2022 (11) TMI 119 - AT - Income Tax

Revision u/s 263 by CIT - Period of limitation - time limit within which the order u/s. 263 can be revised i.e. two years from the end of financial year in which order sought to be revised was passed - HELD THAT - Due to nation-wide lockdown imposed, the Central Govt. of India through Relaxation Act, 2020' r.w. notification dt. 31/12/2020, has extended the period of limitation upto 31/03/2021 for completion of any proceedings or passing any order or issuance of any notice, intimation, notification, sanction or approval or such other action by whatever name called by any authority, commission or tribunal by whatever name called under the provisions of specified Act which inter-alia includes Income Tax Act, 1961. In the light of provisions of section 3(1)(a) of Relaxation Act, 2020 notification dt. 31/12/2020 r.w. press release, we witnessed that, the time limit within which revision action ought to have completed was extended upto 31/03/2021, thus, initiation of revisionary proceedings by issue of SCN and completion by passing an order of revision is saved of limitation, consequently ground number 1 remains with no locus-standi, hence stands dismissed. Violation of principal of natural justice for passing ex-parte order and without according sufficient opportunity to represent before the conclusion of revisionary proceedings - Following the principle of natural justice, the proceeding were adjourned and re-fixed on 16/02/2021, nonetheless the assessee continued to opt out from making any representation which resulted into ex-parte culmination. Thus, due service of SCN to the appellant, and reasonable opportunity of fair hearing against proposition and prima-facie unbiased approach while dealing with revisionary proceedings apparently stands established and in fortiori, the Ld. AR did not controvert the factual plexus, in the event we disapprove the contention of any such violation, resultantly ground number 2 3 of the appeal also stands dismissed. Eligibility for exemption u/s. 54F - As per CIT AO erred allowing the assessee a claim of exemption u/s. 54F by turning blind eye to the disqualification envisaged in proviso to section 54F(1) of the Act and further picturing the absence of inquiries into source of investment made in new asset, has assumed the revisionary jurisdiction and by service of show cause notice called upon the assessee to showcase the entitlement for 54F claim and explain nature source of investment made - HELD THAT - Since the Ld. AO in this case had made inquiries with regard to appellant's entitlement for claim of exemption u/s. 54F and after considering the written submission duly supported by release deed, corporation tax challans, utility bills, property card etc., and explanation offered by the appellant as regard to entitlement, the same was on being satisfied, accepted by the Ld. AO, such conclusion of the assessing Officer cannot be held as erroneous simply because the order did not make an elaborate discussion on the subject matter. As it is a well settled law that, an inquiry and/or fresh determination can be directed by the revisionary authority only after coming to the conclusion that the finding of the AO is erroneous and prejudicial to the interests of the Revenue on the basis of evidential material and without doing so, the authority turns powerless to disturb the completed assessment, hence for the reason in our considered opinion, the conclusion drawn by the Ld. CCIT is untenable in law. We de integro and applying the dictum form CIT Vs Gabriel India Ltd. 1993 (4) TMI 55 - BOMBAY HIGH COURT are of the strong view that, the action of Ld. CCIT could not be sustainable in eyes of law, ergo we finding no infirmity with the order of assessment, quash the revisionary order - Appeal of the appellant assessee is allowed.

Issues Involved:
1. Assumption of revisionary jurisdiction as time-barred.
2. Non-satisfaction of necessary twin conditions laid in section 263 of the Act.
3. Violation of the principle of natural justice.
4. Eligibility for exemption under section 54F of the Act.

Issue-wise Detailed Analysis:

1. Assumption of Revisionary Jurisdiction as Time-barred:
The primary issue was whether the revisionary proceedings were time-barred as per section 263(2) of the Income-tax Act, 1961. The order of assessment was passed on 21/12/2017, and the revisionary proceedings were initiated on 11/01/2021, seemingly beyond the two-year limit ending on 31/03/2020. However, due to the nationwide lockdown, the Central Government extended the period of limitation to 31/03/2021 through the Relaxation Act, 2020. Therefore, the initiation and completion of the revisionary proceedings within this extended period were deemed within the permissible time, dismissing the ground of being time-barred.

2. Non-satisfaction of Necessary Twin Conditions Laid in Section 263 of the Act:
The revisionary jurisdiction under section 263 requires the order to be both erroneous and prejudicial to the interests of the revenue. The Commissioner must form an opinion based on new material or an incorrect application of law. In this case, the Commissioner doubted the action of the lower tax authority without presenting new material or demonstrating the erroneous nature of the original assessment. The Tribunal found that the Assessing Officer (AO) had made explicit inquiries and allowed the exemption under section 54F after due consideration, which cannot be deemed erroneous simply because the order did not elaborate on the subject matter. Thus, the revisionary action was found unsustainable.

3. Violation of the Principle of Natural Justice:
The appellant contended that the revisionary order was passed ex-parte without proper opportunity for representation. The records showed that the assessee was served with a show cause notice (SCN) and given multiple opportunities to respond, which were not utilized by the assessee. Therefore, the Tribunal found no violation of the principle of natural justice, as reasonable opportunities were provided to the appellant.

4. Eligibility for Exemption under Section 54F of the Act:
The appellant challenged the disallowance of the exemption under section 54F, arguing that the disqualification applies only if the assessee is the sole/full-fledged owner of more than one residential house. The Tribunal noted that the AO had made detailed inquiries into the appellant's entitlement for the exemption and allowed it based on the evidence provided. The Commissioner's revisionary action, without new adverse material, was merely a re-evaluation of the same facts, which is not permissible. The Tribunal upheld the original assessment, finding no error in the AO's decision to grant the exemption.

Conclusion:
The Tribunal dismissed the grounds related to the assumption of revisionary jurisdiction being time-barred and the violation of natural justice. It upheld the appellant's contention regarding the eligibility for exemption under section 54F, quashing the revisionary order and allowing the appeal.

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