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TMI Blog2018 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act? 2.Whether the Tribunal is correct in law in sustaining the assumption of jurisdiction by the CIT under Section 263 of the Income Tax Act, 1961 for revising the re-assessment framed by the respondent in accepting the claim of exemption/deduction under Section 54F of the Act in the computation of long term capital gains even though there was no requirement for further investigation into facts with regard to the said claim of exemption/deduction in view of the respondent's thorough enquiry into the relevant facts in relation thereto in the passing of the income escaping assessment?". 3. The assessee filed return of income for the assessment year under consideration viz., 2005-06 on 31.07.20015 admitting a total taxable income of Rs. 1,11,107/-. In the said return of income, the Long Term Capital gains arising or accruing as a result of sale of the property situated at Chennai was reported to the extent of Rs. 24,01,859/- and the assessable capital gains was invested in another property situated at Bangalore. 4. The said return of income filed by the assessee was initially proceeded under Section 143(1) of the Income Tax Act, 1961 (in brevity the "Act"). The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is how the assessee is before us. 8. We have heard Mr.A.S.Sriraman, learned Counsel for the assessee and Mrs.R.Hemalatha, learned Standing Counsel on behalf of the Revenue. 9. Before we consider as to whether the assumption of jurisdiction by the Commissioner under Section 263 of the Act was justified or not and before we proceed to answer the substantial questions of law, we may note the following developments which have taken place during the pendency of this appeal before this Court. 10. As noticed above, as against the re-assessment proceedings dated 31.12.2009, the assessee had filed appeal to the Commissioner in I.T.A.No.58/2010-11. The said appeal was pending when the Commissioner issued show cause notice dated 09.02.2012 under Section 263 of the Act. We will go into the aspect as to whether the assumption of jurisdiction by the Commissioner under Section 263 of the Act was justified and whether was permissible, especially when appeal against re-assessment proceedings was pending as on the said date. 11. The appeal which was filed by the assessee against reassessment proceedings in I.T.A.No.58/2010-11 was re-numbered as ITA No.32/2010-11 on account of change of jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order dated 31.12.2009 does not exist in the same form. In this regard, we are supported by the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax v. NTPC [2017 392 ITR 0426], wherein, the Hon'ble Supreme Court while considering the appeal arising out of a judgment of the Delhi High Court in the matter pertaining to exercise of revisional jurisdiction under Section 263 of the Act held that it is not necessary to go into the question whether at the relevant point of time exercise of jurisdiction under Section 263 of the Act by the Commissioner of Income Tax was justified in view of the subsequent events, which clearly demonstrated that there has been no leakage of revenue and the matter has become academic. However, considering the fact that the assessee is an individual and the assessment for the year under consideration, 2005-06, has not attained finality and matters have been repeatedly remanded to the authorities, we thought fit to take a decision on the merits of the appeal, that is, with regard to the assumption of jurisdiction of the Commissioner under Section 263 of the Act. 14. The leading case with regard to the exercise of powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is unauthorisedly levied and collected will be illegal and without sanction of law. Therefore, the Assessing Officer while completing the assessment is bound to grant relief to the assessee, if in his opinion, it is found that a particular provision of law can be applied in the assessee's case. Therefore, we cannot find fault with the Assessing Officer in the exercise of such jurisdiction. Nevertheless, the assessee was not satisfied with the relief granted in the re-assessment order dated 31.12.2009. Therefore, he filed regular appeal before the CIT(A). When the appeal was pending, notice was issued under Section 263 of the Act. We have perused the said notice dated 09.12.2012. The Commissioner was of the opinion that the re-assessment order granting claim of deduction under Section 54 of the Act was an order erroneous and prejudicial to the interest of the Revenue warranting invocation of Section 263 of the Act. The notice does not state as to how such an order is erroneous and prejudicial to the interest of Revenue. The showcause notice does not explicitly state the same except quoting the words in the Section. The assessee filed a detailed reply dated 28.02.2012, question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to the claim made by the assessee and the exercise undertaken by the Assessing Officer. 21. With regard to the merits of the case, the learned counsel for the assessee referred to a decision of the Division Bench of this Court in Dr.P.K.Vasanthi Rangarajan v. Commissioner of Income Tax [(2012) 252 CTR 0336], wherein, the Hon'ble Division Bench held that there is no inhibition in the assessee claiming the benefit of investment made in four flats thereby gaining the benefit under Section 54F of the Act. The Court took note of the decision in TCA No. 656 of 2005 dated 04.01.2012. However, we are not examining the merits of the matter at this juncture since, we are only called upon to answer the Substantial Question of Law with regard to the assumption of jurisdiction of the Commissioner under Section 263 of the Act. The power under Section 263 of the Act is not exercisable under certain circumstances. In this regard, we refer to Section 263(1) explanation 1(c), which reads as follows: "Revision of orders prejudicial to revenue 263(1)... (a)... (b)... (c)Where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erroneous, it cannot be stated to be prejudicial to the interest of Revenue as every erroneous order cannot be subject matter of Revision under Section 263 of the Act. Further more, if the order passed by the Commissioner under Section 263 of the Act as confirmed by the Tribunal is allowed to stand, then the very purpose of the remand order against the original re-assessment proceedings would become a fait accompli. 25. Thus, for the above reasons we are fully satisfied that the assumption of jurisdiction by the Commissioner under Section 263 of the Act was wholly without jurisdiction as the twin tests have not been satisfied and consequently, the order dated 14.03.2012 as confirmed by the Tribunal by order dated 13.07.2012 calls for interference. 26. In the result, the appeal filed by the assessee is allowed and the order passed by the Commissioner dated 14.03.2012, under Section 263 of the Act as confirmed by the Tribunal by order dated 13.07.2012 are set aside, and it is left open to the assessee to pursue her claim before the Assessing Officer. Accordingly, the Substantial Questions of Law are answered in favour of the assessee. Since, the matter has been pending for a quit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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