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2015 (7) TMI 72 - AT - Income TaxRevision u/s 263 - order has been passed by the Ld. CIT under section 263 without considering the explanation offered by the assessee - Registration of Development Agreement - Explanation w.r.t Exemption u/s 54F - Held that - On the basis of this explanation offered in respect of each and every issue, it was contended on behalf of the assessee before the Ld. CIT that it was not the case of assessments having been completed by the A.O. without making proper and adequate enquiries as required in the facts and circumstances of the case. A perusal of the operative portion of the Ld. CIT s impugned order however shows that he has neither considered this explanation of the assessee nor made any comment/ observation thereon pointing out specifically that it was still a case of failure on the part of the A.O. to make proper and adequate enquiries before completing the assessments as were required in the facts and circumstances of the case. He has not pointed out specifically even a single enquiry which A.O. ought to have made in the facts and circumstances of the case but has failed to do. We, therefore, fully agree with the stand of the assessee that the impugned order has been passed by the Ld. CIT under section 263 without considering the explanation offered by the assessee and without applying his mind. In our opinion, this failure of the Ld. CIT, however, does not constitute any legal infirmity to make the order passed by him under section 263 invalid or void abinitio as sought to be made out by the assessee in the ground raised in these appeals. We are of the view that it would be just and proper in the facts and circumstances of the case, to set aside the impugned order of the Ld. CIT passed under section 263 and remit the matter back to him with a direction to pass fresh order under section 263 after duly taking into consideration the explanation offered by the assessee and after applying his mind. Needless to observe that the Ld. CIT(A) shall pass well discussed and well reasoned order after giving proper and sufficient opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Delay in filing appeals. 2. Taxation of capital gains for AY 2005-06. 3. Compliance with Section 50C for AY 2006-07. 4. Exemption under Section 54F for AY 2007-08. 5. Validity of the CIT's order under Section 263. Detailed Analysis: 1. Delay in Filing Appeals: The Tribunal acknowledged a delay of 3 days in filing the appeals and found the reasons for the delay satisfactory, thus condoning the delay. 2. Taxation of Capital Gains for AY 2005-06: The assessee executed a Development Agreement cum GPA on 01-06-2004 for the development of land, receiving flats in exchange for the land. The CIT noted that the agreement was not registered, making compliance with Section 50C unverifiable. The CIT argued that the capital gains should be taxed in AY 2005-06, a fact not verified during the assessment proceedings. The assessee contended that the registration endorsement was present and the A.O. had correctly considered all facts during the assessment. 3. Compliance with Section 50C for AY 2006-07: The assessee received an amount for surrendering land and sold a flat, showing a certain value for the undivided share of land. The CIT argued that compliance with Section 50C was not verifiable due to the lack of registration, suggesting a higher capital gain than reported by the assessee. The assessee explained that the cost assigned to the land was a balancing figure after reducing the cost of the built-up area from the total sale consideration and not the actual cost of the land. The assessee reiterated that the sale of flats is based on the built-up area, and the A.O. had correctly taken the value of the land on the date of the agreement. 4. Exemption under Section 54F for AY 2007-08: The assessee was allowed an exemption under Section 54F for a flat, which was later gifted, indicating non-compliance with the holding period prescribed under Section 54F. The CIT argued that the exemption should be disallowed. The assessee contended that gifting the flat to a spouse did not constitute a transfer of a capital asset, thus maintaining the exemption claim. 5. Validity of the CIT's Order under Section 263: The CIT held that the A.O. failed to make necessary inquiries, making the assessment orders erroneous and prejudicial to the revenue's interest. The CIT set aside the assessment orders with directions for a proper examination of the issues. The Tribunal reviewed a similar case, noting that the CIT had not considered the assessee's explanations or pointed out specific inquiries the A.O. failed to make. The Tribunal found that the CIT's failure to consider the explanations did not invalidate the order but remitted the matter back to the CIT for a fresh order after considering the assessee's explanations and applying his mind. Conclusion: The Tribunal set aside the CIT's orders and remitted the matters back to the CIT for fresh orders after considering the explanations offered by the assessee and applying his mind. The appeals were treated as allowed for statistical purposes.
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