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TMI Blog2020 (12) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years. Thus, we note that even if the AO finds that the non-registration of the gift deed would result in non-transfer of the flat would not in any case prejudice the revenue. Therefore, the second limb of the jurisdictional requirement i.e. prejudicial to the revenue does not exist and, therefore, the Ld. Pr. CIT lacks jurisdiction to interfere in the order of the assessment passed by the AO. Since the AO has enquired and elicited the relevant information/documents including the source of Ms. Ankita Kejriwal to buy the flat at Bangalore, the AO s action cannot be faulted as an outcome of lack of enquiry. And since there would be no prejudice caused to the revenue, as discussed, we are of the view that in this case, the twin condition is not satisfied as held in Malabar Industries Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] therefore, the revisionary jurisdiction exercised by the Ld. PCIT u/s. 263 of the Ac was without jurisdiction - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Registration Act, 1908 and Section 123 of the Transfer of Property Act, it was mandatory to register a gift deed at the respective Sub-Registrar office. According to ld. PCIT, since the gift deed is not registered, transfer of immovable property cannot take place thereby renders the transfer void. The Ld. PCIT noted that the ld. AR for the assessee submitted before him that the donor being the assessee's daughter, the gift by relative/daughter is not covered u/s. 56(2)(vii) of the Act and any technical requirement of relevant Registration Act or Transfer of Property Act is tax neutral from the income tax point of view, however he did not agree. Even though it was brought to the notice of the ld. PCIT that the flat has been registered in assessee's name on 14.09.2018 after completion of all formalities by the developer of the property, the Ld. PCIT after considering all the aforesaid facts was of the opinion that the Assessing Officer has accepted increase in capital without proper application of his mind, and since it is not mentioned in the assessment order that he had verified the source of increase in capital, according to ld. PCIT, the Assessing Officer has not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect RMZ Latitude, Bangalore, valued at ₹ 2,29,82,161/- was booked and thereafter, she out of her natural love & affection gifted the residential flat booked in her name to her father (appellant) vide the Declaration of Gift dated 29.08.2014 which was notarized on 20.01.2015. It was pointed out by Ld. AR that the assessee's daughter is assessed to tax at Ward-29(4), Kolkata and presently she is residing at USA. According to ld. AR, thereafter a supplementary deed with the builder was executed on 16.03.2015 wherein the appellant's name (father) has been nominated/substituted as 'Purchaser' in place of the original purchaser (daughter) with the daughter as the Confirming Party upon furnishing of the said notarized gift deed and a letter from the daughter (Ms. Ankita Kejriwal) requesting the vendors/developers to delete her name as the purchaser in the original agreement and to nominate her father as the sole purchaser. According to the Ld. AR, by virtue of the said Gift Declaration, the donor (daughter) has relinquished all her rights in the said flat. And in support of the increase in capital, facts of the case as stated above and requirements as per notices iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of residential flat by the donor-daughter to the father-donee and the source of fund invested by the daughter was brought to his notice pursuant to AO's 142(1) notice dated 21.02.2017 and drew our attention to pages 7-9 of paper book from where the Balance Sheet of assessee as on 31.03.2015 and P&L Account (7 & 8 pages PB) as well as the source of fund of his daughter Ms. Ankita Kejriwal (donor) to purchase of flat is found placed at page 9 (which we will re-produce infra). And thus according to ld. AR, the source of fund of Ms. Ankita Kejriwal who was assessed by ITO Ward-29(4), Kolkata at that point of time was brought to the notice of AO pursuant to his notice u/s. 142(1) of the Act (supra) and after being satisfied with the aforesaid enquiries and verification he accepted the increase in capital of assessee and did not find anything amiss in the gift of flat by daughter to father (assessee). 6. According to Ld. AR, the AO being satisfied about the genuineness of gift of the residential flat by a daughter to her father and the AO after going through the source of funding by the donor which was duly documented, and taking into consideration other formalities like substituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional jurisdiction is existing there before the Pr. CIT to exercise his power u/s. 263 of the Act. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s. 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii) Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notices issued by the Assessing Officer by letter dated 19.08.2016 (Page-4 of PB) and by letter dated 15.03.2017 (Page-5 of PB) and had filed the declaration of gift which has been notarized on 20.01.2013 (Page-6 of PB) and had filed detailed written submission along with documents in respect of increase in capital which is found placed in page 7 to 15 of paper book wherein we note that the assessee has also placed the supplementary agreement executed at Bangalore on 16.03.2015 as well as the balance sheet and profit and loss account of the assessee and most importantly the assessee has given the source of the funds of Ms. Ankita Kejriwal (donor/daughter of assessee) for purchase of the flat at Bangalore, which is reproduced as under: We note from page 9 of paper book that along with the source of fund (supra) the assessee had stated to have filed the copy of bank statement of Ms. Ankita Kejriwal for substantiating/corroborating above transactions. We also note that the donor who is the daughter of assessee was an income tax assessee, who was assessed under ITO Ward 29(4), Kolkata. We note that the AO had issued the statutory notice calling for the relevant documents to substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction of the Assessing Officer the identity, creditworthiness and genuinity of the credit i.e., the nature and source of the credit. In this case, since there was increase in capital account of the assessee because of the gift of a flat at Bangalore from his daughter Ms. Ankita Kejriwal to the tune of ₹ 2.29 crores being reflected in the capital account was duly enquired by AO and the assessee has submitted all documents to support his claim of gift including the source of the donor/Ms. Ankita Kejriwal along with the bank statement. From a perusal of the source of fund of Ms. Ankita Kejriwal (donor/daughter of assessee) which was furnished by the assessee during assessment proceedings, we note that ₹ 1,50,00,000/- and ₹ 25,13,209/- are from redemption of mutual fund in AY 2013-14 and ₹ 25,13,209, ₹ 77,900/-, ₹ 25,13,209/-, ₹ 3,44,584/- were from AY 2014-15. Only ₹ 20,050/- is from this relevant AY 2015-16. Thus when the assessee placed before the AO the source of the total purchase consideration amount of ₹ 2,29,82,161/- and has filed the bank statement of donor the assessee has explained the transaction and the donor' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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