2022 (11) TMI 119 - AT - Income Tax

Tribunal upholds appellant's exemption claim under section 54F, dismissing time-barred and natural justice violations.

Smt. Sangeeta Ganpati Jadhav Versus Chief Commissioner of Income Tax, Pune

Smt. Sangeeta Ganpati Jadhav Versus Chief Commissioner of Income Tax, Pune - TMI Issues Involved:1. Assumption of revisionary jurisdiction as time-barred.2. Non-satisfaction of necessary twin conditions laid in section 263 of the Act.3. Violation of the principle of natural justice.4. Eligibility for exemption under section 54F of the Act.Issue-wise Detailed Analysis:1. Assumption of Revisionary Jurisdiction as Time-barred:The primary issue was whether the revisionary proceedings were time-barred as per section 263(2) of the Income-tax Act, 1961. The order of assessment was passed on 21/12/2017, and the revisionary proceedings were initiated on 11/01/2021, seemingly beyond the two-year limit ending on 31/03/2020. However, due to the nationwide lockdown, the Central Government extended the period of limitation to 31/03/2021 through the Relaxation Act, 2020. Therefore, the initiation and completion of the revisionary proceedings within this extended period were deemed within the permissible time, dismissing the ground of being time-barred.2. Non-satisfaction of Necessary Twin Conditions Laid in Section 263 of the Act:The revisionary jurisdiction under section 263 requires the order to be both erroneous and prejudicial to the interests of the revenue. The Commissioner must form an opinion based on new material or an incorrect application of law. In this case, the Commissioner doubted the action of the lower tax authority without presenting new material or demonstrating the erroneous nature of the original assessment. The Tribunal found that the Assessing Officer (AO) had made explicit inquiries and allowed the exemption under section 54F after due consideration, which cannot be deemed erroneous simply because the order did not elaborate on the subject matter. Thus, the revisionary action was found unsustainable.3. Violation of the Principle of Natural Justice:The appellant contended that the revisionary order was passed ex-parte without proper opportunity for representation. The records showed that the assessee was served with a show cause notice (SCN) and given multiple opportunities to respond, which were not utilized by the assessee. Therefore, the Tribunal found no violation of the principle of natural justice, as reasonable opportunities were provided to the appellant.4. Eligibility for Exemption under Section 54F of the Act:The appellant challenged the disallowance of the exemption under section 54F, arguing that the disqualification applies only if the assessee is the sole/full-fledged owner of more than one residential house. The Tribunal noted that the AO had made detailed inquiries into the appellant's entitlement for the exemption and allowed it based on the evidence provided. The Commissioner's revisionary action, without new adverse material, was merely a re-evaluation of the same facts, which is not permissible. The Tribunal upheld the original assessment, finding no error in the AO's decision to grant the exemption.Conclusion:The Tribunal dismissed the grounds related to the assumption of revisionary jurisdiction being time-barred and the violation of natural justice. It upheld the appellant's contention regarding the eligibility for exemption under section 54F, quashing the revisionary order and allowing the appeal.