2024 (5) TMI 1070 - AT - Income Tax

Revision u/s 263 by CIT - Period of limitation - requisite action should been completed by which date? - HELD THAT - In the instant case the assessee originally filed his return of income declaring total income which was assessed to tax u/s 143(3) vide order dt. 18/02/2014 wherein the addition was made towards interest on saving bank account and the assessed income determined at Rs. 3, 69, 540/- while passing the assessment order. Therefore if any of the aforesaid issues which is found to be erroneously dealt with by the AO and therefore call for revisionary proceedings u/s 263 then the requisite action should been completed by 31/03/2016 i.e; within two years from the end of the financial Year in which the assessment order was passed which is F.Y. 2013-14. Transfer expenses CLU expenses and claim of deduction u/s 54F - As we find that the same are clearly emerging from the reassessment order passed u/s 143(3) r/w 147 of the Act and the impugned revisionary order so passed by the PCIT setting aside the reassessment order is thus not barred by limitation as the limitation period will start from passing of the reassessment order and not the original assessment order. Sale of the land situated at District Solan the same is subject matter of original assessment proceedings and not the subject matter of reassessment proceedings and therefore the period of limitation for passing the revisionary order under section 263 would run from the date of the original assessment order and not the reassessment order. Thus to this extent of subject transaction of Rs 23.99 lacs the present revisionary proceedings under Section 263 are barred by limitation and the findings of the Ld. PCIT are hereby set aside as not sustainable in the eyes of law. Transfer expenses and CLU charges we find that the relevant material is available on the record and are admittedly part of the assessment records. Therefore the finding of the Ld. Pr. CIT that no documentary evidence is available on the record is not factually correct. Further in absence of any adverse finding recorded by the Ld. Pr. CIT regarding contents of the material so available on record and which has apparently been considered by the AO while allowing the claim of the assessee the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. Quantum of deduction under Section 54F of the Act as submitted by both the parties we upheld the findings of the Ld. Pr. CIT and the claim of deduction under Section 54F should therefore be restricted to Rs. 30, 49, 998/- as so computed by the Ld. Pr. CIT and therefore to this extent the order of the Ld. Pr. CIT is sustained. Appeal of the Assessee is partly allowed.

Summary

Issues Involved:
1. Justification of the Principal Commissioner of Income Tax (Pr. CIT) in setting aside the assessment order.
2. Legality and factual correctness of the Pr. CIT's order.
3. Limitation period for initiating revisionary proceedings under Section 263.
4. Examination of sale of immovable property at Village Jagjit Nagar, Solan.
5. Verification of transfer expenses and CLU charges.
6. Quantum of deduction under Section 54F of the Income Tax Act.

Detailed Analysis:

1. Justification of the Principal Commissioner of Income Tax (Pr. CIT) in setting aside the assessment order:
The Assessee contended that the Pr. CIT was not justified in setting aside the order passed by the Income Tax Officer, holding it erroneous and prejudicial to the interest of the Revenue under Section 263 of the Income Tax Act. The Pr. CIT had contested the action of the AO in allowing transfer expenses, CLU charges, and deduction under Section 54F while computing Long Term Capital Gain on the sale of land.

2. Legality and factual correctness of the Pr. CIT's order:
The Assessee argued that the Pr. CIT's order was bad in law and facts. It was submitted that except for the issue of deduction under Section 54F, other issues had attained finality at the time of the original assessment order. The Pr. CIT's findings on transfer expenses and CLU charges were contested as these were duly examined by the AO during the original assessment.

3. Limitation period for initiating revisionary proceedings under Section 263:
The Assessee argued that the period of limitation for Section 263 should be read from the completion of the original assessment proceedings. The Pr. CIT's order was claimed to be barred by limitation as it was passed beyond the two-year period from the end of the financial year in which the original assessment order was passed. The Pr. CIT and CIT/DR argued that the reassessment order dated 21/12/2017 was the relevant order for determining the limitation period, making the revisionary proceedings timely.

4. Examination of sale of immovable property at Village Jagjit Nagar, Solan:
The Assessee submitted that the sale of agricultural land at Jagjit Nagar for Rs. 23.99 lakhs was duly examined by the AO in the original assessment order. The Pr. CIT's assertion that the matter was unverified was incorrect. The Tribunal found that this issue was part of the original assessment and not the reassessment, making the revisionary proceedings on this matter barred by limitation.

5. Verification of transfer expenses and CLU charges:
The Assessee provided documentary evidence for transfer expenses and CLU charges, which were part of the assessment records. The Tribunal found that the Pr. CIT's finding of no documentary evidence was factually incorrect. The AO had considered these documents, and thus, the order could not be held erroneous and prejudicial to the Revenue.

6. Quantum of deduction under Section 54F of the Income Tax Act:
The Pr. CIT had determined the quantum of deduction under Section 54F at Rs. 30,49,998/- as against Rs. 37,00,000/- allowed by the AO. The Assessee accepted this determination. The Tribunal upheld the Pr. CIT's findings on this issue, restricting the deduction to Rs. 30,49,998/-.

Conclusion:
The appeal was partly allowed. The Tribunal found the revisionary proceedings on the sale of immovable property at Village Jagjit Nagar barred by limitation and set aside the Pr. CIT's findings on this matter. The findings on transfer expenses and CLU charges were also set aside. However, the Tribunal upheld the Pr. CIT's determination on the quantum of deduction under Section 54F.