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TMI Blog2022 (5) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... essment orders are exclusively in the hands and the domain of the Revenue and merely because facts on which the AO is satisfied are not found mentioned in the order, the absence of discussion thereon shall not by itself be an indicator of the fact that the AO has failed to examine the issue. Such an inference cannot be drawn. We have seen the queries raised in the course of the assessment proceedings. We have seen the responses given thereto. No doubt that the assessee is faced with a handicap that the counsel representing before the AO and before the ld. PCIT has passed away in the COVID times, however, the fact which remains to be demonstrated by the Revenue is the error and that too such an error which is prejudicial to the interests of the Revenue. These requirements cannot be said to have been met by the absence of discussion on facts on which the AO was satisfied after having raised the queries and considered the replies. How the assessment orders are to be written cannot be dictated to by the assessee. The remedy at best lies in providing better training, if so deemed fit to the Revenue officers and hence, lies in-house with the Revenue itself. The suspicion that it was poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king any enquiry which renders the order illegal, arbitrary and unjustified. 5. That the assessment order having been passed by the Assessing Officer after due application of mind and taking into consideration the various replies and material on record, the action resorted to by the Commissioner of Income Tax is unwarranted and uncalled for. 6. That the order of Commissioner of Income tax is erroneous, arbitrary, opposed to the facts of the case and is unsustainable in law. 2. The hearing in the present case effectively took place on 02.02.2022 on which date the ld. AR and the ld. DR more or less made their complete submissions on facts and law, however, the submissions of the ld. DR were incomplete to the extent that he sought time to verify properly from the record the calculations made available by the ld. AR. Accordingly, time was granted and the appeal was adjourned to 09.02.2022. On the said date, due to medical reasons, the counsel was unable to represent. The appeal stood adjourned accordingly to 23.02.2022 however, on account of the ongoing strike of Electricity Department, there were multiple connectivity issues in the hearing conducted via Webex. Accordingly, the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehta Advocate and the appeal was filed on 20.05.2021. Sd/- Deponent Verification: Verified that the above noted contents of my affidavit are true and correct to the best of my knowledge and belief and nothing has been concealed therein. Dated: 07.06.2021 Sd/- Deponent 3.1. Accordingly, placing heavy reliance on the aggravating circumstances as set out in the aforesaid application and affidavit, it was his prayer that the delay may be condoned. 3.2. The ld. CIT-DR considering the contents of the application and the record posed no objection in case the delay is condoned. 3.3. In the light of the submissions of the parties before the Bench, considering the peculiar circumstances as brought on record which are not in dispute and the position of law as relied upon we deem it appropriate to condone the delay. Satisfied by the explanation offered, the delay is, accordingly, condoned. Ordered accordingly. 4. The ld. AR, accordingly, was directed to address the grievance of the assessee in the appeal filed. On behalf of the assessee, it was submitted at the outset that the assessee does not wish to specifically press ground No. 2 as the issue would stand addressed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the ld. PCIT and the ld. PCIT does not fault any of these details. He does not point out to any error in the claim of the assessee. The supporting claim, it was submitted, is based on facts and evidences and co-related with payments by cheque from the banks to a large extent. The ld. PCIT ignoring the evidences made available merely proceeds to cancel and set aside the validly passed assessment order for consideration afresh without pointing to any error justifying the suspicion. It was his submission that the said action of the ld. PCIT was contrary to the settled legal position as has been variously addressed by the Courts. The power to set aside the assessment order u/s. 263, it was submitted, is vested with the ld. PCIT for a specific purpose. It was his submission that as per law, it was to be exercised with due care and caution pointing out to the error in the order sought to be set aside and the error should be of such magnitude which can be said to be prejudicial to the interests of the Revenue. The Courts have variously held that this power should be exercised clearly pointing out the error, it cannot be exercised whimsically or arbitrarily. Addressing the legal position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased by you in your name or in the name of your family member alongwith source of investment. 5. Please furnish the details of deductions claimed u/s. 54 along with copies of sale/purchase deeds of properties and calculations of LTCG. This information is being called for under section 142(1) of the Income Tax Act, 1961 and should be furnished on 22.12.2016 at 11:45 A.M.." 5.2. Referring to the above queries, it was submitted, that there can be no doubt that the issue was fully examined by the AO. When considered with the construction details made available to the ld. PCIT wherein no fault has been pointed out, it was argued that the exercise of powers is whimsical and arbitrary. 5.3 Reverting to the record, attention was invited to reply of the assessee appended thereto at Paper Book pages 3 to 5. Copy of the return filed alongwith the computation, it was submitted, is at pages 6 to 11. Specific attention was invited to the sale consideration received for plot No. 182/49, Industrial Area, Phase-I wherein the assessee had 50% share, value of which u/s. 50C was Rs. 1.55 Crores. After reducing the purchase cost and the Index Cost etc., the deduction u/s. 54F of Rs. 1,28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. Regards (On behalf of Mahesh Chugh) Sd/- (Arvind Mehta) AdvocateCounsel 5.5. The reply at page 28-30 of the Paper Book to the Show Cause Notice issued by the ld. PCIT extracted in the impugned order appended at Paper Book page 24-25 was referred to. It was his submission that the reply was more or less as submitted before the AO. It has been made available on behalf of the assessee by Shri Arvind Mehta. Details of the expenses of construction/renovation of House No. 3113 Sector 28D alongwith evidences is available at pages 31 to 45. Linking these with the Index of specific party/nature of work etc. at pages 31, it was his submission that all details were available and most of the payments were made by cheques. Copy of the bank account is appended at pages 32 to 39, Paper Book page 40, it was highlighted is copy of the ledger account of Topsell Agencies from where certain purchases for the material used were made amounting to Rs. 1,33,040/-. Referring to the said page, it was submitted that it clearly mentions the sales bill, VAT amounts. Similarly Paper Book page 41 is payments made for purchase of ceramic tiles, bill raised by Vishal Trading on 21.09.2014 and 14.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it was submitted that this power cannot be exercised carelessly and whimsically. 6.2. Attention was also invited to the decision of the Hon'ble Delhi High Court in the case of D.G. Housing Projects Ltd. (supra) for the proposition that the ld. PCIT considering the evidence has to upset the same and When all the evidences are available before the ld. PCIT, he cannot whimsically direct that further enquiries be made. It was argued that the law requires the ld. PCIT to address the evidences and not proceed on suspicions. It was questioned what stops the PCIT from carrying out an enquiry and point out what is wrong in the evidence available. The order, it was submitted, is contrary to law and facts. 6.3. Decision of the Hon'ble Delhi High Court relied upon at Sr. No. 3 in the case of Jyoti Foundation (supra) was cited. It was submitted that even in a case where the ld. PCIT makes out a case that it is possibly a case of inadequate enquiry which in the facts of the present case, it is not so, even then the ld. PCIT for exercising the powers u/s. 263 is duty bound to point out what is the error which has occurred on account of inadequate enquiry, if so alleged. 6.4. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, time was granted. 10. On the next date, following submissions were filed on behalf of the Revenue: Feb. 2, 2022 The Hon'ble Members Chandigarh "B" Bench Chandigarh Sir/madam, Reg, M/s. Mahesh Chugh ITA No. 104/Chd/2021 AY 2015-16 The above case was part heard today {2.2.2022}, and now fixed on 9.2.22, the undersigned would like to furnish capital gains calculations for ready reference. The same is as under: Sr. no. Property ID Sales consideration (Rs) Cost of Acquisition Indexation (Rs.) Capital gains/loss (Rs.) 1 Plot F-264 45,00 000 4864223 (-)364223 2 Plot 182/49 155,00,000 2608917 12891083 3 Shop no. 13-14 96 25 000 2064850 7560150 Not included for the time being, the matter will be taken separately. Net consideration from Property 2 & 3 above : 2,51,25,000 (1,55,00,000)+ 96,25,000) Capital gains : 2,04,51,233 (1,28,91,083 + 75,60,150) {A} Investment in residential property (3113) : 2,27,50,000 (including 10,15,000 renovation Deduction eligibility : Investment in residential property x capital gains/net consideration Here : 2,27,50,000 x 2,04,51,233/2,51,75,000 = 1,85,18,031 Capital gains of property 2 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interests of the Revenue has been pointed out by the ld. PCIT. 13. We have heard the rival submissions and perused the material available on record. It is seen that in the facts of the present case the assessee filed its return on 08.09.2015 declaring income of Rs. 15,09,350/-. In the return filed, claim of deduction u/s. 54F was made. The AO after issuance of notice and raising certain queries considering the reply filed etc. passed the assessment order under question. It is pertinent to note that the assessee was represented before the AO by Shri Arvind Mehta. The said order passed was sought to be set aside by the ld. PCIT on account of the facts which were set out in the Show Cause Notice dated 29.02.2020 issued to the assessee. The contents of the same have been extracted in the impugned order and for the sake of completeness are reproduced hereunder: 2. As per information/documents available on records, it is seen that three commercial properties were sold for a total consideration of Rs. 2,96,25,000/- during the year. Net capital gain was worked out at Rs. 10,76,789/- after adjusting the short term capital loss, claiming cost of indexation and deduction u/s. 54F a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce that the deduction claimed u/s. 54F of the Income tax Act, 1961 are not in accordance to the provision under Income Tax Act. Respectful submissions are made as under; I. That it is an admitted fact that the assessee has sold three Nos of immovable properties (Capital assets other than residential) for total consideration amount of Rs. 2,96,25,000/- as declared in the Income Tax return for the assessment year 2015-16. As a matter of fact sales consideration amount of Rs. 45,00,000/- received against sale of Plot No. F-264, Phase-8, Mohali (Pb.) bears net capital loss of Rs. (-) 3,64,223/-. Hence the total consideration amount i.e. 45,000/- is not declared for the purposes of claim of deduction under section 54F of the Income tax Act, 1961. Hence it needs to be executed from total consideration of Rs. 2,96,25,000/-. 2. That apart from above stated amount assessee sold capital assets (not being residential house) i.e. Plot No. 182/49, Industrial Area, Phase-1, Chandigarh for total consideration of Rs. 1,55,00,000/- (vide sale deed dated 12.06.2014)(sic) & Bay Shop No. 13-14, Sector 27-D, Chandigarh for total consideration of Rs. 96,25,000/- (vide sale deed dated 12.08.2014). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the request of the counsel, the case was adjourned to 11.03.2020. 3.1 Sh. Arvind Mehta, Counsel of the assessee attended the proceedings on 11.03.2020 and filed details of expenses for construction/renovation of House No. 3113, Sector 28-D, Chandigarh. From the records, it is seen that these details were neither called for during the assessment proceedings by the assessing officer nor the details were provided by the assessee of his own. 13.3. Relying upon the decision of the Hon'ble Delhi High Court in the case of Nagesh Knitwear Pvt. Ltd. (2012) 345 ITR 135 and decision of the Apex Court in the case of Amitabh Bachchan, the order was set aside holding as under: 5. It is, therefore, held that the said assessment is erroneous in so far as prejudicial to the interest of revenue for the reasons as discussed above in view of the provisions of section 263, inter-alia including Explanation 2(a) inserted w.e.f. 01.06.2015. Accordingly, the assessment order u/s. 143(3) dated 08.12.2017 for the assessment year 2015-16 is cancelled and set-aside with a direction to the Assessing Officer to pass an order afresh in accordance with law keeping in view the above observations and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est lies in providing better training, if so deemed fit to the Revenue officers and hence, lies in-house with the Revenue itself. The suspicion that it was possibly not seen by the AO cannot be the backbone of exercising the powers u/s. 263 of the Act. The fact remains that these calculations were provided to the ld. PCIT. It is seen that he has failed to find any infirmity in the claim. The ld. PCIT, instead has set aside the order u/s. 143(3)/148 in order to grant one more inning to the Revenue to find some shortcoming in the claim on the suspicion that possibly the AO has missed something in the first round. Such an action cannot be supported. Powers u/s. 263 of the Income Tax Act are not on the Statute for such whimsical and arbitrary actions. The powers are expected to be necessarily exercised by pointing out clearly the error in the order passed which is sought to be set aside exercising the Revisionary powers and that too, such an error which is prejudicial to the interests of the Revenue. 13.5. We have given our due consideration to the entirety of the submissions of the parties and examined the claims of the parties from the various perspectives and possibilities which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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