TaxTMI 
TaxTMI 
2015 (7) TMI 558
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....ion of law in the assessment order dated 22.12.2010 passed by the Addl. Commissioner of Income-tax, Range-1, Meerut and so must be quashed. 3. That the Commissioner of Income-tax not having identified or pointed out any error and prejudice to the interest of the Revenue and arbitrarily intervening in the same by assuming authority u/s 263 of the Income tax Act, 1961 must be quashed. 4. That the Commissioner of Income-tax erred in invoking Section 50C of the Income-tax Act, 1961 to business transactions in the sale of shops and in taking the sale consideration of such shops at Rs. 69,72,402/- instead of the actual consideration of Rs. 35,00,000/- as taken by the Assessing Officer which action must be quashed as being incorrect and illegal. 5. That the Commissioner of Income-tax erred in estimating profit on sale of shops at Rs. 20,91,609/- which being erroneous and fanciful must be quashed. 6. That the Commissioner of Income-tax erred in construing income at Rs. 32,50,000/- from advances which being wholly erroneous and imaginary must be quashed. 7. That the Commissioner of Income-tax erred in construing income from indirect sources at Rs. 65,37,491/- on wholly fallac....
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....; 17558555 Rs. 376836 Income from business on sale of shops =Rs.525000-Rs.376836 Rs. 148164 5. The AO also made the addition of Rs. 25,000/- on account of low withdrawals for household expenses and accordingly, the income was assessed at Rs. 30,15,270/- after allowing deduction u/s 80C & 80D of the Act. Thereafter the ld. CIT exercised his powers and issued the notice u/s 263 of the Act on the following points: "(i) As per the revised return of income for the A.Y 2008-09, you have shown the sale consideration of shops at Rs. 35,00,000/- in place of Rs. 14,40,000/- (as per original return dated 13.01.2009) and also changed the head of income from capital gain to business income. The AO has accepted the same without proper enquiry. (ii) You have claimed relief u/s 90 of the I.T. Act 1961 which has been allowed by the AO whereas from the perusal of records it is seen that neither the double taxation avoidance agreement has been fil....
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....n. Purposes for which loan money lent out to others? Why not breach of conditions on which loans were raised? Why interest claimed is admissible if not utilized for the purposes these were taken? * Purposes of raising secured loans. Secured loans from UTI etc. is taken for Vasundhara project (shops project) & claimed. Why admissible while income for project is not reflected no. of shops admittedly got constructed out of which merely 5 stated to have been sold. * Assessee has shown business income/loss in Vasundhara project whereas books of accounts and tax audit denied. Please explain why not liable for penalties u/s 271A and 271B of the IT Act and also give complete details and complete supporting material/evidence of such business. * Complete copies of Bank a/cs of the assessee-certified/true for the whole year. * How income from shops (rent) is shown as income from house property and even deduction u/s 24 is claimed while shops project is admittedly shown as business and even losses/expenses are claimed against the same? Nature of services rendered to PRS Transportation (USA) of which Relief u/s 90 of the Act has been claimed. * To produce entire bank statements, ....
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....; Tara Devi Aggarwal Vs CIT (1973) 88 ITR 323 (SC) Ø Duggal & Co. Vs CIT (1996) 220 ITR 456, 459 (Del.) Ø CIT Vs Pushpa Devi (1987) 164 ITR 639 (Pat) Ø CIT Vs Smt. Rambha Devi (1987) 164 ITR 658 (Pat) Ø CIT Vs Belal Nisa (1988) 171 ITR 643 (Pat) Ø CIT Vs Smt. Kaushalya Devi (1988) 171 ITR 686 (Pat) Ø CIT Vs Bibi Khodaija Khatoon (1988) 171 ITR (Pat) Ø CIT Vs Chandrawati Devi (1988) 171 ITR (Pat) Ø CIT Vs Smt. Devi (1987) 59 CTR (Pat) 3 Ø CIT Vs Bhagwant Kaur (1987) 63 CTR (Pat) 326 Ø CIT Vs Pushpa Devi (1988) 173 ITR 445 (Pat) 8. The ld. CIT pointed out that the assessee had shown the sale consideration of shop at Rs. 14,40,000/- as per original return of income, Rs. 35,00,000/- as per the revised computation and changed the head of income from "capital gain" to "business income" which was accepted by the AO. He further observed that during the course of proceedings u/s 263 of the Act, the assessee was asked to furnish the sale deeds of all the shops where the stamp duty on Circle rate at Rs. 69,72,402/- was paid at the time of registration of sale deeds. He also pointed out th....
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....99,100 9. The ld. CIT directed the AO to revise the assessment order and pass the fresh order by considering all the aforesaid points. 10. Being aggrieved the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the ld. CIT and further submitted that the assessee was having the shops as stock-in-trade, therefore, provisions of section 50C of the Act were not applicable and the ld. CIT was not justified in directing the AO to adopt the circle rate for the valuation purposes. The reliance was placed on the following case laws: Ø CIT Vs Kan Construction and Colonizers (P.) Ltd. 208 Taxman 478 (All.) Ø CIT Vs Mukesh & Kishor Barot Co-owners 215 Taxman 151 (Guj.) Ø CIT Vs Thiruvengadam Investments (P.) Ltd. (2010) 320 ITR 345 (Madras) 11. It was further submitted that the AO inquired the issue in detail and only thereafter he accepted the profits shown by the assessee, therefore, the ld. CIT was not justified in alleging that the proper inquiries were not made by the AO. It was further submitted that the ld. CIT had not pointed out any error in the order of the AO and also no incorrectness was pointed out, ....
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....t is well known that a deeming fiction provided by the statute has to be applied for the purpose of which it is provided and no other. In the present case, if the Assessing Officer had utilized juntry rate as a starting point, to enquire further and ascertain the true market value of the land so sold and having brought some evidence in this direction, surely, the case of the Revenue would have been justified. We have perused the order of the Assessing Officer in detail. Except for making reference to the juntry rates and pointing out that the juntry rate is 2.2 times higher than the sale consideration disclosed by the assessee, the Assessing Officer has brought no evidence on the record to establish that the sale deed did not reflect the full sale consideration. In other words, all that the assessee did was to apply a deeming fiction provided under Section 50C without admitting so, it was not in dispute that the plot was held as "stock in trade" and therefore sale thereof gives rise to the business income and not to capital gain." 15. On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT Vs Kan Construction and Colonizers (P.) Ltd. 208 Taxman 478 (supra) ha....
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....on." 16. From the aforesaid judicial pronouncement, it is crystal clear that the provisions of Section 50C of the Act are not applicable when the shops are treated as stock-in-trade and income from such transaction was held as a business income. Therefore, the ld. CIT was not justified in setting aside the assessment order only on this basis that the AO has not taken the sale value as per section 50C of the Act i.e. the circle rate. We, therefore, are of the view that the ld. CIT was not justified in setting aside the assessment order by invoking the provisions of section 263 of the Act. 17. The subject of revision under Section 263 has been vastly examined and analyzed by various Courts including Hon'ble apex Court. The revisionary power conferred on the learned CIT vide Section 263 of the Act is of wide amplitude, it enables the learned CIT to call for and examine the records of any proceeding under the Act. It empowers the learned CIT to make or cause to be made such an enquiry as he deems necessary in order to find out if any order passed by AO is erroneous insofar as it is prejudicial to the interests of the Revenue. The only limitation on his power is that he must h....
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....rejudicial to the interest of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under the law. (vi) If while making the assessment, the AO 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 of the Act, is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrives at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under Section 263 of the Act, must have material on record to arrive at a satisfaction." In such type of cases, if the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given ....