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TMI Blog2024 (11) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the order passed by the Assessing Officer (hereinafter referred to as "the AO") under Section 143(3) of the Act, dated 29.09.2021. Facts of the case: 2. The assessee, Non-Resident, filed his return of income for AY 2019-20 on 27.09.2019, declaring a total income of Rs. 24,51,708/-. The case was selected for scrutiny under the Complete Scrutiny category through CASS (Computer Assisted Scrutiny Selection) for the verification of capital gains on the sale of immovable property and refund claim. The AO completed the assessment on 29.09.2021 under Section 143(3) of the Act, accepting the returned income without making any adjustments. 2.1. The AO examined the sale of an immovable property located at 16, Nayagaon, Rampur, Jabalpur, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal: 1. The learned COMMISSIONER OF INCOME TAX IT & TP), AHMEDABAD (hereinafter referred to as 'the learned CIT') has erred in initiating proceedings under section 263 of Income Tax Act, 1961 ('the Act') since when the assessment order passed by the learned assessing officer was neither erroneous nor prejudicial to the interest of Revenue. 2. The learned CIT did not appreciate that section 263 does not confer any power on the CIT a quasi-judicial authority to substitute his own judgment over that of the Assessing officer another quasi-judicial authority, because assessment order passed by the Assessing Officer is not of his liking. 3. The learned CIT failed to appreciate that appellant has discharged his onus befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be denied as it is not possible to keep bills and voucher for such a long period of 14 years and when appellant has already shifted to abroad. 7. The appellant craves for leave to amend, add to omit any grounds up to the time of hearing of appeal. 4. During the course of hearing before us the Authorised Representative (AR) of the assessee, stated that the AO had made all necessary inquiries regarding the cost of improvement and had applied his mind to the details furnished by the assessee and the revisionary proceedings were initiated merely because the learned CIT held a different view from the AO. The AR further explained the details of cost of improvement as per statement and corresponding entries in bank statements which were already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticularly in light of the fact that the scrutiny was specifically for the verification of capital gains. 6.1. The learned CIT, in his order under Section 263 of the Act, emphasized that the AO should have conducted a more in-depth inquiry into the cost of improvement, especially by asking for bills and invoices. The learned CIT cited Explanation 2 to Section 263 of the Act, which allows revision of an order that is passed without proper inquiry or verification. 6.2. Section 55 of the Act deals with the determination of the cost of acquisition and cost of improvement of capital assets for the purposes of computing capital gains. In the present case, the relevant provision is Section 55(1)(b)(2) of the Act, which defines cost of improvemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med a cost of improvement of Rs. 68,90,000/- incurred in FY 2008-09, consisting of interior work, kitchen appliances, plywood flooring, and tiles. These items are typically considered capital in nature as they add permanent value to the property and are incurred to improve the property's condition. The assessee also submitted a valuation report from an independent valuer who personally inspected the property and provided a detailed breakdown of the improvements made. The expenditure was supported by bank statements showing payments made through the banking channel, which the AO examined. t is evident from the assessment order that the AO exercised his judicial discretion and adopted a plausible view based on the material on record. The AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the assessee's claim for the cost of improvement and took a plausible view based on the documents submitted, such as the valuation report and bank statements. The assessee's claim for the cost of improvement is allowable under Section 55(1)(b)(2) of the Act, as the expenses incurred were of a capital nature. The revisionary proceedings under Section 263 of the Act were unjustified, as the AO's order was neither erroneous nor prejudicial to the interests of Revenue. Accordingly, we quash the revisionary order passed by the learned CIT under Section 263 of the Act, and the appeal of the assessee is allowed. 7. In the result, appeal filed by the assessee is allowed. Order pronounced in the Open Court on 15th October, 2024 at Ahmedabad.< ..... X X X X Extracts X X X X X X X X Extracts X X X X
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