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TMI Blog2022 (7) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO that it is very cryptic order confined to two paragraphs only without making any discussions and justification for the relief granted to the assessee either under section 54B or under section 54F of the Act. In the assessment order passed by the AO, there is no whisper on the inquiries made by him, before passing regular assessment order. Probably for this reason, the ld.CIT has reopened the assessment under section 263 We find that the ld.CIT also has not verified assessment record properly and simply carried out the objections made by the Internal Audit Party of the department, and thereby initiated the Revision proceedings. It can be seen from the show cause notice issued under section 263 of the Act, wherein the ld.CIT has categorically mentioned that the AO did not verify the facts and allowed the deduction under section 54B 54F of the Act. This observation by the ld.CIT is not correct, for the reason that the ld.AO has called for the details from the Sub-Registrar and received reply from Sub-Registrar on 24.1.2011 and 7.9.2011 respectively. AO though made inquiry about the claim made by the assessee, however, not discussed the same while passing assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, paiki/6 of Village Haripar Pal, and earned long term capital gain of Rs.2,94,27,541/-. The assessee claimed deduction of Rs.1,35,30,171/- under section 54F of the Act on account of construction of a new residential property from the sale of the above land. The assessee also claimed deduction of Rs.1,58,97,370/- under section 54B on account of purchase of new agricultural land. A perusal of the assessment order has revealed that the AO has not made any inquiry and passed a cryptic assessment order and accepted the returned income of the assessee as follows: 2. In response to the said notices, Shri Hitesh Bhatt, Advocate and Authorised Representative of the assessee attended from time to time on behalf of the assessee and the case was discussed with him. The details called for having furnished and the submission filed by the assessee has been verified and placed on record. The assessee produced books of accounts, bills, vouchers, bank statements, etc. which have been verified on test check basis. During the year under consideration, the assessee is deriving share of profit and capital gain. 3. Considering the details available on record and after due verification, the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that would include the verification of the claim of deduction under capital gains. In other words, the A.O. can be said to have satisfied himself and arrived at a conscious view that the capital gain was properly computed accordingly the deduction claimed u/s 54F and 54B were examined and endorsed by the A.O. It may also state that nothing comes out from your aforesaid notice as to how it is believed by you that the records do not show any agricultural income at least in two years prior to the date of transfer of agricultural land. Nothing is pointed out in your notice as to which record shows that the impugned land was not cultivated in the last two years. In absence of any evidence substantiating your said belief, in my humble submission, this would amount to mere suspicion or surmise or at best a change of view from that already taken by the A.O. after due scrutiny and that too on same set of facts. Hence, on this count, with due respect, the assessment cannot be said to be erroneous in law. It appears that it is more out of presumption that it is stated in your notice that absence of agricultural income in my return of income makes me ineligible to claim deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 54B. Hence, not showing such income in the return of income does not make one ineligible for the said deduction. (iii) It has been stated in the notice that the agricultural land purchased during F.Y. 2008-09 and claimed as a deduction U/s. 54F should be used for agricultural purpose. There is no such requirement U/s. 54F, but without prejudice to the same I herewith submit the copies of the Form No. 12 showing that cultivation on the said land was carried out (Annexure Page Nos 6 to 15) (iv) In view of the above, it may kindly be held that deduction u/s 54B was correctly granted and that there cannot be said to be an error in this regard in the assessment order. C. As far as conditions of Sec. 54F are concerned, I have to submit as follows: (I) The Vajdi Agricultural Farm House referred to in your notice and in my balance sheet is an agricultural farm and the only construction thereon was that of a cattle shed. Even the shed was dismantled later. A letter to this effect was filed with the sarpanch-talati of the Vajdi Virda Village on 7-1-2010. A copy of the same in vernacular language with and a legible write of the said letter is submitted herewith ( Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned therein itself and thereafter the spending for construction has taken place from the said bank. The capital gain account scheme referred to by you is administered by banks. I have carried out the task of ensuring that the amount not spent before due date of filing the return of income (30-9-2009 in my case) was set aside in a bank account. In other words, the said amount has not been utilized by me or deployed anywhere other than with a bank. In view of above, both on law and on merits, the claims u/s 54B and 54F were rightly eligible and have been granted accordingly. Therefore, it is prayed that the proceedings initiated u/s 263 may kindly be dropped. 4. After considering the above reply the ld.CIT passed 263-order observing as follows: 4. In nutshell, since the Assessing Officer has allowed the deduction of Rs.1,35,30,171/- under section 54F of the Act and the deduction of Rs. 1,58,97,370/- u/s 54B without obtaining the relevant evidence of fulfillment of respective conditions as mentioned in para 3 above, and the assessee was not able to substantiate the fulfillment of these conditions during revisionary proceedings, the assessment order passed u/s. 143(3) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re attached herewith (Page Nos.20 to 112). To the query No.4, assessee s response is as follow: 7. In response to your query no.(7) of your letter, details of deduction of Rs.2,94,27,541/- are attached herewith (Page Nos.114 to 227). 6.3 The ld AR for the assessee, Shri Deepak Rindani further brought to our notice the letter dated 27-11-2012 by the ld AO to the CIT [audit] in reply to the objections raised by the Internal Audit Party, [available at page number 24 to 26 of the Paper Book] which is self-explanatory and reads as follows: Facts of the case is that the assessee is an individual deriving income from salary, share of profit from Firm and capital gain for the year under consideration [assessment year 2009 10]. Moreover he had sold agricultural land, based on which the case was selected for scrutiny under the AIR category with the remark AO should examine the source of investment in property as appearing in AIR. Taxability of sale of property as reported in AIR, should be examined by the AO . During the course of assessment proceedings, the assessee was asked to furnish full details regarding his land dealings which included the sale of agricultural la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and catalytically mentioned in the office note how the assessment order that the assessee case selected for scrutiny and that the AIR category to verify the sources of investment in property as appearing in AIR taxability of sale of property as reported in AIR, was duly verified. Details of sale of property [agricultural land], purchase of land [agricultural land], reply under section 133[6] from government records, computation of LTCG, copy of ledger [expense] of construction of house along with relevant bills produced during the course of assessment proceedings. Considering the above facts the audit objection prized by the IAP is not acceptable and a kindly be dropped. 6.4 Thus the ld AR pleaded the assessing officer had made through enquiry by calling for information under section 133[6] from the office of the Sub- Registrar s, got replies dated 24-11-2011 and 07- 09-2011 with documents. After going through the same and reply furnished by the assessee, the AO satisfied with the claim of deduction under section 54F and 54B accepted the returned income and completed the assessment. Thus the assessment order is neither erroneous nor prejudicial to the interest of Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch according to Land Revenue record 7/12, is proved. The A.O. has doubted the authenticity of the very record 7/12 of Land Revenue to deny the exemption. In my considered view such exemption cannot be denied unless one has some authentic evidence contrary to the record of a Government Authority. The A.O. has not brought any such evidence on record which is contrary to 7/12 record of Land Revenue Department as submitted by the appellant. Therefore, the disallowance/addition made on this account is deleted and the ground of appeal is allowed. .. 7. I have gone through assessment order as well as the submissions of the appellant. I am inclined to agree with the appellant that there is no need to deposit in the specified account if the money is intended to spend within stipulated time (1 year before sale of land and 2 years after the sale or 3 years from the date of sale) as mentioned in section 54F. Here the appellant has already spent the amount in construction of new house within the stipulated time. Further the argument of the A.O. that the expenditure has been made before layout plan was passed before does not make any sense because there is no such condition l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of agriculture land at Village Kandh. However, in the assessment order passed by the AO, there is no whisper on these inquiries made by him, before passing regular assessment order. Probably for this reason, the ld.CIT has reopened the assessment under section 263 of the Act. 9. Further, we find that the ld.CIT also has not verified assessment record properly and simply carried out the objections made by the Internal Audit Party of the department, and thereby initiated the Revision proceedings. It can be seen from the show cause notice issued under section 263 of the Act, wherein the ld.CIT has categorically mentioned that the AO did not verify the facts and allowed the deduction under section 54B 54F of the Act. This observation by the ld.CIT is not correct, for the reason that the ld.AO has called for the details from the Sub-Registrar and received reply from Sub-Registrar on 24.1.2011 and 7.9.2011 respectively. Thus, the ld.AO though made inquiry about the claim made by the assessee, however, not discussed the same while passing assessment order. Thus, we find that the ld.CIT has initiated Revision proceeding based on the Internal Audit Party report only, which is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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