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TMI Blog2023 (12) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... ne view as legally plausible has been adopted by the AO then existence of other possible view alone would not be sufficient to exercise powers under s.263 of the Act by the Pr.CIT /CIT concerned. Hence, there can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the AO. It is only when an order is erroneous and causing prejudice, that the Section will be attracted. An incorrect assumption of facts or incorrect application of law will satisfy the requirements of the order being erroneous. In the instant case, it is sought to be demonstrated on behalf of the assessee that necessary inquiries were made towards computation of Long Term Capital Gains and deduction claimed u/s 54F of the Act. It was further pointed out that although two separate agreements have been executed due to demarcation of share in single property to different persons due to gift or bequeath by will, the property remains only one and therefore eligible for deduction under Section 54F - assessee has advanced justification for cost of improvement of Rs. 25 lakhs claimed under Section 54F of the Act. Eligibility of deduction towards two units under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, Delhi-10 ( Pr.CIT in short) dated 06.01.2022 for the Assessment Year 2017-18 passed under Section 263 of the Income Tax Act (hereinafter referred to as Act ). 2. As per the grounds of appeal, the assessee has essentially challenged the jurisdiction assumed by the Pr.CIT under Section 263 of the Act and has also assailed the directions given in the revisional order. 3. Briefly stated, the assessee filed return of income declaring total income at Rs. 1,07,53,160/- for the Assessment Year 2017-18 in question. The return filed by the assessee was subjected to scrutiny assessment to verify Large Deduction/Exemption claimed under different provisions of the Act. The AO passed assessment order under Section 143(3) dated 15.11.2019 on being satisfied with the claim so made. 4. The case records pertaining to the aforesaid assessment was reviewed. On examination of records, the Pr.CIT found that the claims made towards deduction under Section 54F is not in accordance with law. 5. The Pr.CIT accordingly issued show cause notice dated 23.07.2021 reproduced as under: NOTICE FOR THE HEARING Mrs/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 54F cannot be claimed for the improvement of the property. The AO has neither asked for the justification nor the assessed has filed any justification regarding the deduction of Rs. 25,00,000/-. The AO had failed to verify the facts. The above facts shows that the AO has failed to make any meaningful logically enquiry in this case. As such this assessment order is erroneous in so far it is prejudicial to revenue. 4. In view of the above facts, you are requested to show cause as to why the assessment order u/s 143(3) may not be set aside as being erroneous and prejudicial to the interest of revenue. You are hereby once again given the final opportunity of being heard and show cause as to why the impugned order be not enhanced/modified or set-aside for fresh assessment u/s 263 of the I.T Act 1961. 6. The assessee contested the show cause notice before the Pr.CIT. The Pr.CIT however did not concur with the justifications advanced by the assessee to drop the proceedings initiated under Section 263 of the Act. The Pr.CIT broadly observed that the Assessing Officer has wrongly accepted the methodology of computation of capital gains and consequent deduction under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorough inquiries and investigations into taxability of capital gains as per the provisions of Section 45 and Section 54F of the Act after keeping in view the rate of property, allowable cost of improvement and allowable deduction. 7. Aggrieved by the setting aside of the assessment order and consequent directions so made, the assessee preferred appeal before the Tribunal. 8. When the matter was called for hearing, the ld. counsel for the assessee submitted at the outset that the property sold at Kirti Nagar was utilized for making purchase of only one conjoint property at plot no. H-53A, Kirti Nagar, admeasuring 193.33 sq. yards. Two registries were carried out for acquisition of respective share in one common and conjoint property held by two different persons. The relevant background facts was narrated to submit that this property was initially acquired by one Shri Joginder Singh on 06.08.1960 who got it constructed from its own sources in 1961. On 28.06.2005, Shri Joginder Singh gifted 87 sq. yards in this property to her daughter Smt. Arvinder Sethi. Remaining area admeasuring 106.67 sq. yards was bequeathed in the hands of Smt. Narinderjit Awal and others, through will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue known to her as per the show cause notice and was having no occasion to respond to the other aspect directly raised in the revisional order. 8.4 The ld. counsel thus submitted that the allegation on utilization of sale proceeds in two different properties and consequent denial of deduction under Section 54F would not lie in revisionsal proceedings in the absence of specific opportunity either by show cause notice or thereafter by any other mode. The Pr.CIT has not issued any such notice or informed on such issue in the revisional proceedings as incumbent under Section 263 of the Act. The scope of show cause notice has been expanded in the revisional order without opportunity and therefore, the directions on the point is without authority of law. 8.5 The ld. counsel further contended that when a point in issue arises in the revisional proceedings, it was incumbent upon the Pr.CIT to make some minimal inquiry himself to ascertain the veracity of concern arising in the revisional proceedings, before embarking upon giving any directions to the AO for such verification. The Pr.CIT has not done anything of this sort and passed the revisional order without making any such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, two pre-requisites must coexist before the designated authority could exercise the revisional jurisdiction conferred on him namely; the order should be (i) erroneous (ii) the error must be such that it is prejudicial to the interests of the Revenue. However, an erroneous order does not necessarily mean an order with which the Pr.CIT is unable to agree. The AO while passing an order of assessment, performs judicial functions. An order of assessment passed by the AO cannot be interfered only because some other view is also possible on the issue as held in CIT vs. Greenworld Corporation (2009) 181 Taxman 111 (SC). If in given facts and circumstances of the case, two views are possible and one view as legally plausible has been adopted by the AO then existence of other possible view alone would not be sufficient to exercise powers under s.263 of the Act by the Pr.CIT /CIT concerned. Hence, there can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the AO. It is only when an order is erroneous and causing prejudice, that the Section will be attracted. An incorrect assumption of facts or incorrect application of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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