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2020 (9) TMI 414 - AT - Income TaxRevision u/s 263 - claim cost of improvement and exemption u/s. 54F in revised return - contention of Pr. CIT is that the AO cannot exercise jurisdiction to process the revised return of income - HELD THAT - In the present case, two returns were filed by the assessee one u/s. 139(4) and another u/s. 139(5) of the Act and since return filed u/s. 139(4) of the Act was validly filed by the assessee, it was incumbent upon the AO to complete the assessment in pursuance of the valid return of income. The assessment made by AO with reference to section 139(4) of the Act thus was not invalid and non-est but it was erroneous and prejudicial to the interest of revenue as rightly held by the Pr. CIT u/s. 263. Thus, the order of Pr. CIT is justified and grounds raised by the assessee are dismissed.
Issues:
1. Jurisdiction of Pr. CIT u/s. 263 on non-est return of income. 2. Validity of revised return of income and assessment made based on it. 3. Entitlement to claim cost of improvement and exemption u/s. 54F. 4. Applicability of amendment to section 139(5) of the Act. Issue 1: Jurisdiction of Pr. CIT u/s. 263 on non-est return of income: The appeal questioned whether the Pr. CIT was justified in holding the assessment passed u/s. 143(3) of the Act as erroneous and prejudicial to the interest of revenue. The Pr. CIT contended that the original return of income filed u/s. 139(4) was valid, and the AO should have completed the assessment based on this return. The Pr. CIT held that the revised return filed later was not valid and the AO erred in considering it. The Pr. CIT's decision was supported by the argument that the assessment made by the AO was not invalid but erroneous, leading to the Pr. CIT's exercise of jurisdiction u/s. 263. Issue 2: Validity of revised return of income and assessment made based on it: The assessee argued that the revised return of income was valid and should have been considered for claiming cost of improvement and exemption u/s. 54F. The Pr. CIT, however, held that the AO did not have the jurisdiction to process the revised return and that the amendment to section 139(5) of the Act was not applicable to the case. The Pr. CIT asserted that the AO's failure to make necessary inquiries before passing the assessment u/s. 143(3) rendered the assessment erroneous and prejudicial to the revenue's interest. Issue 3: Entitlement to claim cost of improvement and exemption u/s. 54F: The assessee contended that the cost of improvement and exemption u/s. 54F should have been accepted by the AO. The assessee claimed that the revised return was filed to correct errors and make these claims, which were not considered by the Pr. CIT. The argument was supported by references to relevant sections and legal provisions regarding the claim for deduction u/s. 54F. Issue 4: Applicability of amendment to section 139(5) of the Act: The substitution of sub-section (5) of section 139 by the Finance Act, 2016 was discussed, which allowed for filing a revised return in case of any omission or wrong statement. However, it was noted that this substitution came into force on 01-04-2017, making it prospective and not applicable to the assessment year 2012-13 under consideration. The Pr. CIT's decision was based on the understanding that the amendment did not apply to the case at hand. In conclusion, the Tribunal upheld the Pr. CIT's decision, dismissing the appeal of the assessee. The Tribunal found that the assessment made by the AO based on the original return of income was not invalid but erroneous, justifying the Pr. CIT's exercise of jurisdiction u/s. 263. The issues regarding the revised return, claims for cost of improvement and exemption u/s. 54F, and the applicability of the amendment to section 139(5) were thoroughly analyzed, leading to the dismissal of the appeal.
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