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TMI Blog2021 (4) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner took cognizance of assessment record and formed an opinion that the assessment order is erroneous and prejudicial to the interest of the Revenue. Therefore, a show cause notice under section 263 of the Act was issued and served upon the assessee. Though the show cause notice has been reproduced in the impugned order passed under section 263, its copy is also available at page no. 76 to 78 of the paper book. We deem it appropriate to take note of this show cause notice, which reads as under: "On verification from the computation of income & other details submitted by you during the course of assessment proceedings, it is noticed that you have shown working of capital gains as under: Sale consideration of 28Flats: - Rs. 4,76,00,000/- Less:- Indexed cost Rs. 2,26,30,066/- Improvement Rs. 11,22,32s/- Rs. 2,37,52391/- Rs. 2,38,47,609/- Less:-Exempt U/s 54 Rs. 2,61,00,000/- Rs. 2,38,47,609/- Long term capital gains . Rs. Nil/- 2. On perusal of the case records, it is noticed that the Collector, Baroda had given permission for conversion of agricultural land i.e. R.S. No. 95, 96 at Nagarwada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as warranted by the facts and circumstances of the case and assessment has been completed without examining all aspects which were required to be looked into for determining the total income of the assessee, It has been held in number of cases by the Hon'ble courts that unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, the Assessing Officer Is not only an adjudicator but also an investigator. He cannot remain passive on the face of a return, which is apparently in order but calls for further enquiry. It is his duty to establish the truth of the facts stated in the return of income when the circumstances of the case are such as to provoke enquiry. If there is failure to make such enquiry, the order is erroneous and prejudicial to the interest of revenue. In this regard references were made to the following cases: Gee Vee Enterprises Vs. Addl. CIT, 99 ITR 375 (DEL) Rampyari Devi Saraogi Vs. Commissioner of Income-tax, 67 ITR 84 (SC) Malbar Industrial Co. Ltd. Vs. CIT, (2000) 243 ITR 83(SC) Rajalakshmi Mills Ltd. Vs. ITO 313 ITR (AT) 0182 7. It may further be stated that Explanation 2 has been inserted below sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer consider the same and allowed the exemption claimed by assessee is valid. However, the proceedings u/s. 263 has been Initiated by your good office claiming that the order passed by the learned AOu/s 143(3) is erroneous and prejudicial to the interest of revenue and show cause notices issued. In view of above/your assessee has provided the following clarifications to prove the Issues raised in your above notice Is not valid and the assessment completed is correct and not erroneous as the order is passed after making proper enquiries & verification. 1. Claim of Improvement As per the notice issued to assessee In para 3 of notice for proceeding u/s. 263 your good office stated that, "the collector, baroda had given permission for conversion................................. the order is erroneous and prejudicial to the interest of revenue." In view of the same, we may mention that the cost of improvement/construction was Rs. 8,26,500. Out of constructed 72 flats, the cost of improvement for Property apportioned to 28 flats sold during the AY 2013-14 is Rs. 321417 (826500 x 28/72). Cost of improvement made in the year 1993-94. Therefore, indexed cost of improvem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the copy of list of cost incurred alongwith the map, dastavej and capital gain savings account for the whole period from date of deposit up to the date of expenditures/payment to your good office in submission no. 5 dated 15.02.2016 as per Annexure 4, 5 & 6. Further, the copy of the same is also attached for your ready reference as per Annexure 2. The same was duly verified by him and found correct claim of cost of improvement and hence therefore the contention that the same was accepted without any verification is not correct and does not require any further verification etc. 3. Indexed cost of acquisition The notice stated that in para 5 that "you have claimed indexed cost of Rs. 2,26,30,066 and a valuation report in this......................................... adopted by you is excessive being regard to the instances of the sales in the vicinity of the impugned land. In view of the same, we may mention that the valuation of the property was done by Mr. Dhrumesh shah, a government approved valuer with a registration no is F-21609. Further, we may mention that the Jantri rate which was introduced around 1999 is a minimum base rate. However, in the normal course of prac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period from date of deposit up to the date of expenditures/payment. In addition to the same, we herewith submit the payment proof in form of Receipt of Contractor and Ledger copy as per books of accounts for your ready reference as per Annexure 1. The same was duly verified by him and found correct claim of cost of improvement and hence therefore the content/on that the same was accepted without any verification is not correct and does not require any further verification etc. We may further mention that the valuation of the property was done by Mr. Dhrumesh Shah, a government approved valuer with a registration no is F-21609. The same was submitted to your good office in our earlier above dated submission. Further, we may mention that we have already submitted copy of BanaKhat dated 7th February 1981 to learned AO in submission no. 5 Dated 18/11/2016 in scrutiny assessment for AY 2014-15, where in the price agreed is Rs. 180 per square feet which/s1 nearly same as valued by the government approved in his valuation report. The same was presented to learned AO in scrutiny assessment of AY 2013-14 & AY 2014-15 and the learned AO has accepted the same by not commenting on the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 10. On a bare perusal of the sub-section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FSI 2.5 7148.55 (2859.42*2.5) Add;FSI-2.5for Road area 224 Total FSI 7372.55 Totalareafor72 flats Amount to be given to land owner 12,23,84,330 (i.e. Rs. 16600 per sq.mtr x 7372.55 sq.mtr) Amount given per flat 17,00,000 approx. (12,23,84,330/72 flats 5. The ld. Commissioner has assigned three reasons for branding the assessment as erroneous and prejudicial to the interest of the Revenue. As far as first issue regarding cost of improvement is concerned, we will take this reasoning at the end. First we take the second reasoning given by the ld. Commissioner. It is pertinent to note here that while computing the capital gain on sale of house property for the purpose of capital gain, the assessee was required to be compute cost of acquisition. The assessee has adopted the cost of acquisition at Rs. 68,30,000/- on the basis of registered valuer's report, who is a government approved valuer. After working out the indexation benefit as on 1.4.1981, the assessee has worked out indexed cost at Rs. 2,26,30,066/-. Grievance of the ld. Commissioner was that the assessee has adopted the cost of acquisition at Rs. 68,30,000/- on the basis of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and others have purchased the suit property from the seller viz. Maganbhai Gordhabhai Patel. In the Schedule-A attached with this agreement, the rate prescribed was Rs. 180/- per sq.feet. The assessee has placed on record true copy of translation of the alleged banakhat, and we take note of the relevant part from the schedule-A, which reads as under: "Schedule-A The land bearing survey no. 95 and 96 paiki, admeasuring 9287 sq.mts. is situated in Mouje Nagarvada, Vadodara City, Tal. Vadodara, District Vadodara, Registration Sub District Vadodara. The same is decided to be sold by us to you for Rs. 180/- (In words Rs. One Hundred Eighty only) per sq.ft. We have received today Rs. 5,00,000/- (in words Rs. Five lacs only) from you in cash. The said property of Survey No. 95 and 96 Paiki 9287 sq.mts. is situated in River Bas, the said land is shown as open space in VUDA." 7. If we look into this agreement, which is very closure to 1.4.1981 along with working of the registered valuer, then it would reveal that in support of her working in indexation cost, the assessee has evidence. On the contrary, the ld. Commissioner did not refer to any sale instance for directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption worked out by the assessee at Rs. 2.61 crores. In other words, even if this improvement cost disallowed to the assessee, then also she has more higher exempt amount under section 54 which can take care of this Rs. 11,22,325/-. Net result in that is that no capital gain tax will be required to be paid by her. Thus by disallowing this amount to the assessee will not ultimately effect on computation of capital gain because she is having higher amount available for exemption. There will be no prejudice to the Revenue. 9. Apart from the above, we would like to make reference to the notice issued by the ld. AO whose copy is available at page no. 98 of the paper book. It reads as under: "You are requested to furnish the following details:- 1. Please furnish the copy of capital a/c alongwith source of addition in the capital account-. 2. In respect of loans raised during the year, whether squared up or not, furnish confirmation of each party alongwith name, address, PAN and a copy of ledger account as appearing in your books of accounts. You are also requested please justify your claim as per requirement of section 68 of the Act. 3. Furnish the bank reconciliation statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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