TaxTMI 
TaxTMI 
2014 (10) TMI 780
X X X X Extracts X X X X
X X X X Extracts X X X X
....l the documents / submissions, one of the possible view was taken:- (a) Ld. CIT erred in holding that the assesee has used interest bearing funds in the acquisition of house property at Model Town and thus AO failed to disallow the deduction on account of interest paid. (b) Ld. CIT erred in holding that the AO has failed to consider the issue of interest paid to wife at a lower rate than the rate paid on the loans raised by the assessee. (c) Ld. CIT erred in holding that the AO has failed to calculate the Long Term Capital Gains arises on the sale of property correctly. (d) Ld. CIT erred in setting aside the entire assessment to the Ld. AO, instead of setting aside only on limited issue discussed in the order. 4. That the Ld. CIT erred in not applying his mind to the matter rather took up the issues already raised by the audit party as audit objection. 5. That the appellant craves leave to add or alter any of the grounds of appeal." 3. Briefly stated facts are that the return of income was filed on 29.9.2009 declaring an income of Rs. 3,65,230/- which was processed u/s. 143(1) of the Income Tax Act, 1961 at the same income. Later on, the case was selected under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsidered by the A.a., holds good. However, with regard to investment in acquisition of house property at Model Town, Delhi at Rs. 45,63,000/- claimed to be out of own capital, the A.O. has not examined the issue and no material has been placed on record to prove that the investment has been made out of own capital. During proceedings u/s 263, also, no details have been placed on record except the contention that AO considered "this fact & found that no interest bearing fund is invested for acquisition of this property". 2.8 The details placed on record have been gone through. It is revealed therefrom that the assessee had his own capital balance of Rs. 49,25,583/- and further contended that he was also enjoying interest free advances of Rs. 25,74,7401-. However, it is seen that the cost of assets including acquired through Will, other investments and stock-in-trade of shares amount to Rs. 70.04 lakh approximately and there remains hardly any amount with the assessee out of his capital & out of interest free loans which can be said to have been invested in the acquisition of house property valued at Rs. 45,63,000/-. 2.9 Thus, AO's failure to examine the issue regarding dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....old Plot NO.16 in a society known as Ujjwal, Apartments, Vikas Puri, New Delhi. The assessee has sold this plot for Rs. 14.00 lacs. The assessee has shown a loss of Rs. 1 ,59,643/- in this deal. This property was acquired in 1990-91 and sold during the Assessment Year 2009-10. The assessee has stated that though the agreement was made for sale for Rs. 14.00 lacs but the assessee had to pay Rs. 1,50,000/- to the purchaser for repairs. The full detail of receipt of Rs. 14.00 lacs by the assessee from purchaser is given in the deed of agreement to sell dated 26.08.2008 as below:- Sr. No. Amount Cheque No. Dated 1. Rs. 9,00,000/- 397541 23.8.2008 2. Rs. 3,50,000/- 485603 25.8.2008 3. Rs. 1,50,0000/- Cash Rs. 14,00,000/- 4.2 As per the provisions of section 48, full value of consideration received (Rs.14.00 lakh) is to be taken into account. Moreover, there is no evidence regarding date & cost of acquisition. The AO, therefore, ought to have not accepted the claim of assessee that sales consideration was Rs. 12.5 lakh and further deduction out of sale consideration (Rs.14.00 lakh) should have been allowed based on evidences. 4.3 Accordingly, no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owed deduction out of sale consideration to the assessee for working of Long Term Capital Gains on flat sold after proper enquiry and this is not prejudicial to the interest of revenue. ..................." 4.4.1 The reply filed by the assessee has been considered, carefully. The cost of acquisition is adopted as per figure shown in old balancesheets. Regarding date of acquisition, Authorized Representative pointed out to the copy of agreement of licence dated 11.10.1991 which says that society entered into a loan agreement dated 25.01.1988 with the Delhi Co-operative Housing Finance Society Ltd for securino loan for erecting multi storey blocks of Flats. This document shows that the flat was not allotted before 11.10.1991. In fact, as per letter dated 20.12.1991* of the Society (Annexure-A to this order), states that the assessee is entitled to take over the physical possession. Therefore, the indexation can only be allowed from 20.12.1991 instead of 25.01.1988, as claimed by the assessee. 4.4.2 The assessee has himself admitted that the flat was sold for a consideration of Rs. 14.00 lacs. As per the sale deed, there is no liability of the assessee towards 'repair'. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion, in the light of discussions made in the preceeding paras (but not necessarily limiting to the same) and make a judicious and logical order as per law, after providing due opportunity of being heard to the assessee." 5. Against the order dated 21.3.2014 of the Ld. CIT, assesssee is in appeal before us. 6. Ld. Counsel of the assessee has filed a Paper Book containing pages 1 to 120 having the records with the lower authorities. 7. We have heard both the counsel and perused the records, especially the paper book filed by the ld. Counsel of the assessee and orders of the revenue authorities. 8. It has been argued by the ld. A.R. Shri Navin Gupta, Advocate, that the impugned order passed u/s. 263 of the Act is illegal, unwarranted and is bad in law and is also against the principles of natural justice. A further argument was advanced by the ld. A.R. that the ld. CIT did not even consider the written submissions filed by the assessee. Therefore, rather the impugned order becomes arbitrary being lopsided. It is claimed that the ld. AO has examined all the points which were raised in the notice u/s. 263 while framing the impugned assessment order, but without looking into....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... an administrative act but on examination "to consider" or in other words, to form an opinion that particular order is erroneous is so far as it is prejudicial to the interests of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of re-examination and reconsideration of an order of assessment, which has already been concluded and controversy which has been set at rest, is again set in motion. It is an important decision and the same cannot be based upon the whims and the fancies or the caprice of the revising authority. There must be material(s) available from the records called for by the Commissioner. The Commissioner must give reasons for passing an order. He is bound by the decisions of the Hon'ble Supreme Court and jurisdictional High Court. The Commissioner must come to a firm conclusion on the point that error in the order has resulted in prejudice to the interests of the Revenue. He has to apply his mind for coming to a firm conclusion which should be based on proper material and he must mention that material in his order. The Commissioner may under this section pass such an order as the circumstances of the case justify, incl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted in S. 263. So, it is clear that the Commissioner does not have unfettered and unchequred discretion to revise an order. The Commissioner is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair- play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well in section 263. An order can be treated as "erroneous" if it was passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts. The "prejudice" that is contemplated under S. 263 is the prejudice to the Income Tax administration as a whole. The revision has to be done for the purpose of setting right distortions and prejudices caused to the Revenue in the above context. The fundamental principles which emerge from the several cases regarding the powers of the Commissioner under section 263 may be summarized below:- (i) The Commissioner must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interests of the revenue. Both the conditions mus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the assessee. The finding of the Hon'ble Supreme Court given in the celebrated decision of Malabar Industries Co. Ltd. (supra) are relevant for ready reference and so these are being extracted herein below : "A bare reading of section 263 of the income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the assessment - condition precedent for invoking revisional jurisdiction not present - Revisional order quashed." 16. We also find that the Agra Bench of ITAT has taken a similar view that if the assessment order is not written more elaborately, the same cannot be branded as erroneous by the Commissioner. This view was taken in the case of Goyal Iron and steel Works India vs. ACIT reported in 120 Taxman page 208. Again Hon'ble Agra Bench has taken similar view while deciding the case of Urmila Gupta vs. ACIT in ITA No. 04/Agra/2005 vide order dated 23.2.2006. The Hon'ble Nagpur Bench of ITAT has also taken a view which supports our above finding in the case of Shri P.K. Bhatia, Corba vs. CIT (2006) 5 ITJ 235 (copy on record). The Hon'ble Bench has held as under :- "Revision - U/s. 263 of the Income-tax Act, 1961 - The revision order was based on the aspects being considered by the AO - Learned CIT has not been able to find any error leading to order become prejudicial to the interest of the Revenue - Tribunal Held - If the assessee had furnished the requisite information and the AO had completed the assessment thereafter considering all the facts, then the CIT was not empowe....