TaxTMI 
TaxTMI 
2017 (1) TMI 1240
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....ncome of Rs. 3,61,630/-, consisting of income from business being remuneration from the partnership firm, income from long term capital gains and income from other sources. The assessment was completed u/s 143(3) of the Act on 31.12.2010 by accepting the total income returned by the assessee. 3. The CIT, Vijayawada issued a show cause notice dated 20.3.2013 and asked to explain why the assessment order passed by the A.O., u/s 143(3) of the Act, dated 31.12.2010 shall not be revised under the provisions of section 263 of the Act. The CIT, proposed to revise the assessment order for the reason that on examination of assessment records, it was noticed that the A.O. has completed the assessment without examining the allowability of exemption u/s 54F of the Act towards re-investment in purchase of residential property. The CIT further observed that on examination of assessment records, it was noticed that the assessee has sold a vacant site for a consideration of Rs. 52,15,000/- and declared nil capital gains after claiming exemption u/s 54F of the Act for Rs. 52,15,000/- towards re-investment of sale consideration for construction of another residential house. On verification of the....
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....r submitted that during the financial year 2008-09, the assessee had spent an amount of Rs. 52,15,000/- towards purchase of vacant site and construction of building. The sources for the purchase of site as well as construction of building in the name of his son have been completely paid out of sale proceeds of vacant site in his name. The assessee further submitted that he had no intention to purchase the house in the name of his son, because of that he had purchased the property by entering into a sale agreement-cum-GPA pending registration of the property. Finally, the property has been registered in the name of the assessee on 24.12.2010 for a consideration of Rs. 31,36,000/-. The consideration paid for purchase of site and construction of building was completely out of the sale proceeds of site in assessee's name and the assessee's son does not have any other source of income to explain the sources of income towards purchase of property. The A.O. has taken a conscious decision after thorough examination of the details and also applied his mind to the provisions of section 54F of the Act. Therefore, the assessment order passed by the A.O. cannot be considered as erroneous in so ....
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....der passed by the A.O. is cryptic and stereo typed. The A.O. never discussed anything about the allowability of exemption claimed u/s 54F of the Act. Therefore, the assessment order passed by the A.O., u/s 143(3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue. Hence, the assessment order passed by the A.O. has been set aside for re-doing the assessment de-novo with the directions as above after giving the assessee a reasonable opportunity of being heard. 6. The Ld. A.R. for the assessee, submitted that the Ld. Commissioner of Income Tax is not justified in invoking the provisions of section 263 of the Act, in as much order dated 31.12.2010 passed by the A.O. u/s 143(3) of the Act, is neither erroneous nor prejudicial to the interest of the revenue. The Ld. CIT is not justified in directing the A.O. to disallow exemption of Rs. 52,15,000/- claimed u/s 54F of the Act, that was claimed and allowed in assessment u/s 143(3) of the Act. The A.R. further submitted that the assessee has filed complete details of long term capital gain along with copies of sale deed and purchase deed of new property. The A.O. after examining the issue has completed ....
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....O. has issued a notice u/s 143(2) of the Act on 18.8.2010, wherein he had called for specific details about computation of long term capital gain as well as proof of investment u/s 54F of the Act. The assessee has filed all details in response to a notice and the A.O. after satisfied with the explanations furnished by the assessee, has accepted exemption claimed u/s 54F of the Act. Therefore, it cannot be held that the A.O. has not examined the issue or order passed by the A.O. is lack of enquiry. As regards, allowability of exemption u/s 54F of the Act, the assessee contended that it is not necessary to invest sale consideration in the name of the assessee. Even if investment is made in the name of his family members, then exemption u/s 54F of the Act can be claimed. We find force in the arguments of the assessee for the reason that on verification of the details filed by the assessee, we find that the A.O. has issued a specific questionnaire, calling for all details pertaining to computation of long term capital gain from sale of property and also proof of investment u/s 54F of the Act. The assessee vide his reply dated 27.12.2010 and 30.12.2010 had furnished complete details of ....
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.... the findings of the CIT, for the reason that for the purpose of claiming deduction u/s 54F of the Act, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. The only requirement is that the assessee needs to re-invest the sale consideration for purchase of new residential house property, within the due date specified u/s 54F of the Act. 11. In the present case on hand, on perusal of the details available on record, we find that the assessee has sold property for a consideration of Rs. 52,15,000/- on 7.6.2007. The assessee has purchased another residential vacant site for a consideration of Rs. 31,36,000/- in the name of his son by way of sale agreement-cum-GPA. The assessee also constructed a residential house on the said site by obtaining a plan approval from the municipal authorities. Subsequently, the said residential house has been transferred in the name of the assessee n 24.12.2010. Though the assessee failed to give any explanations for initially entering into agreement in the name of his son, the facts remain that the property has been finally registered in the name of ass....
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....to the interest of the revenue or vice versa. In some cases the order passed by the A.O. may be erroneous but it may not be prejudicial to the interest of the revenue or vice versa. Unless the order passed by the A.O. is erroneous and also prejudicial to the interest of the revenue, the CIT cannot assume jurisdiction to revise the assessment order, this is because the twin conditions i.e. the order is erroneous and the same is prejudicial to the interest of the revenue are co-exist. In the present case on hand, on perusal of the facts available on record, we find that the A.O. has conducted detailed enquiry and also examined the issue of exemption u/s 54F of the Act. The assessee has filed each and every details before the A.O. Once the assessee filed necessary details before the A.O., it is a general presumption that the A.O. has considered all the details before accepting the claim of the assessee. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) is not erroneous in so far as it is prejudicial to the interest of the revenue. 14. Now it is pertinent to discuss case law relied upon by the assessee. The assessee relied upon the decision of Hon....
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....t name of the assessee along with his son which means the son was also part owner of the land, therefore, the issue would stand covered by the decision of Hon'ble Punjab and Haryana High Court in case of CIT Vs. Gurnam Singh wherein Tribunal had recorded a pure finding of fact that the land in question was purchased out of the sale proceeds of the agricultural land which was used only for agricultural purposes and merely because the assessee's son was shown in the sale deed as co-owner, it did not make any difference. It was not the case of the Revenue that the land in question was exclusively used by his son. Therefore the assessee was entitled to deduction u/s 54B." 16. The assessee also relied upon the decision of ITAT, Visakhapatnam, in the case of Nutech Engineers Vs. CIT 570/Vizag/2013 dated 10.6.2016. The coordinate bench of this Tribunal, under similar circumstances held that once, the A.O. examined the issue on which the CIT wants further verification, the CIT cannot assume jurisdiction on the same issue which was already examined by the A.O. unless he proved that the A.O. failed to examine the issue and also applied his mind. The relevant portion of the order is reprod....
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....ng the course of assessment proceedings, in the case of Sh. A.Loka Satya Ratna Kumar, father of the assessee for the assessment year 2008-09, it has been noticed that the assessee has entered into an agreement-cum-GPA on 18.7.2007 with Shri Chalasani Krishna Rao vide document no.3166/2007 for purchase of land admeasuring 392 Sq.yds. and paid an amount of Rs. 31,36,000/-. Subsequently, the assessee had constructed a building consisting of ground, first and second floor with a total plinth area of 6496 sq.ft after obtaining necessary plan approvals from municipal authorities. Later on, the property was transferred to his father Shri A.L.S.R. Kumar on 24.12.2010 vide document no.4631/2010 for a consideration of Rs. 31,36,000/-, whereas, the market value adopted by the SRO for the purpose of payment of stamp duty was at Rs. 1,00,41,000/-. As the assessee has transferred long term capital asset during the financial year 2010-11, he is liable for payment of tax on long term capital gain arising out of this transaction. However, on verification of records, it is noticed that the assessee has not filed any return of income. In view of the above, the A.O. has reason to believe that the inco....
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....ereas the market value of the property as per the guidance value for the purpose of payment of stamp duty is at Rs. 1,00,41,000/-. Since, the assessee has transferred an immovable property, the assessee is liable to pay capital gain tax as per the provisions of section 50C of the Act, accordingly, computed capital gain by taking sale consideration of Rs. 1,00,41,000/-. In addition to capital gain, the A.O. made additions towards cost of construction of Rs. 35,73,000/- u/s 69 of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). The CIT(A), for the reasons recorded in her order dated 24.11.2014, confirmed the action of the A.O. in taxing capital gain in the hands of the assessee towards transfer of property to his father's name and also confirmed the additions made by the A.O. towards unexplained investment in construction of property. However, the CIT(A) has re-worked capital gain after allowing cost of construction of Rs. 35,73,000/-, as the same has been considered u/s 69 of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 22. The first issue that came up for our consideration is computation of capital ga....
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....f execution of sale deed, but property has been transferred to assessee's father name from the seller Shri Ch. K. Rao. As per the agreement of sale dated 7.6.2007 and sale deed dated 24.12.2010, the consideration paid for purchase of property is one and the same. As per the said documents, the consideration has been paid to the seller Shri Ch. K. Rao. There is no consideration passed between the assessee and his father. Though, the definition of transfer includes giving possession of immovable properties under part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882, as per provisions of section 53A, a particular transaction to be treated as transfer, there should be a consideration paid or to be paid. In the present case on hand, on perusal of the facts available on record, we find that there is no consideration passed on between the assessee and his father. The consideration has been paid for purchase of property to the seller of the property as per the original sale agreement dated 7.6.2007 has been directly paid by the assessee's father to the seller. Therefore, we are of the view that there is no transfer within the meaning of section 2(4....