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TMI Blog2022 (11) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books of the firm this fact is also not disputed by the revenue. The bank statement was furnished by the assessee and considered by the AO while passing the order and the ld. PCIT is finding fault from the same is taking a different view on the matter for which the AO has already applied his mind. As also notable that SBBJ had merged with SBI at the time when the assessee took the copy of the bank statement of earlier period. All these transactions are duly recorded in the audited books of accounts and has duly submitted in the assessment proceedings and the same is duly considered by the AO thought the specific comments does not hold the order as prejudicial to the interest of revenue. Thus, accepting the same has not resulted into any error on the part of the AO as it is a visible document already placed on record. Thus, there is no infirmity in the order of the AO. As regards the shop under construction, it is noted that the same was constructed in F.Y. 2000-01 and the opening balance as on 01- 04-1981 as per ledger account and the same was on account of software issue of tally software which the AO has not objected when the same is correctly claimed from the year when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that jurisdiction u/s. 263 cannot be invoked for making short enquires or to go into the process of assessment again and again merely on the basis of that more enquiry ought to have been conducted to find something more. In this case we have seen that the out of 100 % sales consideration 95.36 % is offered as capital gain and the claim of the assessee is less than 5 % of the total consideration in this case, thus, what more AO can find fault when he has already disallowed the cost which in his opinion is not supported and thus AO has already verified the issues which the PCIT is pointing out. Thus, in view of the above deliberations we do not concur with the findings of the ld. Pr.CIT and thus the order of the AO is restored by allowing the appeal of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the merits as pleaded in the petition moved by the assessee. 3.2 After hearing both the parties and perusing the materials available on record in the petition moved by the assessee relying on the decision of Hon'ble Apex Court 10-01-2022 (supra), the delay so made by the assessee is condoned. Thus, application for condonation of delay is allowed. 4. Apropos Ground No 1 and 2 of the assessees, brief facts of the case are that the assessee filed its return of income (e-return) on 23-07-2016 declaring total income at Rs.22,96,01,790/- for the year under consideration. The case of the assessee was selected for scrutiny assessment through CASS under ''Limited Scrutiny'' on return of income filed. Accordingly, notice u/s 143(2) of the Act was issued on 4-07-2017 through ITBA-Portal which was served upon the assessee, fixing the case for hearing on 25-07-2017 but the assessee filed adjournment letter on 25- 07-2017. In this case, the AO noted that the assessee is mainly earning income from Capital gain and interest income during the year under consideration. It is also noted that during the assessment proceedings, notices u/s 142(1) of the Act along with questionnaire had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice u/s 263 of the IT. Act 1961 for AY 2016-17 AAAFH9961P-regarding On examination of assessment record for A.Y. 2016-17 it has been noticed that assessment in your case was completed u/s 143(3) of the I.T. Act, 1961 (in short 'the Act) on 18.10.2018 at income of Rs. 22,97,14,970/-. The case was selected for limited scrutiny that included whether capital gain/loss is genuine and has been correctly shown in return of income as one of the reason. 2. It is seen on the perusal of assessment record that you have shown long term capital gain of Rs. 22,94,16,850/- after claiming indexed cost amounting to Rs. 97,71,650/-. The following points emerged there from: 1. You have claimed FMV of land as on 01.04.1981 at Rs. 59,910/-, the basis of estimation thereof is not on record. 2. You have claimed indexation from F.Yr. 1981-82 on book value of building taken at Rs. 1,75,255/-. It is seen that the value of the said building has been taken as on 31.03.2005 whereas indexation has been applied from the year 1981-82. 3. You have claimed indexed cost of interest amounting to Rs. 1,69,335/- from F.Yr. 2007-08 (building No. 3), Rs. 2,04,754 from F.Yr. 2008-09 (building No. 04),Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment cannot be termed as erroneous and prejudicial to the interest of the Revenue and revisional jurisdiction u/s 263 cannot be invoked. There can be no question of cancelling the assessment order or directing any fresh assessment. Hence, it is requested to drop the proceedings initiated by issue of show cause notice. ''25th March, 2021 Pr. Commissioner of Income Tax -1, Jaipur Hindustan Sales Industrial Corporation- AY 2016-17 PAN AAAFH9961P Proceeding u/s 263 Hon'ble Madam, The assessee is in receipt of your Notice No ITBAREV/F/REV1/2020 21/1031521041(1) dated 16 March, 2021 regarding assumption of jurisdiction u/s 263. The said notice identifies following errors: 1. You have claimed FMV of land as on 01.04.1981 at Rs. 59,910/- the basis of estimation thereof is not on record. 2. You have claimed indexation from F Y. 1981-82 on book value of building taken at Rs. 1,75,255/ It is seen that the value of the said building has been taken as on 31.03.2005 whereas indexation has been applied from the year 1981-82 3. AO made no efforts to ascertain whether the building portion of asset sold was a depreciable asset or not. AO failed to obtain the bifur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During assessment proceeding vide submission dated 3 October, 2018 (P.B.: 6 to 8), it was submitted that the value appearing in the Balance Sheet as on 31.03.2005 (P.B. : 46 to 48) was Rs. 1,57,730/- wherein one year depreciation amounting to Rs 17,525/- was reduced. It was also submitted that AY 2005-06 was assessed u/s 143(3) and copy of the assessment order was submitted. Through these evidences, it was established that the cost of building prior to 1981-82 was Rs 1,75,255. Ld. AO duly appreciated all these evidences, took judicious view of the matter. and accepted the value as on 01.04.1981 to be Rs. 1.75.255. There is no contradiction as alleged in your notice. Moreover, there is no error in the order as the Id. AO after obtaining and examining all the relevant evidences, accepted the claim of the assessee in this regard. 3. STCG on Sale of Building It is submitted that the sale consideration of property was pertaining to land only as the building was very old and of no use to the buyer. The buyer did not consider it of any value for arriving at the sale consideration. It is relevant to note here that the buyer after purchasing the property, completely dismantled the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -11 66,863 So far as payment of above interest is concerned, the same was duly reflected in the Balance Sheet as on 31.03.2014 (P.B.: 29 to 30) The Balance Sheet & ITR for AY 2014-15 and ledger accounts of respective years were filed vide submission dated 28 July, 2018 (P.B.: 27 to 28) Ld. AO duly evaluated all the above evidence in respect of interest payments, Ld AO found that these details were already on the record of the department through the return of income filed for AY 2014-15 on 28.07 2014 Since filing of return for AY 2014-15 was much prior to the date of sale of the asset, the ld. AO in his judicial wisdom, accepted the same. Without prejudice to above, the bank statement of loan account in the name of partner for FY 2007-08, FY 2008-09. FY 2009-10 and FY 2010-11 is enclosed herewith (P.B.: 33 to 45). In section 263 proceeding it is expected to take into consideration all material available on record including the material placed on record during these proceedings. 7. Reliance is placed on the judgment of the Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax vs. Ganpat Ram Bishnoi [2006] 152 Taxman 242 (Ra).). Para 11 of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d facts available on record. With regard to indexation from the year 1981-82 on the book value of building at Rs. 1,75,255/- as on 31.03.2005, AR has submitted that as per Balance Sheet the value as on 31.03.2005 was Rs. 1,57,730/- after reducing depreciation of Rs. 17,525/- thus it was established by the AR that cost of building prior to 1981-82 was Rs. 1,75,285/- is devoid of any basis/justification as by no stretch the figure of 1,57,730/- as appearing in the Balance Sheet as on 31.03.2005 can be extrapolated to the figure of Rs. 1,75,255/-as on 01.04.1981. As regards claim of indexed cost of interest amounting to Rs. 1,69,335/- from F.Yr. 2007-08 (building No. 3), Rs. 2,04,754 from FY 2008-09 (building No 04) Rs. 1,28,106 from F.Yr. 2009-10 (Building NO. 05). Rs.66,863/- from FY 2010-11 (building NO. 6). AR has submitted that the interest was capitalized and the same was duly reflected in the Balance Sheet as on 31.03.2014 is not acceptable. The Claim that interest was related to a loan which was taken for creation of capital asset is not born out from records. During the assessment proceedings only the ledger account of shop under construction in which interest was, capitalize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident from the site plan annexed to the sale deed that a building was in existence as part of the property sold by the assessee, In view of the above it is evident that AO did not carry out any verification with regard to the indexed cost of building as well as indexed cost of interest claimed by the assessee while computing capital gain. The evidences submitted in the course of present proceedings as well as before the AO do not support the claim of assessee and rather create more suspicion than clarity. AO also failed to ascertain, the element of short term capital gain involved therein against the transfer of depreciable asset. The order passed by the AO was without any application of mind and AO failed to bring out the facts properly as well as failed to apply the provisions of law correctly which is evident from above. 6. In view of the above, I hold that the order passed by the AO was erroneous and prejudicial to the interests of revenue AO completed the assessment without application of mind. The order passed by the AO on 18.10.2018, thus, deserves to be set aside to be made afresh in the light of observations given in paras 4 above. While holding so, I also place r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee.'' 8. During the course of hearing, the ld. AR of the assessee prayed that the ld. Pr. CIT has erred to pass the order u/s 263 of the Act and directed the AO that order passed by him is erroneous in so far as it is prejudicial to the interest revenue and thus the order dated 18-10-2018 is set aside and to be made afresh after giving an opportunity of being heard to the assessee. The ld. AR of the assessee has filed the detailed written submission controverting the findings of the ld. Pr. CIT as under:- ''1. The assessee firm M/s Hindustan Sales Industrial Corporation filed its return of income (e-return) on 23/7/2016 declaring total income at Rs. 22,96,01,79/-. The assessment was completed vide order under section 143(3) dated 18/10/2018 at a total income of Rs. 22,97,14,97/-. 2. The said order was set aside by ld. PCIT assuming jurisdiction under section 263 vide order dated 30/3/2021. The present appeal is against the said order u/s 263. 3. The case of the assessee was picked up for limited scrutiny identifying following issues; (i) Whether the value of consideration for computation of capital gains has been correctly shown in the return of income. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 328 ITR 69 (Madras)]. Therefore, consciously Id. AO allowed the claim of the assessee. The judgement of Id. AO cannot be replaced, under section 263, by that of Id. PCIT. 10. The interest cost was capitalized. The borrowing from SBBJ was duly reflected in the balance sheet as on 31/3/2005 as Mortgage Loan SBBJ 1333301.23 (PB 46). The loan was taken in the name of the partner but availed by the firm. Bank Statement was also furnished. SBBJ had merged with SBI at the time the assessee took copy of the bank statement of the earlier period. All these transactions are duly recorded in the audited books of accounts. Accepting the same has not resulted into any error on the part of ld. AO. 11. The shop under construction was constructed in F.Y. 2000-01. The opening balance as on 1/4/1981 as appearing in ledger (PB 27) was on account of software issue of tally software. However, this fact of construction falling in F.Y. 2000-01 was conveyed to the ld. AO vide submission before him dated 16/08/2018 (PB 3). Thus, the indexation was rightly claimed and allowed by the ld. AO after proper satisfaction. 12. It is further submitted that normally the lack of inquiry / non applicability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something." 9. During the course of hearing, the ld. DR supported the order of the ld. Pr.CIT, Jaipur -1 and submitted that the order of the AO dated 18-10-2018 is erroneous and prejudicial to the interest of revenue. He further submitted that if the appeal of the assessee is allowed then the purpose of section 263 will be defeated. In the decision relied upon by the assessee where the amount involved was very much small where in this case the amount of claim involved is around 90 lacs. So, the decision cited are thus differentiable on facts of the case. The assessee has sold the property along with the land and building so the sale is slump sales and the capital gain would be short term and not long-term capital gain as claimed by the assessee. The assessee them self-submitted that for one year there was a claim for depreciation and thus at least for the part of consideration the sale is short term capital gain is chargeable and not as long-term capital gain as accepted by the ld. AO. He has not seen this aspect of the case though the case is for limited scrutiny. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brief facts of the case are that the assessee firm filed its return of income electronically on 23-07-2016 declaring income at Rs.22,96,01,790/- for the year under consideration. The case of the assessee was selected through CASS under ''Limited Scrutiny'' on return of income. Accordingly, the notice u/s 143(2) of the Act issued on 4-07- 2017 which was served upon the assessee fixing the case for hearing on 25-07-2017. However, the assessee, in response to notice filed the adjournment letter dated 25-07-2017. It is noted from the records that the assessee is mainly earning income from Capital Gain and Interest Income during the year under consideration. In this case, the AO during the assessment proceedings noticed that the assessee firm had sold a property situated at E-101, Road No.8, VKI Area, Jaipur having sale consideration of Rs.24,06,38,500/- to M/s. Prem Motors Pvt. Ltd. and computed LTCG of Rs.22,94,16,850/-. The AO thus noted that in the computation of capital gain, the assessee debited transfer expenses, indexed cost of acquisition and indexed cost of improvement. Before the AO, the assessee furnished documentary evidences of all such expenses except the evidences relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue in question. As regards the indexation of the Building, it was noted that the same was taken from the year of construction as after purchase of land in year 1972 the building was constructed which means that it was in existence prior to 01-04-1981 and the RIICO did not allow to remain the land unused for which it was purchased /on lease, this plausible view of the AO is not controverted by the ld. DR on this issue of RIICO condition for consruction. The assessee has taken reference of 31-03-2005 to support the book value as on that date so that indexation for the same could not be applied from 1981-82. The AO has also taken into consideration this issue while passing the assessment order wherein no infirmity is observed. As regards the sale consideration, it is noted that the assessee did not have the separate bifurcation of sale consideration for land and building for which the assessee has submitted the registered sale deed wherein it is explicitly mentioned at page 2 para (3) ''…..constructed boundaries of all four sides, main gate, structure constructed, water connections etc…… Thus Section 50 is applicable when depreciable asset alone is transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly claimed from the year when the construction is made instead of 01.04.1981. This fact in fact in the interest of revenue and correctly observed even by the PCIT in his order. It is also noted from the available records that this fact of construction falling in F.Y 2000-01 was conveyed by the assessee to the AO vide submission dated 18-08-2018 before him (PB-3). Thus, it is found that the indexation was rightly claimed and allowed by the AO after proper satisfaction and we find no infirmity in his assessment order on the issue in question. 14. Taking into consideration all the facts and points raised by the ld. Pr. CIT, Jaipur-1, it is found that the assessee complied with the enquiries made by the AO by filing the required details. This is not a case where the AO has not made any enquiry. We also find that in the present case the capital gain offered by the assessee is almost 95.36 % of the total sale consideration and has offered the substantial amount of capital gain and the deduction claimed is less than 5 % only and the issues raised in proceedings u/s 263 of the Act were already considered and examined by the AO. It is also notable that initiation of proceedings u/s 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT vs. Vodafone Essar South Ltd. (2013) 2012 Taxman, Hon'ble Delhi High Court held that AO before passing the order made enquiry and directed his mind on all aspects and the views adopted by the AO is one of the two plausible views and the ld Pr.CIT did not agree with that view then ld. Pr.CIT cannot invoke his reversionary powers u/s 263 of the Act. Hence, the order passed by the AO was neither erroneous nor prejudicial to the interest of the Revenue. The AO adopted the plausible view and after considering the evidence submitted before him, in such a situation the invoking of provisions of Section 263 by the ld. Pr.CIT-1 is only to carry out fishing enquiries with objective of substituting his views in place of AO's view, which is not permissible in law as held by ITAT, Mumbai Bench in the case of Narayan Tatu Rane vs. ITO (2016) 70 Taxman.com 2278. Considering all these ratios of the judgement and respectfully following the judgement of Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax, Vs Ganpat Ram Bishnoi where in the court has held that jurisdiction u/s. 263 cannot be invoked for making short enquires or to go into the process of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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