TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 686
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....92,02,625/-. Bungalow was purchased for consideration of Rs. 5,39,540/-. Since it was purchased prior to 1.4.1981 its indexed cost from 1.4.1981 was worked out as on 31.3.2009 at Rs. 31,40,123/-. The assessee has computed long term capital gain of Rs. 60,62,502/-. The assessee has claimed that a sum of Rs. 50.00 lacs was invested in National Highway Authority of India bond and deduction under section 54EC was claimed. Rs. 25 lakh was deposited in capital gain account with State Bank of India. In this way the assessee has claimed that she has made investment of total capital gain and no capital gain has fallen for taxation. This claim of the assessee was accepted by the AO. He has made conclusion in para-4 of the assessment order, and ultimately assessed the income of the assessee at the declared income. 4. After perusal of the assessment record, the ld.Commissioner harboured a belief that the AO has not carried out proper inquiries and his action has caused prejudice to the interest of Revenue. He recorded the following reasons and issued a show cause notice under section 263 of the Income Tax Act. "During the year the assessee had shown LTCG of Rs. 60,62,502/~ on sale of capital....
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....t and it seems that such mere inadvertent punching error has resulted in to the sole reason on your good honour end to consider that the order passed u/s 143(3) dated 05.12.2011 by the AO was erroneous as it was prejudicial to the interest of the revenue and consequently leading the show cause under section 263(3) of the Act. 3. As your good honour is aware, jurisdiction u/s. 263 can be assumed only if the order sought to be revised is both erroneous and prejudicial to the interests of the Revenue. Since the assessment order for the present assessment year is not erroneous in respect of the count raised in the Notice, far less, prejudicial to the interests of the Revenue, the conditions for assuming jurisdiction u/s. 263 are absent and, therefore, the question for assuming that jurisdiction in our present case can just not arise. In order that this may be appreciated, we beg to relate the relevant facts and make submissions in the paras that follow. 4. Assessee had filed Return of Income for A.Y. 2009-10 on 25.09.2009 declaring Income at Rs. 28,30,590/-. The case was selected for scrutiny assessment where in all the details and explanation were furnished from time to time. Ther....
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....s now, resulted as objection for revision of case u/s 263 of the Act. Further, Ld. AO has also erred in punching the amount of exemption for Rs. 13,17,559/- which is actually 10,62,502/- , as rightly quoted by your good honour in the notice u/s 263. 5.3 From the reason as quoted in your good honour notice it is evident that on peruse of assessment records of assessee' case , your honour has found a fact that there is a capital gain arising out of long term capital asset which is Residential house. Your honour has undisputedly accepted that there is neither irregularity about working of capital gain on transfer of residential property nor any irregularity of indexation claim there from. Further, with respect to exemption claim u/s 54EC for Rs. 50 lac from the said long term capital gain is also found to be adequate. As well your honour has also not disputed about the legality of the claim of exemption under different two sections ranging from section 54 to section 54H. The only count raised by your good honour on peruse of the AO's order passed u/s 143(3), is about the eligibility criteria for claiming exemption u/s 54F, for which your honour has categorically mentioned th....
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....shall not in any case said to be order passed by assessing officer as prejudicial to revenue, which can result in to revision of case u/s 263 of the Act. It will be manifest to say that aforesaid explanation will further bring clarity that Rs. 25 lac was not daimed u/s 54EC of the act as correctly figured out by your honour that there is no provision as such u/s 54EC to invest the same in capital gain scheme account under that section. 8. From the above discussion, your honour would kindly see that the suggestion contained in your notice is entirely misplaced and that the assessment order for the present assessment year cannot be regarded as being erroneous on account of mere punching error. Being such, we would urge upon Your Honour for kindly dropping the proceedings u/s. 263. For that act of kindness, we shall be very grateful. 6. The ld.Commissioner has considered the above submissions and also observed that assessee has made investment for purchase of Bungalow bearing no.282/283 having area of 881.30 sq.yards. This bungalow has constructed portion of 190 sq.yards. According to the ld.Commissioner a sum of Rs. 1,27,50,000/- was paid by the assessee on 29.9.2009. The ld.Com....
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....,00,000 Rs. 13,17,559 (-)Rs. 60,62,502 Nil A perusal of the record shows several discrepancies. The assesses has made investment in National Highways Authority of India Capital Gain 54EC Bonds of Rs. 50,00,000/- on 12.9.2009 for claiming exemption under the provisions of the I.T.Act, whereas in the computation of income investment is shown to be in NABARD Bond of Rs. 50,00,000/- This aspect has not been examined by the Assessing Officer, Further in respect of investment of Rs. 25,00,000/- in SBI Capital gain exemption account, the assessee has not quoted specific section under which it was claimed. Therefore, the submission of the assessee that while drafting the assessment order A.O erred in typing the order whereby exemption claim u/s. 54 is shown as exemption u/s. 54F is unfounded. It is .apparent that there is error in the order of the Assessing Officer in presuming and then allowing exemption u/s 54F. The Assessing Officer also failed to enquire total investment which actually comes to Rs. 50,00,000 + 1,27,50,000 = 1,77,50,000/- against sale proceed of Rs. 92,02,625/-. The order of the Assessing Officer is not only erroneous but also prejudicial to the interest of r....
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....onclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 9. In the light of the above, let us examine facts of the present case. A perusal of the submissions made by the assessee as well as finding recorded by the ld.CIT, it appears that the ld.Commissioner did not appreciate the facts in right perspective. The first emphasis by the assessee was that she has not made claim under section 54F. It is an error committed by the AO. The ld.Commissioner ought to have examined this aspect on merit before setting aside the issue to the file of the AO. It is a just an apparent error which can be rectified even by the AO under sectio....