TaxTMI 
TaxTMI 
2013 (2) TMI 505
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.... it. The show-cause notice issued is verbatim, as under: "On perusal of your assessment records for the A.Y. 2006-07, it has been noticed that you have shown capital gain of Rs. 22,67,451.50 on sale of 12 plots and after deducting the investment of Rs. 14,57,522/- towards residential house at Shastri Nagar, Jodhpur the Long Term capital Gain has been declared at Rs. 8,09,929/-. The AO worked out the LTCG at Rs. 25,73,706/- by applying DLC rates and after deducting the investment of Rs. 14,57,522/- the taxable LTCG has been determined at Rs. 11,16,184/-. The AO without making proper investigation/enquiry accepted your claim that the sale consideration received by you on 12 plots as Long Term Capital Gain despite the fact that you were carrying on the business of purchase & sale of plots and have declared net profit of Rs.,65,156/- from such business. There is nothing available either in the assessment order or in the records on the basis of which it could be said that the issue was analyzed as to whether the gains arising from sale of plot are to be treated as business income or as capital gains. Merely for the reason that sale of plot was shown as investment, it cannot be said t....
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....t Kothari and Sahyog Estate Pvt. Ltd respectively, nothing is available on record nor the assessment order speak about it. The AO has simply accepted the liabilities without examining them. v. In respect of withdrawals of Rs. 60,000/- and LIC premium, there are neither any evidence/details available on record nor the AO has called for and examined the same. vi. From the entire discussion as above, it becomes amply clear that the AO completed the assessment in undue haste without making required investigations, verifications and inquires. Therefore, I consider that the assessment order so passed by the AO is erroneous as also prejudicial to the interest of revenue and the same requires to be set aside or modified or enhanced, or cancelled accordingly. I would like to invite your attention to the decision of Hon'ble Karnataka High Court in the case of Thalibai F. Jain v. ITO (101 ITR 1) wherein it was held that the assessment made in undue haste or without enquiry is prejudicial to the interest of the revenue, and what is prejudicial to the interest of the revenue must be held as erroneous. In the case of CIT v. Pushpa Devi (164 ITR 639), it has been held by the Hon'ble Patn....
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.... capital gains on sale of twelve plots. The contention is that whether such income should be regarded as business income or capital gains has not been properly examined. b. The second issue relates to deduction on account of investment in new residential house which was allowed by accepting the contention of long term capital gains. If the gain is treated as business income such claim would not be eligible to the assessee. The copies of registered sale deed were also duly submitted. c. There are certain investments shown in the balance sheet or which roper enquiry has not been made. d. Similarly, there are certain liabilities which also had not properly examined. e. In relation to payment of LIC premium of Rs.60,000/- paid during the year under consideration, the same was also not properly examined. D. In view of above observations it was contended that the order is erroneous and prejudicial to the interest of Revenue and therefore, making fresh assessment in the case of the assessee. E. In relation to the first issue relating to the sale of certain plots on which long term capital gains has been clai....
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....rts the claim of deduction in relation to such investment. G. As regards other investments shown in the balance sheet the ld. AO at the time of assessment had duly verified the same and there cannot be said to be any error or prejudice to the Revenue. In this regards your kind attention is also invited towards assessee's submissions made 011 19.05.2008 wherein in para 3 it was specifically stated that no addition in any of the fixed assets had been made during the year under consideration. However, in relation to the various investments as mentioned in para 2 of your shown cause notice dated 22.03.2010 we submit herewith details to indicate that all investments are old: S.N Particulars Balance as on 31.03.2006 Balance as on 1. Investment in land 7,21,565 10,57,863 2. Land at Pal 12,07,970 15,71,200 3. Land at Bilara 3,04,500 4. Air conditioner 42,492 49,992 5. Car 2,74,854 3,23,358 6. Residential House 79,95,500 54,95,000 7. Television 3,208 3,773 8. Furniture and Fixture 9,....
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....ly submitted that the same is also duly verifiable and was duly verified at the time of assessment. The opening capital of the assessee was 1,01,69,992.19. The capital account was duly submitted and the credit in account were on account of long term capital gain on sale of plot amounting to Rs. 23,28, 887/-and profit during the year was amounting to Rs. 4, 65, 156. 37. Rs. 3,50,000/- was received towards Plot No.1 at Jhalamand which was duly registered in the subsequent period. The amount due in the account of Shri Rekesh, Shri Ravi Surana were on account of current liabilities in relation to amount outstanding to them towards salary. The amount due to Amit Kothari for Rs. 7,000/- was towards legal expenses for tax returns. In earlier year also provision of 7,000/- was made which was paid during the year under consideration on 14.09.2005 vide cheque no. 006797. K. In relation to withdrawals of Rs. 60,000/- in LIC premium of Rs. 49,007/-the same was duly debited in the capital account and necessary evidence was duly submitted with the return of income. The withdrawals were verifiable also from the books of accounts provided before the ld. AO and details furnished alongwith ....
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....gned assessment order u/s 143(3). 3. That on the facts and circumstances of the appellant's case, it is crystal clear from the material existing on records that the original assessment order passed by the Ld. AO by no stretch of imagination can be regarded as erroneous and prejudicial to the interest of Revenue. 4. The impugned order passed by the Ld. CIT is clearly beyond the ambit and scope of section 263. 5. The impugned order passed by the Ld. CIT is bad in law and bad on facts. 6. The appellant craves liberty to add, amend, alter, and modify any of the ground of appeal on or before its hearing before your honour. 7. We have heard the rival submissions and have carefully perused the entire material on record. It would be worthwhile to narrate, in sum and substance, the law relating to revision as settled by the courts. It is trite that an order can be revised only and only if twin conditions of 'error in the order' and 'prejudice caused to the Revenue' co-exist. The subject of 'revision under section 263' has been vastly examined and analyzed by various Courts including that of Hon'ble Apex Court. The revisional pow....
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....ake 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 CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the law. (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the CIT, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Off....