2021 (10) TMI 1091 - AT - Income Tax

Revision u/s 263 by CIT - AO did not properly examine the bills/vouchers/receipts relating to the investments made by the assessee in a new flat to claim deduction u/s 54F - HELD THAT - As perusal of the impugned order of the CIT reveals that after thoroughly examining the details and evidences furnished by the assessee during the revision proceedings u/s 263 CIT could not point out much discrepancy except about some small payments on account of small improvements such as bath room door, balcony grill, geysers, painter etc. as against the total allowance claimed - in respect of the items mentioned by the CIT, the assessee himself had mentioned before the Assessing Officer that the receipts about the said items were not available. The nature of the items and the small investments made in that respect, in our view, cannot be doubted as the assessee has duly furnished the details and evidences relating to the investments made and the same were duly examined by the Ld. CIT himself, however, the Ld. CIT could not point out any major discrepancy. In our view, CIT has wrongly exercised this revision jurisdiction u/s 263 in this case. In our view, no useful purposes will be served for re-assessment on this issue when the details etc. have already been examined by the the Ld. CIT and no error has been found in the order of the Assessing Officer. In view of this, the impugned order of the Ld. CIT is set aside and the order of the Assessing Officer is restored. The appeal of the assessee stands allowed.

Summary

Issues:
1. Revisionary jurisdiction under section 263 of the Income Tax Act regarding long-term capital gain and deductions u/s 54EC and 54F.
2. Proper application of section 54F and verification of investment details.
3. Non-production of bills/receipts for certain items and exercise of revisionary jurisdiction by the CIT.
4. Discrepancies in small payments for improvements and the overall allowance claimed u/s 54F.

Issue 1:
The appeal was against the CIT's order under section 263 of the Income Tax Act, challenging the revisionary jurisdiction exercised by the CIT regarding the long-term capital gain and deductions u/s 54EC and 54F. The CIT observed discrepancies in the application of section 54F by the Assessing Officer, leading to an erroneous allowance of deductions without proper verification of investment details.

Issue 2:
The CIT noted that the assessee did not produce bills/receipts for certain items related to investments made for claiming exemption u/s 54F. Despite the assessee's explanations and submissions, the CIT found a lack of supporting evidence during the revision proceedings under section 263. The CIT set aside the assessment order on the issue of deduction u/s 54F, directing a reassessment by the Assessing Officer.

Issue 3:
During the appeal, the assessee contended that the CIT's order lacked substantial discrepancies in the investment details provided by the assessee. The Tribunal found that the CIT could not identify major discrepancies except for small payments related to minor improvements, which did not significantly impact the overall deduction claimed u/s 54F. The Tribunal concluded that the CIT wrongly exercised revision jurisdiction under section 263, as the investment details were duly examined, and no major errors were found in the Assessing Officer's order.

Issue 4:
The Tribunal overturned the CIT's order, stating that the nature of the small investments made by the assessee, despite lacking some receipts, was adequately supported by details and evidence. The Tribunal found no substantial reason for reassessment when the CIT had already reviewed the investment details and found no major discrepancies. Consequently, the Tribunal allowed the appeal, setting aside the CIT's order and restoring the Assessing Officer's decision on the deduction u/s 54F.