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TMI Blog2018 (9) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. If such power is allowed, then Assessing Officer shall never be applying his mind in a free and judicious way which he is required to do. Furthermore, if unlimited power is assigned to the Commissioner of Income Tax through Explanation 2 to section 263 of the Act, that would lead to innumerable litigations. So far as deduction under section 54F is concerned, the order of the Pr. Commissioner of Income-tax passed under section 263 is valid in view of the proviso to section 54F whereas regards the other issues are concerned, they have been already examined by the Assessing Officer and for them there is no applicability of revisional jurisdiction under section 263 by the Pr. Commissioner of Income-tax and to that extent i.e. share trading business of the assessee and the loan transaction from brother of the assessee, for these issues, we quash the order under section 263 of the Act. - ITA No. 252/LKW/2017 - - - Dated:- 24-8-2018 - SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER Appellant by : Shri Jagdish, Advocate Respondent by : Shri J.S. Minhas, CIT (DR) ORDER Per Partha Sarathi Chaudhury, J. M. This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this is commercial cum residential property. The AO has accepted your so called revised return of income (filed just 02 days before the completion of assessment) as well as your claim of deduction u/s 54F without appreciating the facts circumstances of the case as well as the provisions of the Act in this regard. It is also noticed that you were engaged in the business of share trading but no enquiries have been made by the AO in this regard. Further, you have also taken a loan of ₹ 0.925 crores from your brother but the AO has not made proper investigation in the matter. From the above, it is clear that the AO has failed the examine these issues/facts while completing the assessment and there is complete absence of enquiries on the part of the AO. in view of above facts, the above referred order of the AO is erroneous and prejudicial to the interest of the revenue and is liable to be set aside under the provision of section 263 of the I.T. Act 1961. However, for the sake of natural justice, you are hereby given an opportunity to explain as to why the assessment order dated 23.01.2015, passed by the Assessing Officer, should not be set aside and a fresh or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ld. A.R. of the assessee further submitted that even though revised return was filed two days before completion of assessment, however, Assessing Officer was in possession of all the relevant documents such as purchase deed of property, copies of bank statements, copies of ledger accounts of all the bankers, computation of income, trading account and balance sheet. Therefore, it was possible for the Assessing Officer to decide the issue relating to investment in purchase of property was done by the assessee and assessee was therefore eligible for deduction under section 54F of the Act, since the provision speaks of investment and not use of property. Purchase deed of property was already with the Assessing Officer, so were bank statements and it was clear to the Assessing Officer beforehand that the assessee has invested in residential property and, therefore, eligible for deduction under section 54F of the Act. 7. Similarly, it was further submitted by the ld. A.R. of the assessee regarding share trading business of the assessee that it was in detail enquired and investigated along with verification of facts by the Assessing Officer during the assessment proceedings. Even reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form as prescribed in Rule 12 of the Income Tax Rules, 1962. It should be duly verified and signed in accordance with the provisions of section 140 of the said Act and delivered at my office on or before, (ii) Produce or cause to be produced before me at my office at Room No.323, 3rd Floor, 16/69, Aayakar Bhawan, Civil Lines, Kanpur on or before 18.09.2014 at 11.50 A.M.. (iii) Please ensure compliance of the questionnaire dated 05.09.2014. Encl: As above. Sd/- (Govmd Singh Income tax Officer -2 (3) Kanpur 10. We would first deal with the issue relating to eligibility of deduction under section 54F of the Act. It is the case of the Revenue that assessee was a co-owner of a land property and the same was sold on 7/1/2013 for a sale consideration of ₹ 7,50,00,000/-. Thereafter, assessee filed a revised return wherein he has claimed deduction under section 54F of the Act against the resultant capital gain income arising on the sale of the land claiming that assessee has purchased a house property. Now we look into Point No.7 of the questionnaire, which reads as Please furnish details of moveable/immovable properties purchased by y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question that arises in the instant case is as to whether the investment made in the new property constructed or procured by the assessee was from the money assessee received from sale of immoveable property. We observe that in the present case it is not disputed by the Department that assessee has purchased another property by selling agricultural land, therefore, investment part is clear and is proved. The Department is not agreeable to allow deduction under section 54F of the Act since the property was partly commercial and partly residential. Since we have already examined from the decision of the Co-ordinate Delhi Bench of the Tribunal that intention of the Legislature is that in order to get eligible for deduction under section 54F of the Act, one has to see whether investment is completed or not. In this case of the assessee, investment has already been proved. 12. Similarly, in the case of M. Harinitha Readdy, Hyderabad and Others vs. Department of Revenue in ITA No.1019 1021/Hyd/2009, it was held that mere non-residential use subsequently would not render the property ineligible for being benefitted under section 54F of the Act if it is otherwise a residential pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that in the questionnaire itself point No.1 reads as Please provide a brief note of your source(s) of income during the previous year and also furnish a detailed note about activities carried out and its modus operandi. In case of manufacturing unit, briefly state the manufacturing process. Please also state method of accounting, whether cash or mercantile. Please also furnish the complete address of business premises, branches and godowns. pages 31 to 33 of the paper book filed before is the detailed reply with regard to question No.1 of the questionnaire issued to the assessee and therein assessee has stated that he is engaged in share trading business and still holding membership of Ahmedabad Stock Exchange. Further, he has stated that he is not doing the business of Share trading since about eight years, although trading office is still being maintained at Ahemdabad. It is also stated that assessee is having income from other sources mainly interest income on bank fixed deposits and there is no manufacturing activity. Books of accounts are maintained on Cash Basis. Assessee has also given its address and address of trading office is at Ahemdabad. Furthermore, in the copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal is also annexed at page 260 of the paper book wherein it is clearly stated that same amount was debited on the same date and confirmation thereof has been filed by the brother of the assessee. These documentary evidences clearly brings to light that on this issue Assessing Officer has made necessary enquiry and investigation, and assessee has replied to the query of the Assessing Officer through documentary evidences along with confirmation and bank account statement from the brother of the assessee. Entire process signifies that adequate enquiry process was undertaken by the Assessing Officer. 17. At this point of time, we would like to refer to Explanation 2 of clause (a) of section 263 of the Act. Revenue may perhaps try to take shelter on the basis of this Explanation. Over the years, it has been settled position of law that Commissioner of Income Tax under section 263 has no unfettered power and is subject to various restrictions. It should be clear from his order as to why order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue and that it should be a speaking order and he should bring his though in the order that on what ground he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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