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TMI Blog2017 (10) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... , CA For The Department : Sh. S.S. Rana, CIT(DR) ORDER PER H.S. SIDHU, JM The Assessees have filed these appeals which are emanate from the respective orders dated 28.3.2013 26.3.2013 of the Ld. CIT(Central), Gurgaon pertaining to A.Yrs. 2005-06 2006-07. Since the issues involved in these appeals are common and identical, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience. 2. The grounds raised in ITA No. 2871/Del/2013 (AY 2006-07) read as under:- ITA No. 2871 (AY 2006-07) The Ld. CIT erred in invoking the provision of 263 of the I.T. Act on the basis that the assessee wrongly claimed long term capital gain. The Ld. CIT has wrongly presumed that there is short term gain out of the assets purchased during assessment year 2005-06. The assessee never purchased any assets during assessment year 2005-06. It was an old property. The Ld. CIT verified all the previous year record since 1991 i.e. from the date of purchase of property and house tax receipt and erred in giving the direction to make the addition of ₹ 1,30,476/- in the computation of capital gain without app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as per principle by applying the provision of section 68 of the I.T. Act. The assessee furnished the record from the date of purchase of property till the date to sale which has wrongly been shown under the head of Advance against property. The Ld. CIT has not appreciated agreement to sale and other record confirming the assessee has taken the possession of property. The Ld. CIT has not appreciated the fact that the assessee has sold and handed over complete lot of agricultural land against which payment were received by cheque and deposited the bank account of the assessee. the Ld. CIT has not appreciated the fact that sale consideration received was in respect of agricultural land and capital gain arising from agricultural land is exempt u/s. 10 of the I.T. Act. The Ld. CIT could not appreciate the fact information provided by AO and wrongly invoked the provision of 263 of the I.T. Act and directed to AO to enhance / modify assessment order. The order of Ld. CIT is wrong and bad in law. Having regard to the fact applicable to the case. 5. First we deal with ITA No. 2871 2872/Del/2013 (AY 2006-07 2005-06) in the matter of Sunil Bedi Pinki Bedi respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994-95 and 1995-96 showing the value of asset (Nizamudin House) at ₹ 8,24,000/-. As per the Ld. CIT, no evidence has been filed regarding value of this property in the years subsequent to these years. In response to notice u/s. 263 of the Act asking the assessee to explain the reason for non-appearance of the property in the balance sheet for FY 2994095 (AY 2005-06). The assessee filed a written reply dated 14.2.2013. Thereafter, after considering the reply, the Ld. CIT held that after examination of the record of the proceedings and the submissions made by the assessee in the course of proceedings u/s. 263 of the I.T. Act, the Ld. CIT holds that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interests of the revenue and directed the AO to enhance / modify the assessment and frame a fresh assessment for the year under consideration in the case of the assessee vide order dated 28.3.2013 passed u/s. 263 of the Act, by observing the following facts:- a) The assessee did not provide any evidence of value of the property and treatment given to such capitalization in the returns for all the assessment years in continuation but choose to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment where the facts and property in both the cases is same. It was also wrongly presumed that that stamp charges and Corporation tax of ₹ 68,000/- could have also been capitalized. However, as per clause 12, this cost ought to have been borne by the vendors. The Ld. CIT could not appreciate the fact and information provided by AO and wrongly invoked the provision of 263 of the I.T. Act and directed to AO to enhance / modify assessment order. The order of Ld. CIT is wrong and bad in law. Hence, he submitted that AO has made the assessment judiciously after making all the enquiries / verification, which has been replied and on the basis of the said reply, the AO has made the assessment. Despite that the Ld. Commissioner of Income Tax has wrongly invoked Section 263 of the Act, which is not sustainable in the eyes of law and therefore, the same should be quashed. 9. On the contrary, Ld. DR relied upon the order of the Ld. CIT. In support of his contention he filed a copy of the submissions of Revenue on provisions of Income Tax Act and position of law on the issue of Section 263. 10. We have carefully considered the rival submissions and perused the relevant records ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance sheet, P L account as schedule AY 1998; Details of house tax paid MCD as receipts; ledger account of property; detail of house tax paid receipts. We note all the these documents were submitted at the time of proceeding before the Ld. CIT. We find that the Hon ble Supreme Court in the case of CIT vs. Green World Corporation 314 ITR 81 (SC) has held as under:- The jurisdiction u/s. 263 can be exercised only when both the following conditions are satisfied: i) The order of the AO should be erroneous; and ii) It should be prejudicial to the Revenue interest. These conditions are conjunctive. An order of assessment passed by the AO should not be interfered with only because another view is possible. An order would be erroneous only when the AO makes no enquiries during the course of assessment proceedings. This principle was noticed by the Delhi High Court in Geevee Enterprises vs. Addl. CIT 99 ITR 375 (Del.). In arriving at this decision, the Delhi High Court drew strength from the principles laid down by the Supreme Court in Rampyari Devi Sarogi vs. CIT 67 ITR 84 (SC) and Tara Devi Agarwal vs. CIT, 88 ITR 324 (SC). The underlying principle which emerges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, suggested that while finalizing the assessment order for AY 2005-06, the AO did not consider the factual position and did not make inquiry or investigation on the above issue. Failure to make such inquiry, resulting in undue benefit to the assessee, has made the assessment orders for this year erroneous and prejudicial to the interest of revenue. Accordingly, he issued a notice u/s. 263 of the Act to the assessee on 31.1.2013 and the case was fixed for hearing on 14.2.2013. In response to the notice, the A.R. of the assessee attended the proceedings from time to time and submitted written replies. In response to specific query raised in notice u/s. 263 of the Act asking the assessee to explain the reason for non-appearance of the property in the balance sheet. The assessee filed a written reply dated 14.2.2013 stating therein as follows:- In the above matter we are in receipt of your notice u/s. 263 of the I.T. Act, as per which your goodself has proposed to revise assessment order dated 30.12.2010 on the basis of fact that the assessee has not disclosed cost of land of ₹ 9,90,000/- as it is not appearing in the balance sheet for the assessment year 2004-05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above amount of ₹ 12,72,984/- would be charged to long term capital gain for sale transaction I II. III. In respect of sale transaction no III, the A.O. would enhance value of sale consideration from ₹ 2890.64 per marla to ₹ 6412.50 per marla as discussed above. Thus for the area of 7K 15 M155M), transacted through sale III, the consideration would assumed at ₹ 9,93,937(155 x 6412.50). Since this area of land was purchased as part of a composite purchase of 16K (=320M) for ₹ 4,95,000/-, therefore, at this rate the purchase price of 155M would come to ₹ 2,39,765/-. This purchase price is further indexed as (480/305) comes to ₹ 3, 77,335/-. The Long term capital for this transaction should be recomputed as under:- Assumed Sale Consideration = 9, 93,937 Indexed Cost of Acquisition = 3, 77,335 6,16,602 14.3 After examination of the record, the Ld. CIT held that the assessment order passed by the AO is erroneous in so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The assessee declared the long term capital gain from the sale of agricultural land during the AY 2005-06. We note that Ld. CIT has declared the cost price of the property which is agricultural land in the balance sheet for the AY 2004-05 also. This property had been appearing under the head of advance which is appearing in the name of Survani Udhyog Ltd. from whom this property was purchased. This property was purchased during the year 1996-97 and the amount has also been appearing in the balance sheet of the assessee since then. The purchase documents of the property were submitted at the time of hearing including all the copy of th agreement to sale and the possession letter receipt, in respect of the purchased of said agricultural land were submitted. Therefore, in our view, Ld. CIT has wrongly initiated the proceedings u/s. 263 as the purchase of agriculture land had been appearing in the books of accounts since 1996-97 (AY 1997-98) and all these facts were disclosed in the balance sheet of the assessee since then. We are of the considered opinion that Ld. CIT is not right by giving the direction of sale consideration received may be treated as per principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the Revenue interest. These conditions are conjunctive. An order of assessment passed by the AO should not be interfered with only because another view is possible. An order would be erroneous only when the AO makes no enquiries during the course of assessment proceedings. This principle was noticed by the Delhi High Court in Geevee Enterprises vs. Addl. CIT 99 ITR 375 (Del.). In arriving at this decision, the Delhi High Court drew strength from the principles laid down by the Supreme Court in Rampyari Devi Sarogi vs. CIT 67 ITR 84 (SC) and Tara Devi Agarwal vs. CIT, 88 ITR 324 (SC). The underlying principle which emerges from these judgments is that if an assessment order is passed without making any enquiries, then such an order would be erroneous. But in the persent case, the regular books of accounts, viz. the cash book, the ledger, the bank account statements, were produced by the assesee which were verified and examined vis- -vis the findings of the search (cash found, jewellery found, immovable property found), the diary / loose sheets found and facts emerging out of the statements recorded under section 132(4) of the Act, and the financial statements fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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