2022 (3) TMI 1189 - AT - Income Tax

Revision u/s 263 by CIT - PCIT has raised the issues of Short Term Capital Gain, Long Term Capital Gain, exemption u/s 10(36) of the Act and deduction claimed u/s 57 - HELD THAT - We have duly considered the assessment orders in all the four cases and at the very outset it can be seen that all the issues which were the subject matter of the show cause notices issued by the PCIT had already enquired into by the Assessing Officer and he, after duly considering the voluminous documents and evidences furnished by the assessees, reached a conclusion after due application of mind. It is a matter of record that specific queries were raised by the AO and voluminous details were filed in respect of Long Term Capital Gain . Complete details regarding unsecured loans were also called for and duly furnished by the assessees. Similarly, details with regard to sale and purchase of gold coin, income from house property and deduction u/s 57 of the Act were duly called for by the AO and the assessee made due compliance in this regard too. It is also not the case of the Department that the assessees did not discharge their onus before the AO. It is also seen that the claim/s u/s 57 have consistently been allowed in the earlier as well as later assessment years by raising specific queries and no specific reasons have been given for setting aside this issue to the file of the AO. It is also borne out from records that the offer for surrender on account of Long Term Capital Gain for AY 2013-14 and 2014-15 had been retracted as is evident from the Order - Therefore, we are unable to concur with the view taken by the Ld. PCIT that the AO had not conducted necessary enquiries prior to the passing of the assessment orders. We also do not agree with the argument advanced by the Ld. CIT DR that there was a non-application of mind on the part of the AO. In the present cases, no such inquiry has been carried out by the PCIT and he has simply directed the AO to carry out detailed inquires. In our considered opinion, PCIT, without making further inquiries on his own account, has simply stated in the impugned orders that the AO was required to make more inquiries. The Ld. PCIT has not pointed out as to what further inquiries was the AO required to make and as to how without those inquires the ordesr of the Assessing officer were erroneous in so far as prejudicial to the interest of the Revenue. In the present cases A.O. made the requisite enquiries, therefore, these are not cases of no enquiry and if the Ld. Pr. CIT was not satisfied with the enquiries made by the AO, he should have conducted the enquiries himself to record the findings that the assessment orders were erroneous and he should not have simply set aside the orders passed by the AO directing him to conduct the further enquiries. AO asked the assessee to furnish the relevant details relating to Long Term Capital Gain, Short Term Capital Gain, exemption u/s 10(36) of the Act, deduction u/s 57 of the Act and unsecured loans and the assessees furnished all the relevant documents which were examined by the AO who has taken a possible view. Therefore, it is our considered view that there was a due application of mind on the part of the AO in all the four cases and adequate and proper enquiries had been conducted by the AO in this regard and, therefore, the impugned orders passed u/s 263 of the Act have no feet to stand on. Accordingly, we hold that the proceedings u/s 263 of the Act were bad in law in all the captioned four appeals and we quash the revisionary proceedings for the reason that the AO had made adequate enquiries is all the four cases and further the PCIT had not conducted any independent enquiry on his own before coming to an incorrect conclusion that the assessment orders were erroneous as being prejudicial to the interest of the revenue and were liable to be set aside. - Appeal of assessee allowed.

Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act.
2. Adequacy of inquiries and verification by the Assessing Officer (AO).
3. Allowability of exemptions on long-term capital gains.
4. Verification of unsecured loans.
5. Deduction under Section 57 of the Income Tax Act.
6. Short-term capital gains on gold coins.
7. Income from house property.
8. Procedural aspects related to approval under Section 153D of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Jurisdiction under Section 263 of the Income Tax Act:
The assessees argued that the Principal Commissioner of Income Tax (PCIT) erred in assuming jurisdiction under Section 263, setting aside the AO's assessment orders completed under Section 143(3). The PCIT invoked Explanation 2 of Section 263 without specifying the manner in which inquiries or verifications should have been conducted. The Tribunal found that the AO had made adequate inquiries and due application of mind, thus the PCIT's assumption of jurisdiction was not justified.

2. Adequacy of Inquiries and Verification by the AO:
The assessees contended that the AO had made detailed inquiries regarding long-term capital gains, unsecured loans, and deductions under Section 57. The Tribunal noted that specific queries were raised by the AO and voluminous details were furnished by the assessees. The AO had duly considered these documents and evidences before completing the assessments. The Tribunal held that the AO's inquiries were adequate and there was no lack of application of mind.

3. Allowability of Exemptions on Long-term Capital Gains:
The PCIT claimed that the AO did not make adequate inquiries regarding the allowability of exemptions on long-term capital gains. The assessees provided detailed responses and documentary evidence during the assessment proceedings. The Tribunal found that the AO had conducted necessary inquiries and the PCIT did not specify what additional details were required. The Tribunal ruled that the AO's assessment was not erroneous or prejudicial to the interest of revenue.

4. Verification of Unsecured Loans:
The PCIT argued that the AO did not properly examine the unsecured loans as per Section 68 of the Income Tax Act. The assessees demonstrated that the AO had raised specific queries and they had provided detailed responses, including confirmations and bank statements. The Tribunal found that the AO had verified the unsecured loans and the PCIT's observations were not substantiated by any specific deficiencies in the AO's inquiries.

5. Deduction under Section 57 of the Income Tax Act:
The assessees claimed that the deduction under Section 57 had been regularly allowed in previous years after detailed inquiries. The Tribunal noted that the AO had raised specific queries and allowed the deduction after due verification. The PCIT's finding that the AO did not make independent inquiries was not supported by the records. The Tribunal held that the assessment was not erroneous or prejudicial to the revenue.

6. Short-term Capital Gains on Gold Coins:
The PCIT raised concerns about the short-term capital gains on the purchase and sale of gold coins. The assessees provided detailed computations and documentary evidence during the assessment proceedings. The Tribunal found that the AO had considered these details and the PCIT did not point out any specific deficiencies. The Tribunal ruled that the AO's assessment was not erroneous or prejudicial to the revenue.

7. Income from House Property:
The PCIT questioned the assessment of income from house property. The assessees argued that the properties were old and had been assessed year to year in the past. The Tribunal found that the AO had verified the income from house property and the PCIT did not provide any specific reasons for setting aside the assessment. The Tribunal held that the assessment was not erroneous or prejudicial to the revenue.

8. Procedural Aspects Related to Approval under Section 153D:
The Tribunal noted that the assessments were completed after obtaining necessary approvals under Section 153D of the Income Tax Act. The PCIT did not revise the approval of the Additional Commissioner of Income Tax under Section 153D. The Tribunal held that without revising the approval, the PCIT could not validly set aside the assessments under Section 263.

Conclusion:
The Tribunal quashed the revisionary proceedings under Section 263 of the Income Tax Act, holding that the AO had made adequate inquiries, due application of mind, and the PCIT did not conduct any independent inquiry before concluding that the assessments were erroneous and prejudicial to the interest of the revenue. All four appeals of the assessees were allowed.

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