TaxTMI 
TaxTMI 
2018 (7) TMI 1865
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....isions of Section 50C there will be capital gains, accordingly, issued a notice u/s. 148 of the Act. In the course of assessment proceedings, assessee has submitted that the property was disputed and that there was litigation in the court of Second Additional Chief Judge, City Civil Court, Hyderabad for the reason that transferee, M/s. CSK Realtors, failed to honour half of the sale consideration agreed upon as per the sale deed and the case was finally settled vide order dt. 21-09-2013 by the Lok Adalat by ratifying the sale deed and sale consideration was awarded at Rs. 1,40,50,000/- instead of Rs. 1,50,00,000/-. It was submitted that the title of the property issue was disputed before the Hon'ble Supreme Court as the title of original owners was under dispute. It was further submitted that since the document-in-question was subject matter of litigation, the capital gains does not arise in AY. 2009-10 and if at all it can be considered in AY. 2014-15 as there was settlement between the parties by virtue of the order of the Lok Adalat. AO seems to have accepted assessee's contentions and in the assessment order completed u/s 143(3) rws 147, did not bring any capital gains to t....
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....ute between the parties and assessee has entered into purchase of property from Smt. G. Pramila Devi and others. Even in the purchase document, there was mention of disputed title and the sale deed also carried the same. Referring to the sale deed, it was the submission that the original vendors are Smt. G. Pramila Devi and group whereas assessee and Shri L. Ravinder Reddy are parties as 'agreement holders' and the recitals clearly state that the property is purchased with a dispute and ultimately Ld. Counsel referred to the orders of the Second Additional Chief Judge, City Civil Court, Hyderabad and Lok Adalat orders to submit that capital gain did not arise in the impugned year. It was also submitted that ultimately the Hon'ble Supreme Court has held that original owner Smt. G. Pramila Devi did not have any title to the property, therefore, the entire transaction-in-question is disputed which may have to be cancelled. 4.1. Coming to the provisions of Section 263, it was submitted that explanation (2) introduced by the Finance Act, 2015 w.e.f. 01-06-2015 clearly states that the order is to be deemed to be erroneous if the order is passed without making any enqiry or verific....
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....e issue. The Hon'ble Jurisdictional High Court in the case of Spectra Shares & Scrips Pvt Ltd., Vs. CIT [354 ITR 35 (AP)] has held that if a query was raised during the course of scrutiny by AO, it was answered to the satisfaction of AO, but neither query nor the answer was reflected in the assessment order, this would not by itself lead to the conclusion that the order of AO called for interference and revision. 6.2. Vide the Finance Act, 2015, the explanation-(2) was introduced w.e.f. 01-06-2015, which is as under: "Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accord....
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....ere the AO has not conducted any enquiry or examined any evidence whatsoever ("lack of inquiry") from one (i) where there is enquiry but the findings are erroneous, and (ii) where there.is failure to make proper or full verification or enquiry ("inadequate inquiry"). The fact that the assessment order does not give any reasons for allowing the claim is not by itself indicative of the fact that the AO has not applied his mind on the issue. All the circumstances have to be seen. A case of lack of enquiry would by itself render the order being erroneous and prejudicial to the interest of, the Revenue. In a case where there is inquiry by the AO, even if inadequate, the CIT would not be entitled to revise u/s 263 on the ground that he has a different opinion in the matter. Also, in a case where the AO has formed a wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry before passing the s. 263 order. The CIT is entitled to collect new material to show how the order of the AO is erroneous. The CIT cannot remand the matter to the AO for further enquiries or to decide whether the findings rec....
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....ews of taxability in the impugned year over the view of the AO, who accepted that it is not taxable in the impugned assessment year. Thus, the CIT was not justified in law in holding that the impugned order is erroneous. 11. In the case of Spectra Shares & Scrips Pvt Ltd., Vs. CIT [354 ITR 35] (AP), Hon'ble jurisdictional High Court has held as follows: "If there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders u/s 263 merely because he has a different opinion in the matter. It is only in cases of lack of inquiry that such a course of action would be open. An assessment order made by the Income Tax Officer cannot branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. There must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than was just, has been imposed. The power of the Commissioner u/s 263(1) is not limited only to the material which was available before the AO and in o....