that the A.O. did not make any enquiry regarding the income from house property declared at ?2863 and income from other sources declared at ?40,64,754. The Tribunal noted that the assessee had filed detailed replies regarding these incomes during the assessment stage, and the A.O. had considered these details. Therefore, it was not a case of no enquiry.

Conclusion:
The Tribunal concluded that the assessment order was not erroneous or prejudicial to the interests of the Revenue. The A.O. had made enquiries and considered the material on record. The Tribunal set aside the order under Section 263 of the I.T. Act and restored the original assessment order. The Ld. CIT(A) was directed to decide the appeal against the original assessment order on merits.

Result:
The appeal of the assessee was allowed.

← Previous Next →