9911796707
TMI Blog2024 (6) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... in law as well as on the facts of the case in invoking S. u/s 263 of the Act. The same is being purely contrary to the provisions of law, therefore the impugned order u/s 263 as well as notice u/s 263 of the Act may kindly be quashed. 3. That the Id. Pr. CIT (IT)-Delhi-1 is grossly erred in law as well as on the facts of the case in taking the action u/s 263 of the Act on the allegations that: (a). The assessee was not for Long Term Capital Gain Exemption u/s 54 amounting to Rs. 82,28,577/-. (b). That the assessee purchased new residential house after two years. (c). That the Id. AO wrongly allowed the deduction of Rs. 82,28,577/- u/s 54 Which are contrary to the facts, without considering the material evidences available on record in their true perspective and sense and such a finding being perverse, the impugned action is bad in law without jurisdiction and being void ab initio, the impugned order u/s 263 may kindly be quashed. 4. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing." 3. The brief facts as emerge from the assessment record are that the assessee filed his ITR for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation, you have claimed deduction u/s 48. However, you have not submitted the documentary evidence (Sale deed/ Purchase deed/ Bank statement and sources of payment for purchase). Thus in the absence of the above, the cost of acquisition, improvement & indexation cannot be provided. Also the property will be considered for Short Term Capital Gains with the cost of Acquisition as Nil. You are required to show cause why STCG of Rs. 1,00,33,670/- must not be considered for Short Term Capital 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34,00,000/- on 28.12.2017 and claimed exemption u/s 54 of the Income Tax Act, 1961 including expenses related to various furniture, furnishing house hold items, Interior & brokerage etc. He further noted that the assessee had purchased the flat on 28.12.2017 against sale on 07.04.2015, which was purchased after the two years from the date of sale or transfer of long term assets, thus he was not eligible to claim exemption u/s 54 as per conditions laid down in the said section. Based on that set of facts he issued a notice u/s. 263 of the Act proposing to revise the order of the assessment and thereby the assessee was issued a detailed show cause notice dated 16.02.2024. The assessee replied the same on 08.03.2024. The ld. CIT noted that the reply of the assessee was duly considered and the same was not found tenable because of the following reasons : (i) The assessee had made investment by booking of flat from the Builder M/s Sana land 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of assessee under the provisions of section 54 and section 2(14) of the Income Tax Act, 1961. The AO should also verify the genuineness of expenses incurred on account of interior, house hold expenses and furniture expenses mostly paid in cash. 8. Needless, to say that the AO should provide sufficient opportunity before passing the consequent order as per direction given." 5. Assessee, feeling aggrieved and dissatisfied from the finding so recorded in the order of the ld. CIT(IT), has preferred the present appeal on the grounds as raised and reproduced in para 2 above. In support of the various grounds so raised by the ld. AR of the assessee, the written submissions have been filed. The written submissions so filed by the ld. AR of the assessee, read as under : "GOA : 1-3: Invalid jurisdiction and Action u/s 263 FACTS: 1. The brief facts of the case are that the assessee is a NRI form last 30 years doing business at Dubai Pvt. Ltd and regular IT assessee having income from other sources in India. For the year the assessee has filed his return of income on 20.03.2018 declaring the total income of Rs. 99,820/-. The case of the assessee for the year under consideration was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued to the assessee vide notice dated 08.03.2022 which is reproduced as under: "Please refer to the notices u/s 142(1) dated 30.06.2021, 26.11.2021, 16.02.2022 and 24.02.2022 vide which you have been asked to justify your claim. In response to the above, you have not filed proper justification with documentary evidences. Vide your response dated 23.11.2021 and 08.12.2021 you have not been able to justify your claims. You are therefore required to show cause why the following addition shall not be made in your case: (a) You have sold property for consideration of Rs. 1,00,33,670/- on which you have claimed Long Term Capital Gains. As per the computation, you have claimed deduction u/s 48. However, you have not submitted the documentary evidence (Sale deed/ Purchase deed/ Bank statement and sources of payment for purchase). Thus in the absence of the above, the cost of acquisition, improvement & indexation cannot be provided. Also the property will be considered for Short Term Capital Gains with the cost of Acquisition as Nil. You are required to show cause why STCG of Rs. 1,00,33,670/- must not be considered for Short Term Capital Gains. (b) Also you have claimed deduction/ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T has alleged that: "As the AO did not make proper enquiries in respect of Long Term Capital Gain Exemptions u/s 54 amounting to Rs. 82,28,577/-. In this case, the assessee initially booked a flat worth Rs. 1,05,12,601/- for purchase from M/s. Sana Land Developers Pvt. Ltd. for exemption u/s 54 against the above LTCG but vide email dated 01.03.2022 the assessee submitted that the booking of this flat was cancelled by him and money was returned in FY 2016-17. Thereafter, he purchased a flat from M/s. Nyati Builders Pvt. Ltd. worth Rs. 34,00,000/- as registered on 28/12/2017 and claimed exemption u/s 54 against returned LTCG showing total purchase cost of the flat Rs. 83,36,530/- by including expenses on various furniture, furnishing, house items & brokerage etc. As the assessee purchased flat on 28/12/2017 against sale on 07/04/2015, which was after two years from the date of sale or transfer, he is not eligible to claim exemption u/s 54 as per conditions laid down in the said section. Hence the ld. Pr. CIT has issued notice u/s 263 to the assessee on dt. 16.02.2024. 5. In response thereto the assessee has prepared the detailed reply explanation with details explaining all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144 of the Act dated 26.03.2022 Hence the ld. CIT has held that the assessment order u/s 147/144 dt. 26.03.2022 passed by the AO is hereby set aside and the AO is directed to pass an order afresh after verifying the claim of assessee under the provisions of section 54 and section 2(14) of the Income Tax Act,1961. The AO should also verify the genuineness of expenses incurred on account of interior, house hold expenses and furniture expenses mostly paid in cash. Thus the ld. Pr. CIT has set-aside the assessment to be made afresh. SUBMISSIONS: 1. Wrong order and action u/s 263: 1.1 Action of the Pr. CIT is invalid and without jurisdiction: It is submitted the action and direction of the ld. Pr. CIT is without jurisdiction and invalid on the facts and legal position because the ld. Pr. CIT has right or jurisdiction of revision u/s 263 only when the order of the AO (i) is erroneous in so far as (ii) it is prejudicial to the interests of the revenue. S. 263 provides as under "263. (1) The Pr. Commissioner or 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 errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.]:- there is no such decision. If so then how the action can be taken u/s 263, hence liable to be quashed. 1.2 On perusal of the order of the ld. AO as well as the order of the ld. Pr. CIT itself it is very clearly proved that the order of the AO has neither erroneous nor prejudicial to the interests of the revenue. Because as we would like to draw kind attention of the honble bench that in the above matter the case of the assessee has been reopened u/s 148 was issued for purpose to know the source of investment in purchase of immovable property . 1.3 Thereafter the ld. AO has issued the detailed query letter to the assessee u/s 142(1) raising various query (PB5-15) and asked to the assessee to produce the all the details and replies. In response thereto the assessee has furnished all the details admittedly vide replies to AO (PB35-39) with the details the ld. AO also make inquiry u/s 133(6). Thereafter, during the course of assessment proceedings the ld. AO has also raised the query regarding to deduction claimed u/s 54 itself vide pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment in purchase of immovable property, then how it can be said that the AO has failed to make the inquiry, where the scope of inquiry is limited only to the extent of that issue and in the action u/s 148 the issue of deduction u/s 54 was not there. And till date the position is same there is no change. It was not a regular assessment it was a reassessment for the limited purpose or issue and on perusal of the entire record or detailed it cannot be said that the ld. AO has not made inquiries. ". Vide copy of reasons recorded (PB19). If so then how the ld. Pr. CIT can assume the jurisdiction on the issue other then reasons recorded u/s 148 in this preposition we would like to draw your kind attention to the (2.1) In the case of CIT vs. Software Consultants DelHC (2012) 341 ITR 0240 it has been held that Revision-Revision by Commissioner of orders prejudicial to Revenue-Erroneous and prejudicial order-Lack of enquiries-AO reopened the assessment on ground that assessee had made investment in form of FDR of Rs. 20 lakhs but in the assessment order passed under s. 147/143(3), AO accepted that assessee had established and proved the source and their capacity to invest Rs. 20 lakhs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered, examined and verified the same and also examined the books of account which have been placed on record by the assessee. Thereafter, the assessment was completed U/s 148 r.w.s 143(3) of the Act by the A.O. vide his order dated 30.06.2017 after examining all the details. 12. We observed that the ld. PT.CIT or the Commissioner may call for and examine the record of any proceeding U/s 263 if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interests of the revenue. However, on perusal of the order passed by the A.O. as well as order passed by the ld. Pr.CIT, we found that it is clearly manifest that in the present case, the case of the assessee was reopened U/s 148 of the Act on the ground that the A.O. had got information from the DDIT(System) that there was cash deposits of Rs. 50,55,800/- in the assessee's bank account maintained with Punjab national Bank of India during F.Y. 2009-10 relevant to A.Y. 2010-11 and the assessee has not filed return of income. Thereafter, the A.O. issued statutory notices and seeking queries from the assessee and in reply thereof, as discussed above, the assessee had produced all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the ld. AO to examining the issue which was not subject matter of the reasons recorded u/s 148 and under the 148/147 assessment. Our this view found strength from the decision of Coordinate Bench of this Tribunal in the case of Mahendra Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun 30, 2021 (2021) 62 CCH 0271 Jaipur Trib The present case of the assessee is more strong footing here being the assessment u/s 147/148. Therefore, in light of the above facts and position, the ld. PT.CIT could not be said to be justified in holding that the assessment order was passed without examining the issue of deduction u/s 80P(2)(d)" Copy of order is enclosed. (2.3) Latest decision of this Hon'ble Bench in the In the case of Mahendra Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun 30, 2021 (2021) 62 CCH 0271 Jaipur Trib where It has been held that "Revision-Ordering revision where case is selected for limited scrutiny- Assessee firm is a real estate firm engaged in colonizing and developing residential projects-Case of assessee was selected for limited scrutiny through CASS on account of mismatch of AIR and CIB data, and mismatch in sale turnover reported in audit report and ITR- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se was selected for limited scrutiny in terms of mis-match of sales turnover, same has been duly examined by AO and even CIT has not recorded any adverse findings in terms of lack of enquiry or inadequate enquiry on part of AO-Order passed by CIT u/s 263 is set aside-Assessee's appeal allowed." (2.4) In the case of Paul Bharwaj vs. Pr.CIT in ITA No. 463/Chd/2019 May 13, 2021 (2021) 62 CCH 0120 Chd Trib Revision-Order erroneous or prejudicial to revenue-Over exercise of power-Assessee an individual filed his return declaring income and agricultural income-Case was selected for limited scrutiny for reason that there was a substantial increase in capital during year relevant to assessment year under consideration-AO accepted return filed by assessee- Pr. CIT issued notice to assessee u/s 263 and directed AO to make assessment afresh on issues mentioned in notice-Held, Tribunal in case of M/s Su-Raj Diamond Dealers Pvt. Ltd. CIT ITA No 3098/ Mum has quashed order passed u/s 263 in case of limited scrutiny assessment, holding that Pr. CIT under garb of section 263, cannot exceed his jurisdiction holding that when case of assessee was selected for limited scrutiny for reasons viz. (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB24-27) we had explained that "it is submitted that as the ld. AO had allowed the exemption u/s 54F after considering all reply, the material and details furnished before him and in his view the same was allowable. As the issue as raised by your honor had already been asked by the ld. AO vide page 2-3 of the assessment order where the ld. AO reproduced the SCN and in response to this SCN assessee had filed the reply on dt. 11.03.202022, 21.03.2022, 22.03.2022 and 24.03.2022 where he has clearly mentioned all the facts and produced the documents and after considering all these, the ld. AO has passed the assessment order. Hence it cannot be said that the assessment order passed is erroneous and also prejudicial to revenue. 3. That the assessment was reopened on the reasons of investment in purchase of property and to explain the sources of the same for that he had already stated that the assessee has sold the property and received the consideration of Rs. 1.00 crore and for claiming the exemption he invested in this property. On this there is no dispute and purpose of the reopening was complied and now in 263 new issues for claim u/s 54F has been raised, which is out of the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, it cannot be said that no inquiry or examine has been made by the AO on these issues. The AO has made the inquiry on the above issues. On perusal of the query letter and replies and when the transaction has been shown there and explained and the AO made detailed inquiry and assessee filed all the details related thereto. No one (AO) can read the mind of other person (Pr. CIT) while doing the work on its sprite and cannot guess the expectation or manner of his superior authority. Here the meaning is that non making of an enquiry may render the subject assessment erroneous, however the process of making enquiries may be endless. For someone, some enquiries may be sufficient (here AO), however, the same 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. 5. Thus we have already stated that Earlier flat was cancelled by the builder due to not fulfilling the terms and condition by the builders and it was beyond control of the assessee. In the A.Y. 2016-17 & 2017-18 assessee had invested the amount in new property admittedly and cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a case of lack of inquiry but can be case of insufficient enquiry. Pr. CIT was not justified in passing the order u/s 263." In the present case also is the same position. And also followed in the case of Sh. Gyan Chand Jain v/s Pr. CIT 50 TW 109(Jp). Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification. The ld. Pr. CIT has presented himself that there is a big scams in the case of the assessee. 5.1 No fix formula or limit or extent of Inquiry: Thus, here it is wrong or incorrect case of the Pr. CIT that no proper inquiry has been made by the AO on the issue. The AO has made the inquiry admittedly on the above issue. Which is clear on perusal of the query letter and replies and details filed and explained and the AO made inquiry and assessee filed all the details related thereto. No one (AO) can read the mind of other person (Pr. CIT) while doing the work on its sprite and cannot guess the expectation or manner of his superior authority. Here the meaning is that non making of an enquiry may render the subject assessment erroneous, however the process of mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged by the learned Departmental Representative and as is canvassed in the impugned order, that once Commissioner records his view that the order is passed without making inquiries or verifications which should have been made, we cannot question such a view and we must uphold the validity of revision order, for the recording of that view alone, it would result in a situation that the Commissioner can de facto exercise unfettered powers to subject any order to revision proceedings. To exercise such a revision power, if that proposition is to be upheld, will mean that virtually any order can be subjected to revision proceedings; all that will be necessary is the recording of the Commissioner's view that "the order is passed without making inquiries or verification which should have been made". Such an approach will be clearly incongruous. The legal position is fairly well settled that when a public authority has the power to do something in aid of enforcement of a right of a citizen, it is imperative upon him to exercise such powers when circumstances so justify or warrant. Even if the words used in the statute are prima facie enabling, the courts will readily infer a duty to exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er how liberal a time limit is framed. In scrutiny assessment proceedings, all that is required to be done is to examine the income tax return and claims made therein as to whether these are prima facie in accordance with the law and where one has any reasons to doubt the correctness of a claim made in the income tax return, probe into the matter deeper in detail. He need not look at everything with suspicion and investigate each and every claim made in the income tax return; a reasonable prima facie scrutiny of all the claims will be in order, and then take a call, in the light of his expert knowledge and experience, which areas, if at all any, required to be critically examined by a thorough probe. While it is true that an Assessing Officer is not only an adjudicator but also an investigator and he cannot remain passive in the face of a return which is apparently in order but calls for further inquiry but, as observed by Hon'ble Delhi High Court in the case of Gee Vee Enterprises Vs ACIT [(1995) 99 ITR 375 (Del)], "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. (Emphasis, by underlining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable in law." The test for what is the least expected of a prudent, judicious and responsible Assessing Officer in the normal course of his assessment work, or what constitutes a permissible course of action for the Assessing Officer, is not what he should have done in the ideal circumstances, but what an Assessing Officer, in the course of his performance of his duties as an Assessing Officer should, as a prudent, judicious or reasonable public servant, reasonably do bonafide in a real-life situation. It is also important to bear in mind the fact that lack of bonafides or unreasonableness in conduct cannot be inferred on mere suspicion; there have to be some strong indicators in direction, or there has to be a specific failure in doing what a prudent, judicious and responsible officer would have done in the normal course of his work in the similar circumstances. On a similar note, a coordinate bench of the Tribunal, in the case of Narayan T Rane vs ITO [(2016) 70 taxmann.com 227 (Mum)] has observed as follows: 20. Clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the case under consideration, revisionary power, even under the enlarged scope of the Expl. 2, was not legally exercisable. 7.1 No requirement of deep investigation: Thus, on the perusal of the order of the Pr. CIT it is very clear that he was of the view that the AO must have made deep investigation or inquiry and in the case of Arvind Bhartiya Vidhyalaya Samiti v/s ITO 94 TTJ 614(Jp). Where in held that Deep investigation is outside of the preview of assessment procedure". And also held there is no case laws which say for deep investigations Because there is no limit of deep investigation. In the Act also no reference of the Deep inquiry or investigation. Also refer Gaberial India Ltd. 203 ITR 108 (Bom). That is why Hon'ble SC held in Malabar Fisheries Industries Ltd. 243 ITR 82 (SC) that in each and every type of mistake/ error cannot be made a basis to invoke Sec.263. The case laws available on the subject on this aspect, are distinguishable in as much as those were the cases where no inquiries at all (or very minor reflecting from a short assessment order), which is not at all a case here. Also refer Gyan Chand Gupta V/s PR. CIT 135 TTJ 01(Jp), M/s. Om Rudra Priya Holiday ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the AO on the issues and not verified. Kindly refer CIT v/s Paras Cotton Co. 288 ITR 211(Raj.) where held that CIT could not have acted on mere assumption. Mere suspicion cannot take place of proof and the order of CIT u/s 263 cannot be sustained. 8.1 In CIT V/s Girdhari Lal 258 ITR 331(Raj.) it has been held, "When the Assessing Officer after going through the material on record and after considering the explanation of the assessee, made some additions and rejected the books of accounts, it could not be said that he had not applied his mind. It is not always necessary that every assessee in the line of business should have the same rate of profit. The tribunal was correct in cancelling the order under sec 263 of Income Tax Act." When the assessing officer had considered all the relevant material on record, it was basically a question of facts and it could not be interfered with unless the finding of the Tribunal was found perverse. Considering the material on record, it could be said that finding of the Tribunal was perverse. Therefore, the Tribunal was correct in cancelling the order under section 263." 8.2 Also refer CIT v/s Ganpat Ram Bishnoi 296 ITR 292(Raj.) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. The finding of the Tribunal that the ITO had passed assessment order after relevant enquiries and considering the aspects of the matter required by the CIT to be considered by him is a finding of fact. Although in the present case the ld. AO has made the detailed inquiry on the very same issue being the reason of reopening the case u/s 148. 8.3 In the case of CIT V/s Anil Kumar Sharma 335 ITR 83(Del), held that " Revision- Erroneous and Prejudicial order- lack of proper enquiry- Pr. CIT came to the conclusion that the issue relating to taxability of compensation received by the assessee was not examined by the AO and held that the order of AO is erroneous and prejudicial to the interest of the revenue- Tribunal has arrived at a conclusive finding that through the assessment order does not patently indicate that issue of the taxability of the compensation has been considered by the AO, the record shows that the AO has applied his mind-Thus, it is not a case of lack of enquiry even if the enquiry was inadequate and the CIT was not justified in passing the order under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee has given detailed explanation be a letter in writing and Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 8.5 It is submitted that when all the details submitted by assessee and AO framed the Assessment order thereon, reliance is placed on a case of High Court of Gujarat 21 Taxman. Comm. 64 (Guj) CIT V/s Amit Corporation it has been held " When during course of framing of assessment, Assessing Officer had access to all records of assessee and after perusing said records, he framed assessment, said assessment could not be re -opened in exercise of revision power under section 263 for making further inquires .'' Reference has been made to the decision of Hon'ble Allahabad High Court in the case of Anil Bulk Carriers (P) Ltd. vs. PR. CIT (2005) 194 CTR (All.) 226 : (2005) 276 ITR 625 (All.). It is submitted that department can assume jurisdiction under section 263 of Income tax Act if twin conditions of the order being erroneous and prejudicial to the interest of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion. Minutely examined, the provisions of the section envisage that the PR. CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the PR. CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interest of the Revenue will not suffice. The assessee must be called, his explanation sought for and examined by the CIT and thereafter if the CIT still feels that the order is erroneous and prejudicial to the interest of the Revenue, the CIT may pass revisional orders. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to the interest of the Revenue, he may choose not to exercise his power of revision. This is for the reason that if a query is raised during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him - Whether under section 263 substitution of the judgment of the Commissioner for that of the ITO is permissible - Held, no - Whether ITO's conclusion can be termed as erroneous simply because Commissioner does not agree with his conclusion - Held, no - Whether ITO's order could be held to be 'erroneous' simply because in his order he did not make an elaborate discussion - Held, no - Whether provisions of section 263 were applicable to instant case and Commissioner was justified in setting aside assessment order - Held, no In the case of CIT vs. Deepak Real Estate Developers (I)(P) Ltd. (2014) 367 ITR 0377 (Raj) It has been held that Revision-Revision by commissioner of orders prejudicial to revenue-AO observed that return submitted by Assessee was duly supported by necessary evidence and accepted Assessee's return-CIT in exercise of his power u/s 263, issued notice to Assessee being of opinion that assessment of AO was erroneous and prejudicial to interest of Revenue-ITAT viewed that CIT could not have formed any opinion that assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial order-Lack of proper enquiry-After issue of notice under s. 143(2), several communications were addressed by the assessee to the AO whereby the information, details and documents sought for were adverted to and filed-If upon a perusal of the record filed by the assessee with the AO the Tribunal formed a view that there had been an enquiry which had not been conducted with 'undue haste' surely one would be slow to hold otherwise-While the supervisory power of CIT is wide, it cannot be invoked to substitute the view of the AO-Fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. 9. On Merit our submissions are as under: 9.1 kindly refer our Submissions which has also been filed before the ld. CIT vide PB 23-27 also above para 3 ""as part of our WS before your honor. 9.2 Contradictory approach of the Revenue: Further it is very admitted facts that the assessee had invested the sale consideration amount in purchase of new residential property as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-Hence, assessee could not complete construction within prescribed period of 3 years- This delay in construction was not attributable to assessee-AO and CIT (A) both ignored that assessee had made full payment to developer and such payment was more than amount of deduction claimed by assessee-Since, delay was not on part of assessee but of developer and thus it was beyond control of assessee, it was viewed that benefit of deduction cannot be denied to assessee-It was held that assessee was entitled to exemption claimed by her-AO was directed to delete disallowance-Assessee's appeal allowed There also so many judgments on these issues. 12. However, we want to place on record our legal objection for initiating proceedings u/s 263 for revision of assessment as the original assessment made by the A.O. is neither erroneous nor prejudicial to the interest of revenue. At the time of Original Assessment, the A.O. has enquired all the issues discussed herein above and after being satisfied with the submissions and explanations has made the assessment. 13. Hence in view of the above facts, submission and legal positions of laws the order of the Pr. CIT u/s 263 may kindly may kindly b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was re-opened to verify the investment and the same has been verified, but the ld. AO has not examined the issue of deduction claimed by the assessee u/s. 54 of the Act. Though the ld. AO vide para (c) of his show cause notice had taken up the issue, there is no finding recorded in the order so as to deal the issue on merits and therefore, considering the plain reading of provision of section 263 of the Act the order of the ld. AO being prejudicial to the interest of the revenue has been rightly quashed. 9. We have heard the rival contentions and perused the material placed on record. All the grounds of appeal raised by the assessee challenge the action of the ld. CIT as per provision of section 263 of the Act. As noticed above, brief facts related to the case of the assessee are that the assessee is a non-resident and he filed the return of income declaring income of Rs. 99,820/- for the year under consideration. As per the information of High Risk CRIU/VRU being the insight portal of the revenue, assessee had made an investment of Rs. 1,05,12,601/-. Since the assessee had declared income of Rs. 99,820/- only, AO was of the view that there was reason to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i's cancellation letter dated 01.04.2017, the booked flat was cancelled by the assessee due to non-acceptance 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 flat got booked by the assessee was accepted by the said builder. Further, the assessee stated that he purchased one residential flat worth Rs. 34,00,000/- from M/s Nyati Builders, which was registered on 28.12.2017. A plain reading of the provisions of section 54 of the Income Tax Act, 1961 makes it clear that the assessee should purchase the new assets being residential house within 'one year before or two years after the date on which transfer took place'. He also noted 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 regarding purchase of flat from M/s. Nyati Builders Pvt. Ltd., it is seen that the purchase cost was Rs. 34,00,000/- only, and stamp duty was Rs. 2,40,000/-. Hence, the investment of Rs. 83,36,530/- with M/s. Nyati Builders is not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im exemption u/s 54 as per conditions laid down in the said section. We note that the ld. CIT expected that the ld. AO should have investigated the issue the way, he wants, and as such he has not appreciated the content of the show cause notice issued by the ld. AO: "(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." As already observed the ld. AO had not only examined the deduction u/s. 54 of the Act, but also blamed the assessee that the claim made by the assessee u/s. 54 of the Act amounted to wrongful and malafide claim. The blame so made was explained by the assessee, and consequently, the claim of the assessee was allowed by ld. AO. Thus, having raised the issue of deduction u/s. 54, coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 14. In the present case, none of the aforesaid conditions laid down is fulfilled in the show cause notice for revision issued and it does not specifically deal with as to for what reason the revision of order u/s. 263 is justified. Therefore, the ld. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act. Accordingly, we do not find any justification on the part of the ld. CIT to exercise powers under Sec. 263 of the Act, in dislodging the plausible view that was taken by the A.O, after examining details & explanation furnished by the assessee. 15. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of investment in property and its source, but there was nothing to doubt it. There was no other reason for issuance of notice u/s 148 when no addition was made. In the similar situation, notice as regards the other issue for which notice as regards proceeding u/s. 263 of the Act were initiated, was quashed by the High Court of Delhi in the case of CIT-II Vs. Software Consultants reported at 21 taxmann.com 155 (Delhi) by holding; "14. For exercise of power under Section 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. In the present case, the Assessing Officer did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
