TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 324
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....ssee also invested part of capital gains in accordance with section 54 of the Act. The details furnished during the course of assessment proceedings were examined by the Assessing Officer and after making investigation and enquiries the Assessing Officer noted that the assessee sold farm house during the year. The property was acquired by the assessee during the year 1996-97. The assessee has claimed benefit of indexation on expenses incurred for the construction work carried out in the years 1997-98 and 1998- 99. The assessee was asked to furnish the evidence of incurring expenses on construction of farm house. It was submitted by the assessee that the construction was incurred way back in 1997-98 and 1998-99 and it is not possible to provide the requisite evidence of expenses at the stage. The learned counsel for assessee further submitted that the assessee has been showing rental income from this property regularly in the return of income and, therefore, the cost of construction may be accepted. The Assessing Officer after detailed discussion with the learned counsel for assessee noted that the assessee agreed for addition of Rs. 2 lacs to the long term capital gains to cover up....
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....23,057/- pertaining to assessment year 2005-06. In view of the above facts, the learned Commissioner of Income Tax held that the assessment framed under section 143(3) on 27.5.2011 is erroneous in so far as prejudicial to the interest of the Revenue. Therefore, the explanation of the assessee was called for. The assessee in response to this notice filed reply on 29.1.2014, which is reproduced in the impugned order highlighting all the facts to challenge that the revision of proceedings under section 263 of the Act are not called for and the matter may be dropped. The assessee relied upon several decisions in support of the contention. We would deal with the reply of the assessee later on in this order. The learned Commissioner of Income Tax, however, was not satisfied with the explanation of the assessee and cancelled the assessment order under section 143(3) of the Act dated 27.5.2011 and directed the Assessing Officer to pass assessment order afresh after making necessary enquiries in accordance with law by giving opportunity of being heard to the assessee. The findings of the learned Commissioner of Income Tax in paras 3 to 6 of his order are reproduced as under : "3. Replies o....
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....of the above, the claim of the assesee that this issue was explained by him and got examined by the Assessing Officer is contrary to facts on record and assessee has not brought on record any evidence to that what is apparent is not the real and Assessing Officer has also failed to examine the issue properly. 3.6 Though the assesee claimed that long term capital loss was declared in her return for A.Y. 2005-06 but there is no document in assessment record or submitted by the assessee now to support his claim/submission. 3.7 The assessee has not been able to explain the transactions discussed in the foregoing paragraphs so much so that the assessee has not brought on record the bank accounts involved in these transactions. From the aforesaid, it is also clear that the Assessing Officer has failed to conduct the enquiries emanating from the material and issues before him which were necessary for the assessment. 3.8 The assessee has relied upon the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT (SC) 243 1TR 83. He has inter-alia, mentioned that "where two views are possible and the ITO has taken one view with which the commissioner does ....
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....ove. 5. The explanation of the assessee could, therefore, not be said to be satisfactory as held by the Hon'ble Punjab & Haryana High Court in the case of CIT v. Lal Chand Tirath Ram 225 ITR 675 that mere offering explanation is not sufficient; explanation is to be substantiated by cogent and reliance evidences. 6. In view of the above, it is held that the said assessment order is erroneous in so far as prejudicial to the interest of revenue for the reasons mentioned above. Accordingly, the assessment order u/s 143(3) dated 27.05.2011 is cancelled with a direction to the Assessing Officer to pass an order afresh after making necessary enquiries in accordance with law keeping in view the above observations and allowing opportunity of being heard to the assessee." 4. The assessee feeling aggrieved against the impugned order under section 263 of the Act filed the present appeal. 5. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The learned D.R for the Revenue produced assessment record as well as revision folder of Commissioner of Income Tax under section 263 of the A....
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.... (i ) Decision of Hon'ble Rajasthan High Court in the case of Rajesh Surana v. CIT 306 ITR 368 , in which it was held that "A plot with boundary walls and a garage- cum-room constructed over it is not a residential house, hence capital gain arising from sale thereof is not exempt under section 53". (ii ) Decision of the Hon'ble Punjab & Haryana High Court in the case of Ashok Syal v. CIT 209 Taxman 376 in which it was held that "Exemption u/s 54 is not available when property in question is not a "house" or "dwelling unit". (iii ) Decision of the Hon'ble Punjab & Haryana High Court in the case of Dr. A.S. Atwal v. CIT 277 ITR 462, in which it was held that "Property sold by assessee i.e., plot with a tin shed, was not a house as the tin shed had not bathroom or kitchen or electricity connection, and even if the same is considered as a house, assessee is not entitled to exemption under s. 54 on the sale of said property as it was not occupied by the assessee or a parent of his for their residence in the two years immediately preceding the date of transfer". (iv ) Order of I.T.A.T., Hyderabad Bench in the case of ITO v. Smt. Rohini Reddy 122 ITD 1 , in which it was he....
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....g "income from house property" in her income tax returns upto assessment year 2008-09. The assessee referred language of section 54 of the Act, which provides that in case of an assessee being an individual or HUF, the capital gain arises from the transfer of a long term capital asset being building or land appurtenant thereto and being a residential house, the income of which is chargeable under the head "income from house property". The assessee submitted that since the house was occupied by the assessee and his parents and rental income was also earned from letting out of some portion and was duly declared in the return of income, therefore, the assessee was entitled for benefit contained under section 54 of the Act. The assessee also relied upon the order of the I.T.A.T., Delhi Bench in the case of Mahavir Prasad Gupta v. CIT, 5 SOT 355 on the proposition that 'even farm house can be a residential house and investment is eligible for benefit under section 54 of the Act'. The learned Commissioner of Income Tax, however, considered the sale deed of the property in question dated 17.10.2008 and found that the type of the land sold is 'gairmumkin shed', whereas the....
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....village Balomajra was having value of Rs. 18,10,000/-. These facts would clearly indicate that the property in question was 'gairmumkin shed' and house, on which on letting out part of its portion income was also assessed under the head "income from house property". Therefore, the assessee has been able to prove that the capital gains arises from transfer of long term capital assets being building or land appurtenant thereto and being a residential house, the income of which is chargeable under the head "income from house property". Therefore, the conditions of section 54 of the Act have been satisfied in the case of the assessee. Therefore, the decisions relied upon by the learned D.R for the Revenue would not support the case of the Revenue. 9. The learned Commissioner of Income Tax noted that even in the above facts when the property sold was farm house, the assessee would not be entitled for deduction under section 54F of the Act because the proviso is against the assessee. Since the assessee claimed long term capital gains on transfer of residential house, therefore, the learned counsel for assessee argued that the claim of the assessee would fall under section 54 of ....
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....come Tax are wholly incorrect and cannot be sustained. Thus the assessee would be entitled for benefit of Rs. 1 crore under section 54 of the Act on making FDR under Capital Gain Scheme. The learned Commissioner of Income Tax thus has not properly examined this issue before taking any adverse view against the assessee. 11. The learned Commissioner of Income Tax also noted that the assessee has failed to provide any proof in respect of the amount to the tune of Rs. 8,70,000/- claimed as transfer expenses in respect of sale of property. The assessee submitted before the learned Commissioner of Income Tax that the copies of all the bank accounts with narrations of debit and credit entries were given to the Assessing Officer alongwith reply, which shows that this amount was paid through account payee cheque drawn on Punjab & Sind Bank, Phase-5, Mohali to Shri Kesar Singh for facilitating the completion of the said deal. This point was also clarified to the Assessing Officer. The learned Commissioner of Income Tax, however, noted that no document is filed on record to prove the genuineness of the claim of the assessee. The assessee in the Paper Book has filed copy of the same bank acco....
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....as made in the returns of income in all the earlier years. Therefore, there was no question of examining such issue which has happened in the earlier years 2005-06 onwards. Since all informations have been given in the computation of income and returns of income to the Revenue Department and the Assessing Officer examined the issue of long term capital gain in detail, therefore, no fault could be found with the order of the Assessing Officer. 14. The learned D.R for the Revenue filed copy of order-sheet from the assessment record, which would show that the Assessing Officer issued several statutory notices to the assessee and also issued questionnaire to the assessee for claiming deduction under section 54 of the Act in respect of long term capital gain. The Assessing Officer conducted enquiries on several dates of hearing and after examining the issue of long term capital gain in detail has made the addition of Rs. 2 lacs on that account. The copy of the order-sheet of the learned Commissioner of Income Tax is also filed on record, which shows that after issue of show cause notice under section 263 of the Act dated 10.1.2014, the assessee filed reply before the learned Commission....
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....he house property in question holding it to belong to the petitioner. The findings recorded by the criminal court in this regard could not be brushed aside. Hence, any de novo proceedings at this stage would be futile. The order of revision had to be quashed. The assessment of the petitioner for the assessment year 1992-93 made by order dated May 16, 1994, had to be considered complete and final." 15. Considering the above discussion and material on record, it is clear that the specific queries were raised by the Assessing Officer at assessment stage regarding long term capital gains and the Assessing Officer was satisfied with the explanation of the assessee. This itself would be an indication of application of mind by the Assessing Officer while passing the assessment order. When the Assessing Officer was satisfied with the explanation of the assessee with regard to the claim made under section 54 of the Act and he made part addition on the same, therefore, no fault could be found with the order of the Assessing Officer. When the Assessing Officer has adopted one of the courses permissible in law and the Commissioner do not agree with him, it cannot be treated as erroneous order....
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....e Hon'ble Supreme Court in its subsequent decision in the case of CIT v. Max India Ltd. 295 ITR 282. The Hon'ble Punjab & Haryana High Court in the case of CIT v. Deepak Mittal, 324 ITR 411, has held as under : "Change of opinion by reappraising the evidence is not within the parameters of revisional jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961. Held, dismissing the appeal, that the Tribunal had found that the Assessing Officer had given a categorical finding that the assessee was engaged in the process of manufacturing of products and accordingly he had granted concession under section 80-IB. The claim of the assessee had been found to be genuine. The Assessing Officer had also examined the various workers of the assessee and then recorded the finding. The Assessing Officer was justified in granting the special deduction under section 80-IB. The order of revision disallowing the special deduction was not valid." 18. The learned D.R for the Revenue lastly argued that since the assessee purchased two properties, therefore, the assessee would not be entitled to claim of exemption under section 54 of the Act in respect of the two residentia....