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TMI Blog2021 (2) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... r case where the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act which are applicable for the impugned assessment year i.e. A.Y 2015- 16 has escaped the attention of the Assessing Officer which renders the order so passed as erroneous and prejudicial to the interest of the Revenue Applicability of provisions of section 56(2)(vii)(b)(ii) - All that proviso talks about is that where there is an agreement to sell which has been executed prior to the date of registration, in such cases, the stamp duty value as on the date of agreement may be taken instead of date of registration of the property provided that whole of the consideration or a part thereof has been paid by any mode other than cash on or before date of agreement. Therefore, the fact that the proviso is applicable in the instant case does not take the impugned transactions of purchase of industrial plot of lands out of the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act as so contended by the ld. AR. All that it provides is that it shifts the determination of stamp duty value as on the date of agreement rather than the date of registration of the sale deed. Therefore, the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual and for the year under appeal has filed his return of income declaring total income at ₹ 10,02,280/-. The case of assessee was selected for scrutiny under CASS under limited scrutiny and one of the reasons was to examine the issue of purchases of property by the assessee during the year under appeal. Various query letters / show cause notice were issued by the Ld. AO from time to time and after due enquiries and verifications into the matter and also after considering the provisions of Act, the assessment was completed u/s 143(3) of the Act vide dated 26.12.2017 at total income of ₹ 13,80,060/- by making certain additions/ disallowance including the excess cost claimed in purchase of property. Against this order, assessee preferred an appeal before the ld. CIT(A) who vide order dt. 26.9.2018 partly allowed the appeal of the assessee however, the addition towards the excess cost claim in purchases of property is sustained. Thereafter, vide notice dt. 05.04.2019 ld. CIT (Admn.) invoked the provisions of section 263 of the Income Tax Act, 1961 for the reason that during the year under appeal assessee has purchased property G-99 and G-100, MIA Alwar for ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(Adm.) has invoked the provisions of section 263 and issued the first notice on 5.4.2019 alleging the assessment order as erroneous. 6. In this regard, attention is invited to the provision of explanation (c) to sub-section of section 263 which reads as under: Revision of orders prejudicial to Revenue. 263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment and directing a fresh assessment. [Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner [or Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sub section (1) of section 263 find support form Doctrine of Merger, according to which, where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and in capable of enforcement in the eye of law. Logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject matter at a given point of time. 10. In present case, issue for consideration is whether, when an order of the Assessing Officer was subjected to appeal which had concluded with the order passed by the Commissioner (Appeals) for a subject-matter which in the present case is value of purchase of property, will it be still open and available for the Commissioner to exercise his revisional jurisdiction under Section 263 to revise the order of the Assessing Officer on the same subject-matter. On this issue, Hon ble Guwahati High Court in PCIT v. Oil India report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased, which comprised agreements to sell as well as registered sale deeds and documentary evidences in respect to expenses claimed (over and above sale consideration mentioned in sale deed) for both properties purchased. In fact, at page 2 of Assessment order, ld. AO has observed both the properties were registered at sub registrar II on 28.04.2014 at ₹ 29 lacs each. During the course of hearing, on enquiry, it was explained to ld.AO that no addition was called for in respect of difference between DLC value of properties purchased and sale consideration thereof as the date of agreement and date of registration was different and assessee had received part of sale consideration through account payee cheque prior to the date of agreement to sale of properties for which the necessary details of payments made were also submitted in the charts. It was claimed that since the payments have been made through payees account cheque in respect to both the properties in accordance with the agreement to sale which were executed prior to 1.4.2014 thus it is outside the purview of provisions of section 56(2)(vii)(b)(ii), by virtue of proviso to that section. After considering submission a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le property without consideration were brought on the statue book, by Finance (No.2)Act, 2009 w.e.f. 01.10.2009. Subsequently, clause (b) of the section was amended by Finance Act, 2013, w.e.f. 01.04.2014, which provided for taxability of even inadequate consideration in transfer of property. 17. So far as facts of the present case are concerned, part of the sale consideration was paid through banking channels before the date of agreement (as is evident from table at page 4 of this submission) and thus assessee was outside the purview of deeming provisions of section 56(2)(vii) by virtue of proviso thereof. 18. It is worthwhile to mention here that Ld. CIT(Admn.) in para 2 at page 3 of the revision order merely observed that It is observed by me that the provisions of section 56(1)(vii)(b) of the Act, were introduced by the Finance Bill 2013, w.e.f. 01.04.2014 relevant to A.Y. 2015- 16(incorrectly mentioned by ld.CIT (A), correct A.Y. is A.Y.2014-15) in regarding value taken u/s 50C of the Act, of the purchase of immovable property which are applicable on the case of the assessee, as the assessment was related to A.Y. 2015-16. 19. It is thus apparent that ld. CIT has rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner suo motu under it, is that the order of the Income Tax Officer is erroneous is so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act. 23. In fact, ld. CIT(Admn.) has relied upon the decision of Apex Court on the observation that An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous . In this regard, it is submitted that ld.AO has duly applied the provisions of law and ld. CIT (Admn.) has not proved the same otherwise and has rather issued directions for revision in a mechanical manner. Similarly other case laws relied upon by ld.CIT(Admn.) are also not applicable to facts of the case. 24. At this juncture, kind attention of Hon ble bench is invited to Explanation 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between Lack of inquiry and inadequate enquiry and held that, in the case of inadequate enquiry, provisions under section 263 cannot be invoked. It may however, be noted that the instance case is neither the case of inadequate enquiry nor lack of enquiry during assessment proceedings as it can be seen that due, necessary and most pertinent enquiries to all the issues emerging from the return filed by the assessee were conducted by the Ld. AO. Therefore, in view of such legal position, no action u/s 263 could have been taken. 28. It is thus submitted that for the sake of clarification and at the cost of repetition it is submitted that twin conditions as laid down u/s 263 i.e. erroneous and prejudicial to the interest of the revenue have to be cumulatively satisfied and in the absence of one of the conditions, (i.e. order passed by ld.AO is not erroneous) not being attracted the other would become nonest for the purposes of revision. 29. Therefore, in view of the above it was submitted that the impugned order of Ld. CIT(Admn.) be quashed and held bad in law. 30. Per contra, the ld. CIT/DR submitted that the case of the assessee was selected for limited scrutiny assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was limited to the expenses which have been incurred in relation to these industrial plots however as far as the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act is concerned, there is no material available on record that the Assessing Officer has carried out any inquiry/examination and sought any explanation from the assessee. Where the matter relating to applicability of provisions of section 56(2)(vii)(b)(ii) of the Act has not been examined by the AO and not subject matter of assessment order, there is no question of application of theory of merger with that of the order of the ld CIT(A) as so contended by the ld AR. We therefore find that it is a clear case where the applicability of provisions of section 56(2)(vii)(b)(ii) of the Act which are applicable for the impugned assessment year i.e. A.Y 2015- 16 has escaped the attention of the Assessing Officer which renders the order so passed as erroneous and prejudicial to the interest of the Revenue. 32. The other contention which has been raised is regarding merit of applicability of provisions of section 56(2)(vii)(b)(ii) of the Act in the instant case. It has been contended that by virtue of proviso to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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