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2022 (4) TMI 740 - AT - Income TaxRevision u/s 263 - Allowability of exemption u/s 54B - Reassessment proceedings initiated against assessee - HELD THAT - Under Section 54B of the Act the amount was firstly required to be deposited in the capital gain account and thereafter payment was to be made from such capital gain account for availing the exemption. No detail of deposit in the capital gain account was made available either before the Revenue or before us by the appellant. Whereas the assessee was required to deposit the unutilized capital gain in capital gain account scheme within the due date of filing of the return of income u/s 139(1) - Whereas the record reveals that the assessee had paid cash on purchase of land after 31.07.2010 and further availed exemption u/s 54B - These two are contradictory with each other since the amount of cash was not out of the capital gain account. We do not find any iota of evidence submitted by the assessee before the Revenue during the reopening proceeding under Section 147 of the Act in regard to the capital gain account scheme in respect of the several transactions entered into by the assessee both for sale and purchase. Thus, we do not find any enquiry conducted by the concerned ITO in this regard which could be a solid foundation of the opinion made by the PCIT against the order passed by the ITO as erroneous and prejudicial to the interest of the Revenue. It is expected that the ITO would make an enquiry of a particular item of income in the absence of which in the facts and circumstances of the case in our considered opinion the Senior Revenue Officer as the PCIT has the jurisdiction to interfere with the matter under Section 263 of the Act on a prima facie finding of the order as passed by the ITO is erroneous and prejudicial to the interest of Revenue. We, therefore, do not find any reason to interfere in the order passed by the Ld. CIT(A) in exercising the powers conferred by Section 263 of the Act in setting aside the issue with the direction upon the AO to frame an assessment afresh upon conducting as proper enquiries / verification of the above referred issues and to pass orders which in our considered opinion is just and proper so as to warrant interference. Hence, we confirm the impugned order passed by the Ld. PCIT. - Decided against assessee.
Issues:
Reopening of assessment under Section 147 for A.Y. 2010-11 based on erroneous and prejudicial order under Section 263 of the Income Tax Act, 1961. Detailed Analysis: 1. Reopening of Assessment: The appeal was filed against the order dated 22.04.2020 by the Principal Commissioner of Income Tax, Vadodara-1, for A.Y. 2010-11 under Section 263 of the Income Tax Act, 1961. The case was reopened under Section 147 due to the sale of an immovable property in F.Y. 2009-10 without filing a return for A.Y. 2010-11. The PCIT found the order under Section 143(3) r.w.s. 147 erroneous and prejudicial to revenue interests due to discrepancies in availing exemption u/s. 54B against capital gain income. 2. Compliance with Section 54B: The PCIT observed that the assessee failed to comply with Section 54B requirements, which necessitate depositing unutilized capital gain in the Capital Gain Account Scheme within the due date of filing the return of income under Section 139(1). The purchase of properties and utilization of cash for land purchase after 31.07.2010 were found to be in violation of Section 54B provisions. 3. Judicial Precedents and Assessing Officer's Role: The assessee cited various judgments in support of their case, emphasizing compliance with Section 139 for availing exemptions. However, the PCIT emphasized the necessity of following Section 54B(2) requirements regarding capital gain utilization and deposit. The PCIT also referred to relevant High Court judgments supporting their interpretation. 4. Lack of Evidence and Direction for Fresh Assessment: The Tribunal noted the absence of evidence regarding the capital gain account scheme during the reopening proceedings and the lack of inquiry by the ITO. As a result, the PCIT's intervention under Section 263 was upheld, directing the AO to conduct proper inquiries and frame a fresh assessment. The Tribunal affirmed the PCIT's order, dismissing the appeal and confirming the impugned decision. This detailed analysis covers the issues surrounding the reopening of assessment, compliance with Section 54B, judicial precedents, the role of the Assessing Officer, lack of evidence, and the direction for a fresh assessment as per the judgment by the Appellate Tribunal ITAT Ahmedabad.
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