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TMI Blog2022 (11) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital gain. This calculation may have been not matched with the understanding of the ld. Commissioner but this cannot be a reason to set aside the assessment for framing the same de-novo. Therefore, on this point, we are of the view that the impugned order passed by the ld. Commissioner is not sustainable. It is to be further notice that the ld. CIT himself failed to conduct any enquiry in the finding extracted supra pointing out as to why the valuer s report considered by the Assessing Officer for taking cost of acquisition is erroneous. For taking action u/s 263 of the Act, twin conditions should be fulfilled i.e., the order should be erroneous inasmuch as it causes prejudice to the revenue. From the finding of the ld. CIT, it appears that the ld. CIT has erred in construing the position of law. As in the case of DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] has held that the ld. Commissioner should not simply relegate the point that the assessment order is erroneous to the AO. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn was processed u/s 143(1) of the Act on 23/02/2009. The Assessing Officer thereafter issued a notice u/s 154 of the Act on 17/11/2009 intimating that certain rectification is required to be undertaken. However, this proceeding was dropped vide order dt. 28/04/2010. 6. The assessment was reopened by issuance of notice u/s 148 of the Act on 28/04/2010. The reasons for reopening are placed on page no. 19 of the paper book and they read as under:- OFFICE OF THE INCOME TAX OFFICER: WARD-14(1) 169,AJ.C. BOSE ROAD, 2 FLOOR,BAMBOO VILLA,KOLKTA-700014. NO. I.TO.,Wd-14(1)/Scrut./11-12/Kol/ 393 Dated: 15.12.2011 To Shi Sukumar Das, 65B, Linton Street, Kolkata-700014. Sir, Sub: Supply of reasons for reopening of assessment u/s.147 of the I.T.Act, 1961 in the case of Shri Sukumar Das, PAN:AGGPD1946A for the A.Y. 2007-08. Ref: Your letter dt.1S.12.2011. Please refer to the above. You are requiring the reasons for reopening the assessment ws.147 of the I.T.Act.1961 for the A.Y. 2007-08 vide letter dt. 15.12.2011, though the same has already been discussed with you/your representative several times as because without know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which value was determined by an approved valuer to the tune of Rs.10,93,750/- Rs.11,40,625/- respectively i.e. totaling Rs.22,34,375/-as per valuation report dt.03.05.20j0 filed by the assessee on 15.12.2011. The flats as such owned by the assessee were sold out one to Shri Ram Narayan Verma and Smt. Sandhya Verma for a consideration of Rs.12,50,000/- another to Shri Ravi Baid and Smt. Kusum Devi Baid for a consideration of Rs.12.00,000/- i.e., for total consideration of Rs.24,50,000/-. The assessee was required to file the details of such sale of flats received from M/s.Vidya Promoters (P) Ltd. The assessee could not file any such transactions made during the F.Y. 2006-07, stated that the said flats were sold out to parties mentioned above for a consideration of Rs.24,50,000/-. Later on, the assessee also filed conveyance deed dt.31.07.2009 and 30.09.2009 evidencing sale of the said property. The assessee was asked how the flats are treated as sold out when there was neither any agreement nor any deed of conveyance in support of such sale. The assessee stated that possession of the said flats had already been given during F.Y. 2006-07 against which the said sum of Rs.24,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the notice of hearing, the ld. Counsel for the assessee appeared before us and submitted written submissions also. In the written submissions, it has been pleaded that notice issued u/s 148 of the Act vide which the assessment was reopened has been challenged before the Hon ble Calcutta High Court vide writ petition no. 22496 (W) of 2011. According to the submissions of the assessee, this writ petition is still pending but Hon ble Court has granted an interim order restraining the Assessing Officer from realizing the disputed taxes from the assessee. 11. With the assistance of the ld. Representatives, we have gone through the record carefully. 12. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- 263(1) The 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 interest of the revenue, he may, after giving the assessee an oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is stayed by an order or injunction of any court shall be excluded. 13. 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 his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 14. Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 and Gee Vee Enterprises Ltd vs. Addl. Commissioner of Income Tax (99 ITR 375). In the case of Sun Beam Auto, the Hon'ble High Court has pointed out a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the assessment order can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 16. In the light of the above, let us examine the facts and circumstances of the case. A pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record copy of any notification issued by the Income Tax Department accepting the fact that jurisdiction in an Income Tax Officer was infused particularly to one person. Therefore, we are of the view that there is no merit in this ground of appeal. 18. As far as the second fold of submission is concerned, neither complete details were being placed by the ld. Counsel for the assessee before us nor by the revenue. It is not ascertainable whether the assessee has challenged the assessment order in appeal before the ld. CIT or not. Probably the assessee might be expecting acceptance of his writ petition by the Hon ble High Court vide which the reopening proceedings stated to have been challenged. Therefore, we are at a loss to appreciate this controversy and to record any categorical finding. 19. As far as the third limb of dispute is concerned, we are of the view that the impugned order of the ld. CIT is not sustainable. There is no dispute with regard to the fact that capital gain arose to the assessee. The capital gain has to be computed as provided u/s 48 of the Act which contemplates:- 48. The income chargeable under the head Capital gains shall be computed, by deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration falling in the hands of the assessee as per Section 50C of the Act. This exercise has not been carried out by the Assessing Officer and, therefore, he termed the assessment order as erroneous. It is pertinent to observe that the deemed sale consideration u/s 50C of the Act is not an absolute figure. It has to be further verified u/s 50C sub-Clause (2) for determining the market rate all these aspects are to be examined. It is also pertinent to observe that the cost of acquisition was on 22/11/2004. The indexation with appreciation of cost of acquisition is calculated for taking a final figure for the purpose of reducing it from full sale consideration assumed u/s 50C of the Act. From the finding of the Assessing Officer, it is to be seen that all these consideration must have gone by. It is not a mathematical formula. He has taken a particular cost of acquisition on the basis of valuer s report and thereafter calculated the capital gain. This calculation may have been not matched with the understanding of the ld. Commissioner but this cannot be a reason to set aside the assessment for framing the same de-novo. Therefore, on this point, we are of the view that the imp ..... 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