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2021 (7) TMI 13 - AT - Income TaxRevision u/s 263 by CIT - no enquiry v/s incomplete enquiry - assessment orders framed u/s 147 r.w. 143(3) of the Act and various documentary evidences filed during the course of reassessment proceedings - Value of sale consideration to be adopted for computing the capital gain, Allowability of deduction u/s 54B of the Act and Allowability of deduction u/s 54F - HELD THAT - In the instant case where the payment for sale consideration mentioned in the agreement to sale has been duly received through banking channels prior to entering registered sale deed, the value of sale consideration to be adopted in these cases has to be valued as per the Stamp Valuation Authority provided u/s 50C of the Act as on the date of entering the agreement of sale or consideration mentioned in the agreement to sale whichever amount is higher. AO after making necessary enquiry has adopted one of the permissible view by accepting the claim of the assessee of computing the capital gain by taking sale consideration as on the date of agreement to sale which thus leaves no room for Ld. Pr. CIT to assume jurisdiction on this particular issue. This common issue covers appeals in the case of Shankarlal Mukati, Babulal Mukati, Kailash chandra Mukati, Tulsi Bai Mukati, Radheyshyam Mukati, Motilal Mukati Motilal Mukati (L/H Ramchandra Mukati) wherein Ld. Pr. CIT assumed the jurisdiction only on this particular issue. AO has conducted necessary enquiry on this particular issue and have also taken one of the permissible view judicially accepted, there was no justification on the part of the Ld. Pr. CIT to invoke the provision of section u/s 263 of the Act. We, therefore, quash the proceedings carried out u/s 263 of the Act and restore the assessment order originally framed u/s 143(3) r.w.s. 147 of the Act in the case of all these seven assessees and allow their respective appeals. Deduction u/s 54B - In the instant case the agreement to sale was not cancelled and the same was acted upon on at the same sale consideration and finally executed the registered sale deed with the same person though acting on behalf of the company as its director and since the assessee has utilized the same sale consideration for purchasing new agricultural land he should be allowed the benefit of section 54F of the Act, so as to fulfill the very object of section 54B of the Act for which it has been created in the act. This view was adopted by the Ld. AO to allow the deduction u/s 54B of the Act which is legally permissible view and thus, cannot be taken as a basis to assume jurisdiction u/s 263 of the Act and holding the orders of Ld. AO as erronous.Grounds of appeal raised deserves to be allowed and proceedings u/s 263 of the Act are directed to be quashed. Allowability of deduction u/s 54F as deduction was claimed by the assessee towards amount utilized for construction of residential house from the sale proceeds of impugned immovable property - HELD THAT - Records shows that the assessee(s) have filed necessary documentary evidences such an affidavit in support of construction of new house, withdrawal of amount from bank for construction purpose, physical existence of new residential house which were also confirmed by the valuation report of Chartered Engineer. As required by the Ld. AO the valuation of residential house was also obtained and submitted to the Ld. AO which was found to be much higher than the deduction claimed. Based on all such evidences and enquiry Ld. AO was satisfied about the investment in construction of new residential house and the claim of deduction u/s 54 F of the Act. It shows that there was a detailed enquiry of the Ld. AO to verify deduction u/s 54 F of the Act. However, Ld. Pr. CIT in the preceding u/s 263 of the Act alleged that the valuation report is dated 22.03.2016 but the construction was done in 2008. This valuation was carried at the insistence of the ld. AO to verify the physical existence of the property and overall value of investment. It is not a case of no enquiry nor incomplete enquiry rather the Ld. AO to the best of his ability had made detailed enquiry and made proper application of mind and had examined this issue of deduction u/s 54F of the Act. In the given facts and circumstances invoking provisions of section 263 of the Act on this issue so as to give direction to revise the assessment order was unjustified and uncalled for.Therefore, since the assessment orders in question are neither erroneous nor prejudicial to the interest of revenue, Ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act and was thus not justified in setting aside the order passed by the Ld. AO u/s 143(3) r.w.s. 147.
Issues Involved:
1. Condonation of delay in filing appeals. 2. Legality of invoking provisions of Section 263 of the Income Tax Act. 3. Correctness of the value of sale consideration for computing capital gain. 4. Allowability of deduction under Section 54B of the Income Tax Act. 5. Allowability of deduction under Section 54F of the Income Tax Act. Detailed Analysis: 1. Condonation of Delay in Filing Appeals: The Tribunal noted the delay of 122 days in some appeals and 54 days in others. The assessees attributed the delay to the death of a family member and lack of necessary advice. Considering the reasons and in the larger interest of justice, the Tribunal condoned the delay and admitted the appeals for adjudication. 2. Legality of Invoking Provisions of Section 263 of the Income Tax Act: The Tribunal examined whether the Principal Commissioner of Income Tax (PCIT) was justified in invoking Section 263, which allows revision of orders that are "erroneous and prejudicial to the interest of the revenue." The Tribunal emphasized that for Section 263 to apply, both conditions must be met. It cited several judicial precedents, including the Supreme Court's ruling in Malabar Industrial Co. Ltd. vs. CIT, which clarified that not every loss of revenue qualifies as prejudicial to the interests of the revenue. The Tribunal found that the Assessing Officer (AO) had made detailed inquiries and adopted one of the permissible views, which cannot be considered erroneous merely because the PCIT disagreed. 3. Correctness of the Value of Sale Consideration for Computing Capital Gain: The Tribunal addressed the issue of whether the sale consideration should be based on the date of the agreement or the date of the registered sale deed. The assessees argued that the sale consideration was received through banking channels before the registered sale deed. The Tribunal referred to various judicial precedents, including the Supreme Court's decision in Sanjeev Lal & Anr vs. CIT & Anr, which supported the view that the date of the agreement should be considered if part of the consideration was received by cheque or bank draft. The Tribunal concluded that the AO was justified in adopting the sale consideration as on the date of the agreement, and thus, the PCIT's invocation of Section 263 on this ground was not warranted. 4. Allowability of Deduction under Section 54B of the Income Tax Act: The Tribunal examined whether the assessees were entitled to the deduction under Section 54B, which pertains to the purchase of new agricultural land. The PCIT contended that the deduction was not allowable because the new land was purchased before the registered sale deed. The Tribunal noted that the sale consideration was received before the registered sale deed and was used to purchase new agricultural land. Citing the Jaipur ITAT's decision in Smt. Rukmani Devi Agrawal vs. ITO, the Tribunal held that the intent to purchase new agricultural land from the sale proceeds was sufficient to satisfy the conditions of Section 54B. Therefore, the AO's decision to allow the deduction was not erroneous, and the PCIT's invocation of Section 263 was unjustified. 5. Allowability of Deduction under Section 54F of the Income Tax Act: The Tribunal considered the deduction under Section 54F for the construction of a residential house. The PCIT questioned the deduction based on the date of the valuation report. The Tribunal found that the AO had conducted a detailed inquiry, including verifying the physical existence of the house and the withdrawal of funds for construction. The Tribunal concluded that the AO had made a proper application of mind and that the PCIT's invocation of Section 263 on this issue was unwarranted. Conclusion: The Tribunal quashed the orders passed under Section 263 by the PCIT and restored the original assessment orders under Section 143(3) read with Section 147. The appeals filed by the assessees were allowed.
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