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TMI Blog2021 (5) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... e had rightly shown the sale consideration at ₹ 97,65,000/- and even this aspect has been thoroughly examined by the assessing officer during the course of assessment proceedings of the assessment order - Therefore, so far as, this issue relating to applying of the guideline rate as on 30.03.2012 or 26.03.2014 is concerned, we find that the issue has been thoroughly examined by the assessing officer and has taken one of the plausible view in the light of the settled judicial proceedings which thus leave no room for the Pr. CIT to assume jurisdiction u/s 263. Deduction u/s 54F(1) for the investment in construction of House - As assessee apart from owning one flat also held another house at AH-28 29 which was a joint property owned by appellant with his wife Smt. Sumitra Borad. There was a house on AS-28 and AH-29 was vacate. That initially the entire payment for construction of the original house was made by the appellant duly shown as the investment in the house in the balance sheet. During financial year 2014-15 relevant to A.Y. 2015-16 against the investment of ₹ 41,56,868/- the appellant received ₹ 16,81,609/- from his wife towards her share. The cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law the Ld. Pr. CIT erred in setting aside the assessment order as passed by the ld. AO u/s 143(3) of the Act on 14.12.2016 even when the said assessment order as passed by him was neither erroneous nor prejudicial to the interest of revenue. The order so passed by the Ld. Pr. CIT and properly appreciating the facts of the assessee submission made before him is wrong and bad in law. 2. That on the facts and in the circumstances of the case and in law the Ld. Pr. CIT erred in setting aside the assessment order as passed by the Ld. AO just to re-verify to the plots relating to the calculation of Income from capital gain on sale of plots and examine which has already been verified the course of original assessment . after full application of mind. The order so passed by the Pr. CIT by invoking the provision of section 263 of the Act is therefore illegal and bad in law, the said order requires to be quashed. 3. That on the facts and in the circumstances of the case in the present case the Ld. Pr. CIT erred in setting aside the original assessment passed by the Ld. AO and invoking the provision of section 263 of the Act for examination of issue related to the Capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch in amount paid to related persons u/s 40A(2)(b) 4. An order u/s 143(3) of the Act was passed by the Ld. Assessing Officer on 14.12.2016 assessing the Total Income of appellant at ₹ 16,21,350/- including the income under the heads Long Term Capital Gain of ₹ 7,09,689/- as against ₹ 1,93,656/- as declared in the return of total income as filed. The assessing officer while passing the Assessment Order, has restricted the amount of selling expenses to ₹ 1,10,320/- only as against selling expenses as claimed by the assessee at ₹ 6,26,353/- and thereby has disallowed an amount of ₹ 5,16,033/- out of total selling expenses for want of supporting documents etc. 5. Subsequently, a notice under section 263 of the Income Tax Act was issued by the Pr. CIT, Indore for the following three reasons and he was of the opinion that the assessment order as passed by the assessing officer was erroneous and so far as prejudicial to the interest of the revenue. The reasons as recorded by the Pr. CIT are listed as under: 1 Guideline value at the time of sales was of ₹ 1,30,20,000/- whereas the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h fixed deposits 'are part of capital gain Account scheme. It is further-seen that all the four FDRs were redeemed prematurely and proceeds were' deposited in ~ savings account. The AO has not examined whether such premature redemption is in accordance with Capital Gain Account Scheme 1988 and deduction u/s 54Fwas allowable or not. 4.4 You have also claimed to have invested ₹ 43,31,991/ up to the date of filing of' return in construction of a, new house (apparently AN 28-29). However, on perusal of the balance sheet plated on record that a; on 311312014 there is 'House Account' R's43,76,862/-whereas as on 31.3.2013 the same is at ₹ 41,57,868/~. As on 30.11.2014 there 'are two entries in the balance sheet viz. New House- Construction ₹ 4331991/- and house account (AH 28-29) ₹ 24,76,2591/-. Hence it is not clear in which house the assessee has made a new investment Further as per the balance sheet there is one more 'ilat account' ₹ 3,30,0001- thus-it is not clear whether the assessee fulfills-the condition of not owning more than one residential house besides the new assets as envisaged in section 54F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3] The appellant during the course of assessment proceeding filed detailed reply, the same is enclosed on Page Nos 96 to 103 and also on Page No 104 of the Compilation. From the documents it is proved that the appellant had filed detailed reply in respect of calculation of capital gain and deduction as claimed under section 54F of the Income Tax Act. The assessing officer after due application of mind after reducing the selling expenses, accepted the contention of the appellant. 2.4] The reason for issuance of the notice under section 263 of the Act and its reply by the appellant is as under:- S.No Reason for issuance of notice Explanation of the Appellant Guideline value as on the date of registry was of ₹ 13020000/- but the appellant had offered sale consideration of ₹ 97,65,000/- The appellant executed registered sale agreement dt 30- 03-2012 without possession in favour of M/s Daksha Homes P Limited for ₹ 97,60,000/- and substantial amount has already been received by the appellant. ₹ 37,60,000/- on 30.03.2012 and ₹ 6000000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dharamhi Bhai Sonani V.ACIT 161 ITD 627 [ Ahd ] The first and second proviso to section 50C(1) of the Income Tax Act was inserted w.e.f 01-04- 2017 but these proviso was inserted to explain date of valuation as applicable as on the date of agreement and not on the date on which registry was actually executed Ms Zubeida Shahanshah ITA No 519/ Lkw/2017 dt 31-01-2019 Dharmshibhi Sonani Vs ACIT, Surat [2016] 75 Taxmann.Com 141 [ Ahmedabad Bench ] 161 ITD 627 (Ahd ) Hari Mohan Das Tandon (HUF) 169 ITD 639 (All) M/s Jai Laxmi Developers (P) Ltd Vs DCIT ITA No 5578/ Del/ 2014 dt Smt Kundanben Ambhai Shah V. ITO ITA No 3354/ Ahd/ 2014 dt 30-11-2017 Deduction U/s 54F of the Act in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after demolition of the old house. Hence, the appellant was rightly eligible to claim deduction under section 54F of the Act The Ld Pr CIT merely on the basis of amount as reflected in the Balance sheet doubted the genuineness of the construction expenses as incurred which in any case is not justifiable. The appellant for claiming deduction under section 54F of the Act can invest in additional one house in addition to his existing house. In the present case, existing house was demolished and permission was obtained for construction of new house. Hence, the appellant is duly complied with the condition as per section 54F of the Act 3.1] That the first reason as mentioned by the Pr. CIT for issuing the notice u/s 263 to the appellant was as under:- ● That appellant has claimed that transfer of Land took place in A.Y. 2014-15 however while determining the sale consideration, the appellant has adopted the value of Sale Agreement i.e ₹ 97,65,000/- which was entered into during the A.Y. 2012-13 however as per the sale deed and also as per the Stamp duty authorities rate , the consideration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 97,60,000 3.6] That an amount of ₹ 20,00,000/- as received vide Ch No 359048 and an amount of ₹ 17,60,000/- as received vide Ch No 359046 were credited in the bank account of the appellant as on 30-03- 2012 and balance amount was credited in the bank account of the appellant on 19-12-2012. 3.7] That during the course of original assessment proceedings the appellant has submitted a detailed reply in respect of said transaction and has properly explained the nature of transaction and also furnished duly registered sale agreement (without Possession). The sale agreement was registered and consideration was also received through an account payee cheque. Thus, as per amended proviso of section 50C of the Act the guideline value as on the date of agreement is to be considered as full value of consideration. The appellant is therefore rightly offered sale consideration of ₹ 97,65,000/- in his return of total income. 3.8] The Date wise event of Property as sold by the Appellant and which is under question is summarized as under for better understanding:- Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer is also enclosed for your kind reference and is available on pages 174 to 180 of the paper book filed before the Hon ble Bench. 1. Hon ble ITAT, Indore Bench in the case of Shri Raja Ram Patidar Vs ITO 1(2), Bhopal [ Appeal No ITA No 371/Ind/ 2015 dt 28-09-2018 for the Asst Year 2010-11 ] 2. That Hon ble Allahabad high Court in the case of CIT V. Shimbhu Mehra as reported in [2016] 65 taxmann.com 142 (Allahabad) 3.That Hon ble Delhi Bench of ITAT in the case of ITO V/s Modipon Ltd. as reported in 168 TTJ 480 4. Hon bleHyderabad Bench of ITAT in the case of Shri Mohd. Imran BaigV/s ITO [ ITA No. 1942/Hyd/2014] 5. 3.12.1] That as per first and second proviso to section 50C(1) of the Income Tax Act as inserted as inserted by the Finance Act, 2016 w.e.f 01-04-2017 read as under: Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes P. Ltd. in its return since they were the sellers of property in A.Y. 2014-15 which is correct and proper. 4.1] That the second reason as mentioned by the Pr. CIT for issuing the notice u/s 263 to the appellant is as under: ● The A.O. has not examined whether 4 Fixed Deposits made by the appellant amounting to ₹ 4613000/- in Capital Gain Deposit Scheme on 29.11.2014 is in accordance with Capital Gain Account Scheme 1988 and Deduction u/s 54 F was allowable or not before allowing the same. 4.2] That Appellant during the course of original assessment proceedings had filed the copies of Capital gain scheme FDR made with Dena Bank totaling to ₹ 46,13,000/-. Details of FDR made by the appellant are as under:- FDR No. Date [ Due date for filing of return extended to 30-11-2014] Amount [Rs] SDRE8258986 29.11.2014 1613000 SDRE8258985 29.11.2014 1000000 SDRE8258984 29.11.2014 1000000 SDRE825 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t produced before AO for examination and hence, were not available with the AO to take correct view regarding benefit of capital gain deposit account scheme. the AO has passed the order without examining the issue in proper prospective and enquiries. 4.7] That from the above, it is clear that the certificate in respect of capital gain deposit has already been provided to the Pr CIT, during the course of 263 proceeding. Hence, there was no justification for him to passed an order under section 263 of the Act with a direction to reexamine the same facts again. The appellant during the scrutiny assessment provided complete detail of fixed deposit with capital gain scheme and its utilisation. The assessing officer after being satisfied with the explanation of the appellant accepted his contention.In view of the above it is submitted that appellant has properly claimed deduction u/s 54F of the Income Tax Act of ₹ 46,13,000/- in his return. The same may kindly be treated as legal and proper. 5.1] That the third reason as mentioned by the Pr. CIT for issuing the notice u/s 263 to the appellant is as under: ● That appellant has claimed to have invested ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was house on AH- 28 and Plot no. AH 29 was vacate. That initially the entire payment for construction was made by the appellant and shown as Investment in house in his name. That during the previous year relevant to the Asst Year 2015-16, an amount of ₹ 16,81,609/- was received by him from his wife towards her share and therefore the cost to that extent was transferred by the Appellant in the Books of his wife. For this reason the cost of house reduced from ₹ 41,57,868/- to ₹ 24,76,259/- in the file of the appellant as on 30.11.2014. 5.5] The said house situated at AH 28 has been demolished by appellant in A.Y. 2014-15 and he has started the construction of a new residential house on and same along with adjoining plot AH29 Sukhliya. The Appellant has also taken permission for construction of new house from the Municipal Corporation on AH-28 and AH 29 copy of same are enclosed. It was for this reason that the appellant has shown House (AH-28-29) at ₹ 41,57,868/- as on 31.03.2013. That appellant has demolished the Old house after he got permission for construction in April 2013. That later on after 01.04.2014 the appellant has started construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed by him under section 54F of the Act was legal and proper. The Ld. A.O. after considering all the aspects has properly allowed the deduction u/s 54F. Thus, the assessment order as passed by the assessing officer was neither erroneous nor prejudicial to the interest of revenue. Hence, the order as passed by the Ld. Pr. CIT requires to be quashed. 6.1] The language of Provision of section 263 of the Income Tax Act read as under:- 263. (1) The Principal Commissioner or 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 appellant 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 cancelling the assessment and directing a fresh assessment. [ Emphasis supplied ] 6.2] That prior to invoking the provision of section 263 of the Income Tax Act, the order in question must be erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as reported in [2019] 106 taxmann.com 30 (Guj.) 6.4.7] The Hon ble Supreme Court of India in the case of Pr CIT-8 v. Sumatichand Tolamal Gouti as reported in [2019] 111 taxmann.com 287 (SC) dismissed the SLP filed by the Department against the order of the Hon ble Bombay High Court. The Hon ble Bombay High Court in the case of Pr. CIT-8 v. Sumatichand Tolamal Gouti as reported in [2019] 111 taxmann.com 286 (Bombay) 6.4.8] The Hon ble Supreme Court of India in the case of CIT v. Amitabh Bachchan as reported in [2016] 69 taxmann.com 170 (SC) 6.4.9] The Hon ble ITAT Kolkata Bench C in the case of Patron Vinimay Pvt. Ltd. Vs. ITO [ITA No. 1614/Kol/2019] vide order dated 31-12-2019. 6.4.10] The Hon ble ITAT Pune Bench B in the case of Rajesh Chandrakant Shah (HUF) v. Pr. CIT-6 as reported in [2019] 102 taxmann.com 428 (Pune - Trib.) 6.4.11] The Hon ble ITAT Ahmedabad Bench C in the case of Jay Agriculture Horticulture Pvt. Ltd. Vs Pr. CIT-2 [ITA No. 605/Ahd/2015] 9. Per contra Ld. Departmental Representative (DR) vehemently argued reiterating the finding given by Ld. Pr. CIT in the impugned order and also placed reliance on the following decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides. 11. Though, the assessee has raised various grounds of appeal by the sole grievance of the assessee is against the finding of Ld. Pr. CIT in the order filed u/s 263 of the Act setting aside the assessment order treating it to be erroneous and so far as prejudicial to the interest of revenue. 12. We observe that the assessee has shown income from long term capital gain from sale of plot No.29/D/F, Scheme No.74C, Sector D, Indore. To arrive at the capital gain liable to tax, assesse has claimed selling expenses, exemption u/s 54F(1) of the Act for investment in new house and exemption u/s 54F(4) towards deposit in capital gain Deposits Scheme. The case of the assessee was assessed u/s 143(3) of the Act after making certain additions/disallowance. Ld. Pr. CIT invoked the provisions u/s 263 of the Act and issued show cause notice mentioning the following three reasons : S.No Reason for issuance of the notice under section 263 of the Act 1 Guide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the F.Y.2011-12 and 2012-13. The final consideration as mentioned in the sale deed dated 26.03.2014 was received by M/s. Daksha Homes Pvt. Ltd. Ongoing through various decisions relied on by the Ld. counsel for the assessee, we find that the assessee had rightly shown the sale consideration at ₹ 97,65,000/- and even this aspect has been thoroughly examined by the assessing officer during the course of assessment proceedings and in para 4 of the assessment order, Ld. AO has categorically stated as follows: During the assessment year the assessee has sold up piece of land bearing description plot No.29/D/F, Scheme No.74C, Sector D, Indore. The assessee has transacted in the property through a sale agreement (without possession) for an amount of ₹ 97,60,000/- dated 27 March 2012 registered on 30.3.2012. This property has ultimately been transferred through a sale agreement between the assessee and the initial buyer Deksh Home Pvt. Ltd. Indore (PAN:AADCD2378J) and shri Sanjay Porwal Radheshyam Porwal for a sum of ₹ 1,30,20,000/- with a sale deed dated 26 March 2014. In computing the capital gains on sale of the asset the assessee has claimed expenses on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this fact that all these details were very much available before the assessing officer for examination and are forming part of the assessment records. Based on these evidences the income disclosed under the head of long term capital gain from sale of plot of land was examined by the assessing officer and was found to be correct except for disallowance of selling expenses at ₹ 5,16,033/-. 22. So going through above discussion, we are of the considered view that it is not a case of no enquiry rather it is a case of complete enquiry by the Learned assessing officer who after calling all the necessary documents examined the transaction of long term capital gain and various deductions claimed under the provisions of law and took one of the view permissible under the law and assessed the income after making certain disallowance. 23. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83, has laid down the following ratio: A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by such authority. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Hence the provisions of section 263 of the Act were not applicable to the instant case and, therefore, the commissioner was not justified in setting aside the assessment order. 25. The Hon'ble Supreme Court in the case of Max India Ltd 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fortified by the judgment of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] 71 taxmann.com 272 (Bombay). 27. This view is further supported by the decision of the Hon'ble Gujarat High Court in the case of Shri Prakash Bhagchand Khatri in Tax Appeal No. 177 with Tax Appeal No.178 of 2016, wherein the Hon'ble Gujarat High Court was seized with the following substantial question of law:- Whether the Tribunal is right in law and on facts in upholding the order passed by the CIT under section 263 of the Act on merits and still storing the issue of allowability of deduction under section 54 of the Act to the file of Assessing Officer even though the working of allowability of deduction under section 54F is available in the order under section 263 which is not disputed by the assessee before ITAT. 28. We, therefore, considering the facts of the case in totality and in light of the judicial decisions discussed hereinabove are of the view that Ld. Pr. CIT was not justified in imposing his view upon the assessing officer on wrong appreciation of facts and not considering the fact that issues raised in the show cause notice u/s 263 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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