9911796707
TMI Blog2024 (6) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... the findings recorded in the body of the assessment order. We may note here that ld. CIT evidently did not place on record any apparent error on the part of the AO to substantiate that order passed by ld. AO is prejudicial to the interest of revenue. He only mentioned that a detailed investigation was required to be conducted in order to verify the claim of the assessee for which related details had already been called for and examined. CIT has not pinpointed as to on which aspect enquiry required to be made was not made by the ld. AO. He commented about the eligible amount of the claim which was allowed and considered, based on the information collected. Thus, no further defect was found from the record collected by the AO. Since, in this case, ld. AO has clearly incorporated the extract of enquiry conducted in the body of the assessment order and revenue did not pinpoint any error on the part of the Assessing Officer the order passed after due application of mind could not be subjected to proceeding u/s. 263 of the Act. In our considered view, A.O while framing the assessment had taken a possible view, and revenue did not demonstrate any error on the part of the AO. In fact, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of hearing. 3. The brief facts as emerge from the assessment record are that the assessee filed his ITR for the A.Y 2016-17 on 20.03.2018. In that return the assessee declared the total income at Rs. 99,820/-. There was an information from ITO, (I CI), Udaipur that assessee had made investment in purchase of immovable property at Rs. 1,05,12,601/-. Since, the return of income filed was only for an amount of Rs. 99,820/-, ld. AO noted that the source of investment made by the assessee in purchase of immovable property remained unexplained and escaped the assessment. Based on that set of facts a notice u/s. 148 of the Act was issued to the assessee on 30.03.2021 for the year under consideration by ITO, Banswara. 3.1 Thereafter, the case was transferred to DCIT, (Intl. Tax) Jaipur. Assessee did not file his ITR in response to notice u/s 148 of the Income-tax Act, even after providing of sufficient opportunities to the assessee. Notice u/s 142(1) of the Act, 1961 was issued on 30.06.2021, 26.11.2021, 16.02.2022 and 24.02.2022 requiring the assessee to furnish information and documents relevant to his case. The assessee replied to these notices on 09.12.2021 and 28.02.2022. Reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed shall not be disallowed and added back to the total income. Also you are required to show cause why penal provision shall not be initiated in your case. (d) Considering the above, you are required to Show Cause why the Short Term Capital Gains shall not be calculated on the entire consideration of Rs. 1,00,33,670/- and added back to the total income. 1. On perusal of your bank a/c 18890100006023 of Bank of Baroda, it is observed that you have received an interest of Rs. 2,00,000/- which has not been offered in the total income. You are required to Show Cause why Rs. 2,00,000/- shall not be added back to the total income as unexplained money 2. On perusal of your Bank a/c No. 18890100006023 of Bank of Baroda; it is also observed that you have received Rs. 15,00,000/- from M/s Nyati Builders Pvt Ltd which has not been offered to tax. You are required to show cause, why Rs. 15,00,000/- shall not be added back to the total income as unexplained money. 3. As per the Bank statement of a/c no. 18890100017421 of Bank of Baroda, Rs. 2,50,000/- has been withdrawn as cash and you are required to provide the purpose and justification. After issuance of the above detailed show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 01.04.2017, the booked flat was cancelled by the assessee by not accepting of the revision of building plan made by the BMC which was subject matter while booking of flat on 30.04.2015 and cancellation of booked flat by the assessee was accepted by the said builder. Further, the AR of the assessee stated that the assessee had purchased one residential flat worth Rs. 34,00,000/- from M/s Nyati Builders, which was registered on 28.12.2017. The plan reading of the provisions of section 54 of the Income Tax act, 1961 states that the assessee should purchase the new assets being residential house 'one year before or two years after the date on which transfer took place' (ii) It is seen from the ledger account of Nyati Builders Pvt. Ltd. that transaction of Rs. 38,49,930/- was only made with Nyati Builders Pvt. Ltd. during the period from 30.11.2015 to 15.01.2018. Further, on perusal of sale deed dated 28.12.2017 on purchase of flat from M/s. Nyati Builders Pvt. Ltd. it is seen that the purchase cost was Rs. 34,00,000/- was only with stamp duty of Rs. 2,40,000/-. Hence, the reply of the assessee that investment of Rs. 83,36,530/- with M/s. Nyati Builders is not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,820/-. The case of the assessee for the year under consideration was reopened u/s 148 and notice u/s 148 was issued on dt. 30.03.2021 by the ITO Ward Banswara and the assessment was completed u/s 147/144 by the DCIT Circle(Intl Tax) Jaipur on dt. 26.03.2022. The ld. AO has issued the notice u/s 148 on dt. 30.03.021 on the reason that The assessee is individual and derives income other sources. The assessee filed his ITR for the A.Y. 2016-17 on 20.03.2018 declaring there in total income at Rs. 99,820/- and the same had been processed u/s 143(1) on 29.11.2018. On perusal of High Risk CRIU/VRU Information available on Insight Portal of the Department information. According to the information received, during the year under consideration, the assessee made investment in purchase of immovable property at Rs. 1,05,12,601/-. The assessee has filed his ITR declaring therein income of Rs. 99,820/- only. Therefore, the source of investment made by the assessee in purchase of said immovable property is unexplained. As stated above, the source of investment made by the assessee towards purchase of immovable property worth Rs. 1,05,12,601/- is not explained. Therefore, the said amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Gains. (b) Also you have claimed deduction/exemption u/s 54 of the Capital Gains by claiming purchase of property of Rs. 1,05,12,601/- on 24.04.2015 for which you have not submitted any documentary evidences. (c) On calling information u/s 133(6) from M/s Sana Land Developers Pvt Ltd, the assessee vide e-mail dated 01.03.2022 submitted that the booking of Flat No. 604 of Burj Burhan Apartment was cancelled by you and money was returned in F.Y. 2016-17. Thus the deduction u/s 54 claimed by you amounts to wrongful and malafide claim. You are thus required to show cause why the deduction claimed shall not be disallowed and added back to the total income. Also you are required to show cause why penal provision shall not be initiated in your case. (d) Considering the above, you are required to Show Cause why the Short Term Capital Gains shall not be calculated on the entire consideration of Rs. 1,00,33,670/- and added back to the total income. On perusal of your bank a/c 18890100006023 of Bank of Baroda, it is observed that you have received an interest of Rs. 2,00,000/- which has not been offered in the total income. You are required to Show Cause why Rs. 2,00,000/- shall not be add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s explaining all the facts, details on 08.03.2024 by stating all the details/information s (PB23-27). 6. However the ld. PR. CIT did not feel satisfy with the reply and summarily has observed as under:. (i) The assessee had made investment by booking of flat from the Builder M/s Sanaland and developers on 24.04.2015 during the F.Y 2015-16 relevant to A.Y 2016-17, however, as per builder M/s Sana land and developers, Mumbai s cancellation letter dated 01.04.2017, the booked flat was cancelled by the assessee by not accepting of the revision of building plan made by the BMC which was subject matter while booking of flat on 30.04.2015 and cancellation of booked flat by the assessee was accepted by the said builder. Further, the AR of the assessee stated that the assessee had purchased one residential flat worth Rs. 34,00,000/- from M/s Nyati Builders, which was registered on 28.12.2017. The plan reading of the provisions of section 54 of the Income Tax act, 1961 states that the assessee should purchase the new assets being residential house one year before or two years after the date on which transfer took place . (ii) It is seen from the ledger account of Nyati Builders Pvt. Ltd. tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [ Explanation 2. For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, ( a ) the order is passed without making inquiries or verification which should have been made; ( b ) the order is passed allowing any relief without inquiring into the claim; ( c ) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or ( d ) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] We would l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order (PB20) which have also respond by the assessee vide reply to AO (PB35-39). Thus during the course of assessment proceedings the AO verified the all the details and query as taken by the ld. Pr. CIT in his notice u/s 263. And the AO did examine all these details, record and discussion with the assessee, after that the ld. AO had taken a possible view being a quasi judicial authority. That is why the ld. AO has noted same in the assessment order at page 2-3. Thereafter he completed assessment at Rs. 99,820/- vide assessment order u/s 147/144 dt. 26.03.2022 by taking a reasonable and possible view. Here we want to say that if the ld. AO has not examined the issues he could have not made the assessment. When the assessee has filed reply on the same (PB35- 399) with all the details and income and verified the same. 1.4 On these preposition kindly refer the recent decision of the Hon ble ITAT Jodhpur bench in the case of Lodha Offset Ltd. vs. Pr. CIT ITA No. 155/Jodh/2018 19th March, 2020 Prateek Metals Pvt. Ltd. vs. Pr. CIT ITA No. 156/Jodh/2018 19th March, 2020 Nokha Agro Sevices vs. Pr. CIT ITA No. 171/Jodh/2018 20th March, 2020 1.5 Further the ld. Pr. CIT has not gone in to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this account The return filed by assessee showing loss was accepted CIT viewed that AO had earned in determining loss after issue of notice under s. 148 as no necessary enquiries conducted by AO in respect of share application money Tribunal held that the order of AO could not be regarded as erroneous even if AO had failed to carry out necessary verification and required enquiries in respect of share application money, as no addition had been made on account of the reasons for reopening, which were recoded before issue of notice under s. 148 Thus, AO had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition had been made on account of the reasons for reopening, which were recorded before issue of notice under s. 148 of the Act It has been held that the AO could not have made an addition on account of share application money as no addition has been made on account of FDRs of Rs. 20 lakhs Held, AO did not make any addition for the reasons recorded at the time of issue of notice under s. 148 That position was not disputed and disturbed by CIT(A) in his order under s. 263 of the Act Hence, AO could not have made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, submitted details of all the bank accounts, details of cash deposits in the bank accounts, cash book and bank book and relevant books of account for verification. In response thereto, the assessee had also furnished all the details admittedly vide replies to the A.O. which is at page No. 3 to 4 and 6 to 11 of the paper book and this fact has also not been disputed by the ld. PT.CIT in its order which goes to show that after examining all the documents, verifying all the details, the A.O. had taken a plausible view being a quasi judicial authority i.e. on the reason the A.O. in his order of assessment had categorically mentioned that the assessee attended and submitted the requisite details, information and clarifications sought for as per notices and order sheet entries. The above specific finding recorded by the AO goes to show that the AO had taken a reasonable and plausible view after examining all the details as were required for surviving the A.O. in respect of the issue of cash deposits, which was under consideration before the A.O. 13. If so then how the ld. Pr.CIT can assume the jurisdiction u/s 263 on the issue of deduction u/s 80P(2)(d) which were not at all in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . which was not challenged by assessee Subsequently, on basis of certain audit objections, CIT issued notice u/s 263 Assessee submitted that it is a case outside jurisdiction of Commissioner of Income tax to raise objections outside scope of limited scrutiny CIT ordered for 'Denovo' assessment without considering reply filed by assessee Held, there is no dispute that scope of enquiry in case of limited scrutiny is only to extent of issues for which case was selected for scrutiny under CASS CBDT has issued instructions from time to time in this respect and has specifically instructed taxing authorities that scope of enquiry should be limited to verification of all particulars for which limited scrutiny was taken up under CASS However, in case during assessment proceeding if AO is of view that substantial verification of other issue is also required then case may be taken up for comprehensive scrutiny with approval of Pr.CIT/DIT concerned It is also instructed that such an approval shall be accorded by Pr.CIT/DIT in writing after being satisfied about merits of issue(s) necessitating wider and detailed scrutiny in case AO is duty bound to follow instructions in case limited s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to assessment framed by A.O on ground that he had failed to deal with other issues which though did not fall within realm of limited reasons for which case was selected for scrutiny assessment In other words, Pr. CIT in garb of his revisional jurisdiction u/s 263 cannot be permitted to traverse beyond jurisdiction that was vested with A.O while framing assessment As A.O had aptly confined himself to issues for which case of assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for reason, that he had failed to dwell upon certain other issues which did not form part of reasons for which case was selected for limited scrutiny under CASS Case of assessee was selected for limited scrutiny under CASS for reason that there is substantial increase in capital in relevant year and AO passed assessment order and accepted return filed by assessee after examining issue regarding increase in capital account as assessee had credited his capital account with agricultural income and capital gain from sale of flat Assessee has reflected that same in its capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as raised the query and replied by the assessee. 4. Further it is also admitted facts that the assessee sold the flat No. 11-, Saffi Building on dt.04.06.2015 And received the sale consideration of Rs. 1.00 crore of his share the indexed cost of the same was 18,05,093/- vide computation and for claiming the exemption u/s 54 he had to invest Rs. 82,28,577/- in new residential house property. Hence assessee has purchased and booked a flat No.604 Burj Burahan Moral Church Road Mumbai in M/s Sana land and Developers on dt.24.04.2015 and paid Rs. 1,05,12,601/- admittedly, thus during the year assessee has fulfilled the condition laid down u/s 54 of the Act. However unfortunately the said flat was cancelled on the part of the builders on dt. 01.04.2017 and amount has been refunded to the assessee on dt 09.05.2017 to 11.01.2018 in installment after deducting the Service Tax Vat vide cancellation letter dt.01.04.2017 again enclosed and admittedly available on record. On perusal of this letter that the booking has been cancelled due to default on the part of builders. Thus there was no default of the assessee. However the assessee by taking precaution has also booked one another flat with N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed the exemption u/s 54F in the A.Y. 2018-19. Copy of sale deed of flat sold by the assessee on dt.07.04.2015, copy purchase deed of flat purchase from M/s Sana Land and Developers, copy of allotment, copy of cancellation of flat purchase from M/s Sana Land and Developers , Copy of purchase deed of flat purchased from M/s Nyati Builders Pvt. Ltd with copy of allotment letter, ledger accounts, replies to AO, bank statements all are already on assessment record if not available kindly let us know. So also kindly look in to the merit of the case. Thus looking to all these facts, evidences and record there is no error in the order of the ld. AO . 4. Thus the order of ld. Pr. CIT shows that he has not looked merit of the case in their true perspective and sense and not applied his mind on the same despite available before him nor made any inquiry. He was only of the view that the AO has not made proper detailed i.e deep inquiry on the issue. He was only of the view that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Hence the conclusion of the Pr. CIT that the order is prejudicial to the interest of the Revenue is not a matter of subjective satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame may be insufficient for the other (here Pr. CIT). There is no definition of proper inquiry in the act. There is no straight jacket formula or parameter to make inquiry in the assessment proceedings. What is required is that the AO should frame the assessment in accordance with the provisions of the Act, as interpreted and in the light of the relevant judicial pronouncements, as available on the date of framing the assessment or material available before him. The AO being a quasi-judicial authority can also take support from one set of the decisions, if there, in case is a diversions of opinion. He can t be directed to make an assessment in a particular manner, as specifically prohibited by S. 119. Kindly refer recent judgment of Jodhpur Bench in the case of Ritesh Suhalka V/s Pr. CIT Udaipur in ITA No. 383/Jodh/2019 dt. 21.12.2020. On same plea 5.2 Wrong direction for verification u/s. 2(14): Further the ld. Pr. CIT has wrongly and invalidly give the direction to make verification u/s 2(14) for the verify the genuineness of expenses incurred on account of interior, house hold expenses and furniture expenses mostly paid in cash. As this allegation and issue was not in the Show C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Officer [(1970) 78 ITR 26 (SC)]. As a corollary to this legal position, when a public authority has the powers to do something against any person, such an authority cannot exercise that power unless it is demonstrated that the circumstances so justify or warrant. In a democratic welfare state, all the powers vested in the public authorities are for the good of society. A fortiorari , neither can a public authority decline to exercise the powers, to help anyone, when circumstances so justify or warrant, nor can a public authority exercise the powers, to the detriment of anyone, unless circumstances so justify or warrant. What essentially follows is that unless the Assessing Officer does not conduct, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be, Commissioner cannot legitimately form the view that the order is passed without making inquiries or verification which should have been made . The true test for finding out whether Explanation 2(a) has been rightly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed not put every proposition to the test and probe everything stated in the income tax return. In a way, his role in the scrutiny assessment proceedings is somewhat akin to a conventional statutory auditor in real-life situations. What Justice Lopes said, in the case of Re Kingston Cotton Mills [(1896) 2 Ch 279, 288)], in respect of the role of an auditor, would equally apply in respect of the role of the Assessing Officer as well. His Lordship had said that an auditor (read Assessing Officer in the present context) is not bound to be a detective, or, as was said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watch-dog, but not a bloodhound. . Of course, an Assessing Officer cannot remain passive on the facts which, in his fair opinion, need to be probed further, but then an Assessing Officer, unless he has specific reasons to do so after a look at the details, is not required to prove to the hilt everything coming to his notice in the course of the assessment proceedings. When the facts as emerging out of the scrutiny are apparently in order, and no further inquiry is warranted in his bonafide opinion, he need not conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. ClT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO visa- vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have claimed out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. The above findings are also fully applicable in the present case. In case of Chorma Business Ltd v/s DPR. CIT 82 TTJ 540(Cal) it has been held that AO before making the assessment, having called for details and having discussed the matter with the A/R of the assessee, such an order cannot be called erroneous and prejudicial to the interest of the Revenue only because the AO made a brief assessment order without discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision u/s 263 Order erroneous and prejudicial to interest of revenue CIT issued a notice u/s 263 to assessee on ground that assessment order of AO passed u/s 143 (3) was an order erroneous and prejudicial to interest of revenue Tribunal allowed appeal of assessee Held, safeguard provided to assessee in section 263 is that mere erroneous orders are not revisable but revisional authority has to further establish with material on record that such erroneous order is also prejudicial to interest of revenue Twin conditions of assessment order being erroneous and it also being prejudicial to interest of revenue, keeps initial burden on Commissioner, who invokes such jurisdiction Premise for invoking revisional jurisdiction on the ground that the Assessing Authority made insufficient enquiry or improper enquiry and failed to verify closing stocks in record of assessee, before passing assessment order, falls flat by a bare perusal of assessment order itself Thus, Tribunal was justified in holding that Commissioner was in error in invoking revisional jurisdiction u/s 263 Mere alleged insufficiency of enquiry in opinion of Commissioner by Assessing Authority, could not permit him to invoke r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich, according to the CIT have not been at all enquired into and the AO has acted merely on furnishing evidence on one single date. The Tribunal noticed that as per the record of the proceedings, the AO required the assessee to produce documents or material in relation to 10 different items, which included the details of capital contributed by partners, details of purchases made in excess of Rs. 20,000 with evidence, confirmation of unsecured loans, amongst other matters, which the AO desired to enquire into. The assessee has produced desired information. The AO studied the sundry creditors, unsecured loans and desired to furnish affidavits of unsecured loans and details of interest paid. The AO again required the assessee to furnish the details of partners capital accounts and also to produce voucher for expenses and the matter was adjourned. After that, assessment was completed by passing assessment order. These matters clearly indicate that the AO particularly made reference to the matters, which the CIT has opined were not inquired. Thus, according to the Tribunal, the foundation to exercise power under s. 263 was not existing. In the aforesaid circumstances on the finding reac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009) 227 CTR (Del) 133: (2009) 31 DTR (Del) 1 followed . 8.4. In the case of The Lake Palace Hotels Motels Pvt Ltd v/s The PR. CIT Udaipur 48 TW 181(Jd). It has been concluded that : The fundamental principles which emerge from the catena of judicial pronouncements may be summarized as under : (i) The PR. CIT must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue. Both the conditions must be fulfilled: (ii) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement or order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view under with which the PR. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs decisions: 1. Malabar Industrial Co. Ltd. v. PR. CIT [2000] 243 ITR 83 (SC) 2. PR. CIT VS MAX INDIA LTD.(2007)213 CTR 266(SC) It is further submitted that proceedings under s. 263 cannot be taken on the ground that the AO has not made sufficient enquiry. The learned PR. CIT can assume jurisdiction if there has been lack of enquiry. In the instant case, the enquiry has been made, though the enquiry may not be sufficient in the opinion of the learned PR. CIT. The reliance is placed upon the decision of Hon ble Delhi High Court in the case of CIT v. Hindustan Marketing Advertising Co. Ltd. [2010] 46 DTR (Del.) 109. The attention is drawn towards the decision of Hon ble jurisdictional High Court in the case of PR. CIT v. Trustees Anupam Charitable Trust [1987] 65 CTR (Raj.) 30 : [1987] 167 ITR 129 (Raj.) Thus it is clear that Assessing Officer has made enquiry but sufficiency of enquiry can be depend upon from person to person. The AO cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is the duty of the AO to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the order of the AO called for interference and revision. In the instant case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment, assuming it to be so, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were income-tax assessee and the unsecured loan taken from SC (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. Merely on the basis that the AO has not examined the cash credits of the partners or deposits from SC (P) Ltd., PR. CIT was not justified in invoking his suomotu powers, especially where the assessee had explained that the capital investment made by the partners, which had been called into question by the PR. CIT was duly reflected in the respective assessments of the partners and the unsecured loan taken from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d all relevant records in accepting return submitted by Assessee CIT did not find fault with any findings of AO, culminating in ultimate conclusion that return of Assessee was acceptable Decision of CIT authenticates that Assessee furnished all relevant records and documents in support of its return accepted by AO CIT did not reject documents to be irrelevant CIT only remanded matter to AO observing that documents ought to have been laid before him and examined at time of assessment Revisional jurisdiction available to Commissioner u/s 263 subject to condition that Order of AO was erroneous and prejudicial to interest of Revenue Any exercise of revisional jurisdiction, bereft of such satisfaction was impermissible rendering resultant order void No interference with impugned order of ITAT was warranted Appeal dismissed In the case of Baberwad Shiksha Samiti v/s PR. CIT 134 DTR 65(Jp) It has been held that the AO accepted the returned income of the assessee. AO issued the query letter on both the issue which was replied by the assessee. Thus the AO made detailed enquiry and no adverse inference has been drawn by him. Hence the order u/s 263 is not sustainable. In the case of Shree Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration, the assessee made investment in purchase of immovable property at Rs. 1,05,12,601/-. And admittedly this is the same amount and property for which assessee claimed the deduction u/s 54F. It shows that the information and evidence for investment in new assets was very well available on the record of the revenue. The action and reopening of the revenue itself shows that the assessee has made investment in the new house property now the opinion of the ld. Pr. CIT shows his contradictory approach. Hence hot and cold breath cannot be taken same time. If assessee had not made investment the revenue could not have reopened the case of the assessee. 10. Further the ld. AO himself has made the inquiry u/s 133(6) from the M/s Sana Builders from whom initially flat booked. 11. Further we rely upon the judgment of Dhananjay Madhukar Naik vs. ITO ITA NO. 2988/MUM/2022 August 9, 2023 (2023) 68 CCH 0630 Mum Trib (2023) 203 ITD 0030 (Mumbai-Trib). PR.CIT AND ANOTHER vs. C. GOPALASWAMY (2016) 95 CCH 0221 KarHC (2016) 384 ITR 0307 (Karn) The principal of these judgments and judgments referred therein are also applicable in the present case. Copy is enclosed. As in these case it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of total income. 3-4 3. Copies of notices u/s 142(1) dt. 30.06.2021, 26.11.2021, 16.02.0022, 24.02.2022 and Show cause notice dt. 08.03.2022. 5-15 4. Copy of Show cause notice u/s 263 dt. 16.02.2024 by Pr. CIT(IT)-Delhi-I. 16-17 5. Copy of Assessment order u/s 147/144 DT. 26.03.2022. 18-21 6. Copy of letter to AO. 22 7. Copy of reply dt. 08.03.2024 to Pr.CIT(IT)-Delhi-I in response to notice u/s 263. 23-27 8. Copy of provisional allotment of flat by Sana land Developers dt. 30.04.2015 with receipts of payment. 28-31 9. Copy of cancellation letter of flat dt. 01.04.2017. 32-34 10. Copy of letters to AO 35-39 7. The ld. AR of the assessee in addition to the written submission so filed vehemently argued that the assessee is a non-resident. The case of the assessee was re-opened by issue of notice u/s. 148 of the Act to verify the investment made by the assessee for an amount of Rs. 1,05,12,601/-. The ld. AO raised the query on all the facets of the issue (APB 5 to 15). The assessee replied to those query letters as recorded by the ld. AO and he applied his mind and took a view on the issue. Even the ld. AO issued notice u/s. 133(6) of the Act to collect independent evidence related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceeding by filling the reply of the notices so issued, and the same is not under dispute. In the re-assessment proceeding, while examining the source of investment the ld. AO also went on to examine the claim of the assessee u/s. 54 of the Act. The relevant part of the show cause notice issued to the assessee in the matter is as under: (c) On calling information u/s 133(6) from M/s Sana Land Developers Pvt Ltd, the assessee vide e-mail dated 01.03.2022 submitted that the booking of Flat No. 604 of Burj Burhan Apartment was cancelled by you and money was retumed in F.Y. 2016-17. Thus the deduction u/s 54 claimed by you amounts to wrongful and malafide claim. You are thus required to show cause why the deduction claimed shall not be disallowed and added back to the total income. Also you are required to show cause why penal provision shall not be initiated in your case. 10. As is evident from the above, show cause notice that the assessee s claim was doubted by the ld. AO considering the information collected u/s. 133(6) of the Act. The assessee replied to the said show cause and the claim of the assessee was accepted by the ld. AO. Thus, it is evident that the claim of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, it is seen that plain reading of provisions of section 2(14) reveals that furniture and house hold expenses are not part of capital assets. Thus, the assessee is not eligible for claim of exemption on new assets being residential house u / s 54 of the Income Tax Act, 1961 on these items. As it is evident the ld. CIT noted that the ld. AO should have investigated the issue as contended and observed by him upon examination of the record. Thus, here the limited question as to whether in view of the observation noted by the ld. CIT, the order is erroneous or prejudicial to the interest of the revenue or not? 11. But before examining that question, at the cost of repetition, it would be necessary to note that the case of the assessee was re-opened to verify the source of investment of Rs. 1,05,12,601/- and there is not a single line of any adverse inference on the issue by the ld. CIT. He was satisfied with the conduct of the ld. AO on the issue for which the notice u/s. 148 was issued. But he went on to examine the other issue of deduction claimed u/s 54 of the Act by the assessee amounting to Rs. 82,28,577/-. In this case, the assessee initially booked a flat worth Rs. 1,05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently the ld. AO having noticed that the assessee had claimed deduction u/s. 54 of the Act, he called for information while exercising powers u/s. 133(6) of the Act. All the details related to claim were examined as is evident from the findings recorded in the body of the assessment order. We may note here that ld. CIT evidently did not place on record any apparent error on the part of the AO to substantiate that order passed by ld. AO is prejudicial to the interest of revenue. He only mentioned that a detailed investigation was required to be conducted in order to verify the claim of the assessee for which related details had already been called for and examined. The ld. CIT has not pinpointed as to on which aspect enquiry required to be made was not made by the ld. AO. He commented about the eligible amount of the claim which was allowed and considered, based on the information collected. Thus, no further defect was found from the record collected by the ld. AO. Since, in this case, ld. AO has clearly incorporated the extract of enquiry conducted in the body of the assessment order and revenue did not pinpoint any error on the part of the Assessing Officer the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If any one of them is absent i.e., if the assessment order is not erroneous, but it is prejudicial to the Revenue, provision of section 263 cannot be invoked. This 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 as also prejudicial to Revenue's interest, then the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue must be read in conjunction with an erroneous order passed by the AO. Every loss of revenue, because of the order of the AO, cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the ld. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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