9911796707
TMI Blog2021 (4) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... d the suit property from the seller viz. Maganbhai Gordhabhai Patel. In the Schedule-A attached with this agreement, the rate prescribed was 180/- per sq.feet. The assessee has placed on record true copy of translation of the alleged banakhat- 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 the AO to adopt 8/- per sq.ft. as on 1.4.1981 for working the cost of acquisition. Commissioner has observed that the assessee failed to show any documentary evidence about the improvement cost claimed at 11,22,325/-. The AO has not examined this aspect and allowed the claim. Though the assessee has demonstrated the facts as to how she has claimed the improvement cost, and it was a very old claim, the expenditure was incurred in the year 1993-94. It was duly recognized in the return of income for Asstt. Year 2006-07. AO has called for details regarding working of capital gain/loss. He has also called for investment made during the year. According to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in taking cognizance under section 263 of the Income Tax Act, 1961 and thereby setting aside the assessment order for passing a fresh assessment order. 3. Brief facts of the case are that the assessee has filed her return of income on 25.6.2013 declaring total income at ₹ 6,41,630/-. The case of the assessee was selected for scrutiny assessment, and assessment order was passed on 16.2.2016 under section 143(3) by accepting the returned income of the assessee. The ld. Commissioner 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter taking into consideration of instances of sales in and around the Land situated at Nagarwada which were called for from Sub-Registrar, Baroda. Thus, the indexation cost of ₹ 2,26,30,066/- adopted by you is excessive being regard to the instances of the sales in the vicinity of the impugned land. Hence, this has made the order erroneous and prejudicial to the interest of revenue. 6. From the above, it is clear that the Assessing Officer has failed to carry out enquiries 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. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me account. Further, we may mention that your assessee has constructed a residential house in April, 2015 within 3 years from amount deposited in scheme. Therefore, your assessee has eligible to claim exemption of ₹ 2,38,47,609 under capital gain. In view of the above, the case of your assessee also selected for scrutiny assessment for the AY 2013-14. In response to the notice CA Chirag Shah and authorised representative attended and submitted requisite detail which is placed in the record. The Assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential house within the limit of 3 years from earning of capital gain. Therefore, your assessee has claimed exemption u/s. 54 is valid because your assessee has constructed residential house within the limit of 3 years from the earning of capital gain. It was explained to learned AO that the building in scrap mode and only plinth was use able. Your assessee has used the same plinth to construct a fresh/new house and submitted all related documents which proves that a house is constructed on the said piece of land. Your assessee already submitted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Your assessee has claimed exempt/or, u/s. 54 is valid because your assessee has constructed residential house within the limit of 3 years from the earning of capital gain. It was explained to learned AO that the building in scrap mode and only plinth was use able. Your assessee has used the same plinth to construct a fresh/new house and submitted all related documents which proves that a house is constructed on the said piece of land. Your assessee a/ready submitted the copy of list of cost incurred along with the map, dastavej and capital gain savings account for the whole 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 regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 120; (b) "record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT. In the letter, the assessee has explained how much share she got by virtue of this agreement and how she has applied for exemption under section 54. Relevant submissions made in this letter read as under: In the Development agreement, on the page no. 3 it is clearly mentioned that ₹ 16,600 per sqr.mtr is given to land owner against the sale of flats. However, the calculation sheet is as under: Particulars Area of sqr.mtr. Remark Total land 3266.72 As per development agreement on page no.3 Less: Road cutting 89.60 Less: Common plot 317.70 Balance Area 2859.42 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. ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of land comes to ₹ 1,82,180/-. So the rate per sq.ft comes to 1,82,180/782 sq.ft = ₹ 232.96 The property is nucleolus zone, I consider the value 15% less. So, net value of land is derived at 232.96 -15% (34.94) = ₹ 198.01/sq.ft Hence I consider the fair value of ₹ 196/- per sq.ft in 1981 because this land is between two nucleus zone 1 & 2." 6. The registered valuer has made a reference to a sale instance, and thereafter worked out the value of the property as on 1.4.1981. Apart from this aspect, the copy of the agreement dated 7.2.1981 has been placed on record. By way of this agreement, the 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 ₹ 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 Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was duly recognized in the return of income for Asstt. Year 2006-07. Without going into that controversy, it is to be appreciated how the assessee has made working of the capital gain, which is reproduced by the ld. CIT page no. 9, which reads as under: Sale consideration of 28 flats ₹ 4,76,00,000/- Less: Indexed cost ₹ 2,26,30,066/- Improvement ₹ 11,22,325/- ₹ 2,37,52,391/- ₹ 2,38,47,609/- Less: Exempt u/s.54 ₹ 2,61,00,000/- ₹ 2,38,47,609/- Long term capital gain Rs. NIL If a sum of ₹ 11,22,325/- is also added to the amount of ₹ 2,38,47,609/-, then also it is lesser than the exemption worked out by the assessee at ₹ 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 ₹ 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. Apa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion as to how the assessment order is erroneous. He cannot relegate this aspect to the AO to find as to how his order is erroneous. Hon'ble Delhi High Court in the case of DG Housing Projects Ltd. [2012] 343 ITR 329 (Delhi) has held that the ld. Commissioner should have not relegated the point that assessment order is erroneous to the AO himself. The ld. Commissioner, after analyzing the record, ought to have recorded a categorical finding and provided valid reasons as to how the assessment order is erroneous. In other words, the CIT has to examine the order of the Assessing Officer on merits and then form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the absence of the same, original assessment order of the AO cannot be said to be erroneous and prejudicial to the interest of the Revenue. Accordingly, we do not find any reason for invoking provisions of section 263 by the ld. CIT, more so when relevant details and explanations were already available on the assessment record and based on which assessment order was passed by the AO. We quash the impugned order passed under section 263 res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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