TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 966
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....urisdiction u/s 263 to revise the assessment order which was subjected to appeal filed by assessee, and was fixed for hearing for 04.05.2016. During the course of hearing the assessee (appellant) expired on 30.04.2016 cremated on 01.05.2016 and Ld. AR has withdrawn his Power of Attorney due to death as well as the appeal.. 3. That the Ld. Pr. CIT has erred in acquiring jurisdiction u/s 263 on the basis mentioned in notice as - "The valuation of property as on 01.04.1981 has been adopted by the A.O. without considering the report of Valuation Officer, Meerut". The Ld. Pr. Commissioner has erred in invoking provision-of section 263, on the basis of Valuation Report of DVO, Meerut under section 55A of the Act, when no reference is made by assessing officer and the valuation report was not the part of records of assessment till the completion of assessment. 4. That the Ld Pr. CIT has erred in taking into consideration the valuation report, which was not referred by the assessing officer for valuation to Valuation Officer, Meerut under section 55A of the Act. No reference is placed on records of assessment. The assessment is completed on the basis of valuation report of Govt....
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....der this section and has exceeded the revisional jurisdiction in passing the impugned order." 3. Brief facts of the case shows that the assessee is an individual who sold jointly with four others an immovable property whose value as per stamp duty rate is Rs. 1.93 croes at Muzaffarnagar during the Financial Year 2008-09. Therefore, notice u/s 148 was issued on 18.03.2014. In response to which the assessee filed a return of income on 12.01.2015 declaring income of Rs. 12500/- only. As the assessment was reopened to determine the long term capital gain the ld AO made an addition of Rs. 136036/- as per working given by assessee to the total income of the assessee as chargeable to capital gains. As assessee has also claimed deduction of expenditure of Rs. 246000/- for improvement of the asset for which no details were produced, the ld AO did not allow 50% of such cost of improvement expenditure. The assessment was passed u/s 143(3) read with section 147 of the Act on 20.03.2015 determining total income of the assessee of Rs. 271536/-. Subsequently, the ld CIT u/s 263 of the Act issued notice to the assessee on 05.12.2016 holding that ld AO has accepted the unsubstantiated claim of th....
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.... fair market value. The provision of relevant to assessment year 2009-10 is referred as under- Reference to Valuation Officer. 55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer- (a) In a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value; of b) In any other case, if the Assessing Officer is of opinion- (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by mode than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. and where any such reference is made, the provisions of subsections (2), (3), (4), (5) and (6) of section I6A clauses (ha) and (i) of sub-section (I) and sub-section (3A) and (4) of section 23, sub-section (....
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....1981, determined by the Registered Valuer. 5. Thus, bv accepting the unsubstantiated, varying and disjointed claims of the assessee, failing to conduct detailed an legitimate inquiries, the AO utterly failed to conduct meaning full investigation essential to determine the total income of the assessee. Hence, when the AO has failed to take notice of all the relevant facts and has failed to examine the correctness or otherwise of the claims and assertions by the assessee, it is evident that he has failed to apply his mind and discharge his duty as an assessing officer during the scrutiny proceedings u/s 143(3)/147 of the Income Tax Act, 1961. Consequently, the assessment order, passed by the AO on 20.03.2015, is rendered erroneous in so far as it is prejudicial to the interest of the revenue. 5.1 It is beyond dispute that, under section 263, the Commissioner does have the power to set aside the assessment order and send the matter for a fresh assessment if he is satisfied that further enquiry is necessary, and that the order of the AO is prejudicial to the interest of the Revenue [Swarup Vegetable Products Industries Ltd. vs. CIT, (1991) 187 ITR 412, 415- In that case, in ex....
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....erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made arid not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 6. On the facts of the present case, it is evident that the AO accepted the version of the assessee without making any inquiry or verification, whereas it is a well settled law that mere failure to make inquiries makes an order erroneous. In order that the Commissioner may consider an order to be "erroneous" for the purposes of section 263, the error of law may not be apparent on the fact of the order. The Commissioner may consider an order of the AO to be erroneous not only if it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case [Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal vs. CIT, (1973), 88 ITR 323 (SC). 6.1. Reliance is also placed on the following case laws:- (i) Dugg....
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....1) alongwith a long questionnaire, requiring the assessee to showPage cause as to why capital gain be not taken as per provisions of section 50C of the income Tax Act. g) In compliance thereto, assessee contended that there was no capital gain. h) Thereafter, assessee filed the report from registered valuer valuing the property at Rs. 1.81 crores (1.69 crores towards land and Rs. 12,07,0171- towards improvement of land & construction of building). For arriving at the value of cost the registered valuer took the rate at Rs. 24,500/- sq mtr as specified in the circle rate. The said rate was prescribed as the rate for commercial property on GT Road by the relevant authorities. i) That during the proceeding, AO sent a letter to the Tehsildar of the Area for inquiring about the commercial rate of the property as on 01.04.1981. j) The Tehsildar of the area, vide his letter-dated 02.02.2015 informed that in the year 1981, circle rate of the commercial property was not determined. As per the rate list, the rate of the area was Rs. 100/- per sq yd however, as per the inquiry made from the neighbour, it was gathered that the commercial rate of the area was Rs. 2,000-Rs. 3,000/- p....
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....tice u/s 148 was issued. Infact, AO had made the detailed inquiry in r/o circle rate as on date of sale as well as cost as on 01.04.1981 and thereafter had arrived at a figure of capital gain. For determining fair market value as on 01.04.1981, AO had made inquiry from the area Tehsildar, who vide letter-dated 02.02.2015 had informed that the commercial rate of the area was not available, however on inquiry from the neighbours it was gathered that the commercial rate of the area was Rs. 2,000/- to Rs. 3,000/- per sq yd as on 01.04.1981. Thus after considering the details, the AO had framed tte assessment. f) The DVO in the case of co-owner, had taken the value of land as on 01.01.1981 at 100/- per sq yd and was adjusted at 140% per sq mtr. The Ld. Pr. CIT did not applied his mind that the value adopted by DVO did not suggest the commercial rate of the property. It was the rate of the residential area Mohalla Rampuri whereas the property of the assessee existed on GT Road. g) When the sale consideration is taken at Rs. 24,500/- per sq mtr which was commercial rate of the area then the cost is also to be taken at the commercial rate and that too of the proper area. Even in the ....
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....ourses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is unsustainable in law. m) That this is not the case where no inquiry had been made by the Assessing Officer. The grievance of the CIT u/s 263 of the Act is that no proper inquiry had been made by the Assessing Officer in respect of the issues stated in the notice. There is a distinction between lack of inquiry and inadequate inquiry. The former confer power on the CIT to invoke jurisdiction u/s 263 but not the later. n) That the Hon'ble Supreme Court in Malabar Industrial Company Ltd. vs CIT (243 ITR 83)(SC) have held that the Commissioner has to satisfy himself of both the conditions, order being erroneous and prejudicial to the interest of revenue. It is also held that the provisions cannot be invoked to correct each and every type of mistake or error committed by the AO, it is only when an order is erroneous that the section will be attracted. The phrase "....
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....k of inquiry on the part of Assessing Officer which confers jurisdiction on the CIT to assume jurisdiction u/s 263 of the Act. Following cases are relied upon : (2010) 320 ITR 674 (Del) CIT vs Ashish Rajpal Hon‟ble Jurisdictional High Court in this case have held that where the Assessing Officer during the scrutiny assessment proceeding raised a query which was answered by the assessee to the satisfaction of the Assessing Officer but the same was not reflected in the assessment order by him, a conclusion cannot be drawn by the Commissioner that no proper inquiry with respect to the issue was made by the Assessing Officer, and enable him to assume jurisdiction under section 263 of the Act. (2012) 343 ITR 329 (Del) Income Tax Officer vs D G Housing Projects Ltd Hon‟ble Jurisdictional High Court in this case, after considering various judgements on this subject have held that in cases whore tjagp Jj| inadequate inquiry but not lack of inquiry, the CIT must give and;^6ud.a / finding that the order / inquiry made is erroneous. In the cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, ....
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....ry or not, though Assessing Officer had applied his mind and accepted offer made by the assessee, section 263 would not be invoked by the Commissioner for initiating revision proceeding. r) Lack of discussion in the assessment order It is submitted that where the Assessing Officer had made a query which had been duly explained by the assessee to the satisfaction of Assessing Officer then no revision is permissible by the CIT on the ground that there is no discussion on the issue in the assessment order which lead to assumption that Assessing Officer did not apply his mind. (2013) 212 Taxmann 184 (Del), 1 ITR - OL 526 (Del) CIT vs Vodafone Essar South Ltd. Hon‟ble Jurisdictional High Court in this case have held that where Assessing Officer after detailed inquiry and considering amesms‟s disclosures, had allowed deduction, it is not a case of no inquiry: TTie (acfe of any discussion on the issue cannot lead to the assumption that the Assessing Officer did not apply his mind. Hence no revision is permissible under section 263 of the Act. 194 Taxmann 57 (Del) CIT vs Vikas Polymers (341 ITR 537) In this case also, the Jurisdictional High Court have held th....
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.... is satisfied after hearing the assessee that the orders are not erroneous and prejudicial to the interest of the revenue, he may choose not to exercise his power of revision. This is for the reason that if a query was raised during the course of scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer was reflected in the assessment order, that would not, by itself, lead to the conclusion that the order of the Assessing Officer is called for interference and revision. s) That these principles are again reiterated by the ITAT Delhi Bench in the case of Technic UK Ltd. vs DIT International Taxation in (2017) 81 Taxmann.com 311 (Del). ITAT have held that in the instant case, Assessing Officer, after considering the various submissions made by the assessee from time to time has taken a possible view, merely because the Director did not agree with the opinion of the Assessing Officer, he cannot invoke the provision of section 263 to substitute his own opinion. It has further been held in several decisions that when the Assessing Officer has made inquiry to his satisfaction and it is not a case of no inqu....
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.... Revenue. v) The order in the case of Smt. Sangeeta Jain v. PCIT, (ITA No. 3888/Del/2017 decided on 15.02.2018) is squarely applicable to the present case. In this case also the certificate from the Tehsildar was relied upon. The „G‟ Bench of this Hon‟ble Tribunal has quashed the order of CIT u/s 263 of the Act holding that certificate issued by the public officers are generally to ba believed by the other officers, unless there is some material which suggest that the certificate has been obtained under fraud etc. In the present case, the Ld. Pr. CIT has not made any inquiry by himself and has set aside the order passed by Ld. AO, merely on the ground that the AO had failed to examine the case properly on the issue for which the notice u/s 148 was issued and other issues also. It is not made clear as to what those other issues were. Such an order directing for making roving and fishing inquiries is not sustainable in law. Hence the order passed by Pr. CIT u/s 263 is liable to be set aside in the interest of justice." 7. The ld DR vehemently supported the order of the ld CIT and submitted when the assessment order is passed without adequate enquiry the ld C....
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....at Rs. 754747/-. Accordingly, the cost of acquisition as on 01.04.1981 was derived at Rs. 3238747/- which was indexed at Rs. 18849508/- resulting into the net capital gain of Rs. 544142/-. 25% thereof i.e. Rs. 136036/- was offered by the assessee as his share which was accepted by the ld AO. The ld Assessing Officer made addition of Rs. 123000/- as per para No. 5 of his order in a casual manner. The ld CIT noted that AO has accepted the valuation of the property as on 01.04.1981 without considering the report of the DVO. The ld AO relied upon the valuation given by the Tehsildar for the circle rate. Such certificate is available at Page No. 83 to 87 of the paper book. In fact the ld CIT has noted that ld AO should have used the valuation report of District Valuation Officer for arriving at fair market value as at 01.04.1981. We are afraid that ld AO could have done that legally u/s 55A of the Act. The reference to the department valuer can only be made if the AO was of the opinion that valuation shown by the assessee is less than fair market value. The amendment in Section 55A(a) replacing "is less than its fair market value" with " as at variance with its fair market value" is by ....