TaxTMI 
TaxTMI 
2019 (6) TMI 431
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....e. 2. Ld. Pr. CIT failed to appreciate that: i. both the pre-requisites i.e. (a) the assessment order being erroneous and (b) the assessment order being prejudicial to the interest of the revenue, are not satisfied in the facts of the present case; ii. the amendment in section 54 by Finance (No. 2) Act, 2014 limiting the exemption to one residential house was effective only from April 1, 2015 relevant to Assessment Year 15- 16; iii. The AO has made adequate enquiries on issues in respect of which impugned order has been passed and the plans as well as layouts were part of the Agreements which were submitted to the AO; iv. In any case, mere inadequate enquiry is not a sufficient ground for revision u/s. 263 of the Act; and v. where the view of the AO is a possible view, revision u/s. 263 is bad in law. 3. The Appellant prays that it be held that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of revenue and accordingly the action of the ld. Pr. CIT of invoking provisions of section 263 of the Act and directing the AO to verify and examine the facts of the case and to pass a fres....
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....ng resident individual was assessed for impugned AY in scrutiny assessment u/s 143(3) on 02/02/2016 accepting the returned income of Rs. 50.21 Lacs e-filed by the assessee on 28/09/2013. 2.2 Subsequently, this order was subjected to revisional jurisdiction u/s 263 by Ld. Pr.CIT vide show-cause notice dated 12/09/2017, the relevant extract of which is as under: - 2. The assessment in your case has been completed u/s. 143(3) of the I.T. Act, 1961 on 02.02.2016, accepting the returned income at Rs. 50,21,020/-. 3. On perusal of records, the following issues are noticed in the aforesaid order u/s. 143(3) of the Income Tax Act, 1961 dated 02.02.2016. 3.1 It is seen from the records that you have sold two flats Nos. 501 & 502 in Sun Palm View Bldg, Sanpada on 18/10/2012 & 16/10/2012 respectively for sale consideration of Rs. 1,12,50,000/- each. Whereas you have sold Flat No.501 and purchased two flats 401 & 402 in Monarch Imperial, Kalamboli amounting to Rs. 40 lacs each. Against the sale of Flat No.502 you have purchased two more flats 302 & 303, Monarch Imperial, Kalamboli amounting to Rs. 28 lacs plus Rs. 5 lacs (additional amenities) each. It is observed....
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....e conditions were satisfied. In the above background, it was submitted that deduction was permissible under law and the decision of Ld. AO was in line with binding judicial precedents and therefore no revision was warranted. The submissions were also made that the twin conditions to invoke Section 263 viz. erroneous as well as prejudicial to the interest of the revenue were not fulfilled in the present case. Reliance was placed on the decision of Hon'ble Bombay High Court rendered in CIT Vs Gabriel India Ltd. [203 ITR 108]. The submissions were also made that Ld. AO had already applied his mind on the stated issue by asking and scrutinizing various details and accepted assessee's claim with due application of mind. 2.5 However, not satisfied with assessee's submissions, the order was set aside after making following observations: - 6. The submission of the assessee is duly considered and found not tenable. The Assessing Officer has not examined whether the new Residential Flats purchased by the assessee are 2 separate independent units & sold to the assessee by the developer by separate agreement. The AO should have examined the Sanctioned approved Building ....
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....roperty purchased to claim exemption u/s 54 on account of purchase of Flat Nos. 302 & 303 and Flat Nos 401 & 402 was also provided to Ld. AO. Along with the same, the copies of sale deeds as well as purchase deeds executed by the assessee were submitted in support of the computations. It is observed that the properties have been sold as well as acquired by the assessee by way of separate deeds. The Ld.AO, after appreciating the same, accepted the claim made by the assessee. 4.3 The perusal of these submissions and documents would establish that specific queries were raised by Ld.AO regarding assessee's eligibility to claim exemption u/s 54 and the documents / information were duly supplied by the assessee. Therefore, we form an opinion that Ld. AO with due application of mind, after making requisite inquiries, accepted assessee's claim. This being so, the action of Ld. Pr.CIT could not be justified. Nothing on record would suggest that the action of Ld.AO was not in conformity with statutory provisions or not in line with the binding judicial precedents prevailing at the time of framing assessment u/s 143(3). As per extant provisions of Section 54 of the Act as interpreted by va....
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....lowing the claims have attained finality. We have minutely perused the assessment order. The claims for deductions were made by the assessee at least under 20 heads and queries were made in the notice under Section 142 (1) of the Act to the assessee in respect of nearly all of them. We, however, find from the assessment order that the Assessing Officer has dealt with nearly nine claims of deductions. These claims have been specifically mentioned in the assessment order and they have been discussed therein because the Assessing Officer appears to have disallowed those claims either partially or totally. In respect of the claim for the Corporate Social Responsibility and some other claims that were allowed by the Assessing Officer, the Assessing Officer has not made a specific reference in the assessment order. It is apparent from the assessment order that the Assessing Officer has expressed in detail about the claims that were disallowable. Where the claims were allowable, as we find from the reading of the assessment order, the Assessing Officer has not referred to those claims. The Corporate Social Responsibility claim is one of them. It is apparent from the notice under Section 1....
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....the claim in respect of the Corporate Social Responsibility, the Assessing Officer had passed the assessment order without making any enquiry in respect of the allowability of the claim of Corporate Social Responsibility. In our view, the provisions of Section 263 of the Act could not have been invoked by the Commissioner of Income Tax in the circumstances of this case. The Tribunal was not justified in holding that the query under Section 142 (1) of the Act was very general in nature and the reply of the assessee was also very general in nature. In our considered view, the query pertaining to Corporate Social Responsibility was exhaustively answered and the appellant - assessee had provided the data pertaining to the expenditure under each head of the claim in respect of Corporate Social Responsibility, in detail. The Tribunal was not justified in holding that the reply/explanation of the assessee was not elaborate enough to decide whether the expenditure claim was admissible under the provisions of the Income Tax Act. The Assessing Officer is not expected to raise more queries, if the Assessing Officer is satisfied about the admissibility of claim on the basis of the material and....
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....ot in accordance with law or an order which has been passed without making an enquiry in undue haste. Similarly, an order cannot be said to be prejudicial to the interests of the Revenue, if it is not in accordance with law in consequence whereof, the lawful revenue due to the Government has not been realised or cannot be realised. The judgment of the Division Bench has been followed by the Delhi High Court in CIT v. Vikas Polymers [2010] 194 Taxman 57 . 11. Now, it must be noted that subsequent to the judgment of the Division Bench of this Court in Gabriel India Ltd. (supra), the provisions of Section 263 were interpreted by the Supreme Court in the decision in Malabar Industrial Co. Ltd. (supra). In the case before the Supreme Court, the assessee had entered into an agreement for sale of a plantation. The purchaser not having adhered to the Schedule prescribed for payment by instalments, parties agreed to the extension of time on condition of payment of compensation/damages. In the return filed by the assessee, the amount was noted as compensation and damages for loss of agricultural income. The Assessing Officer accepted this and endorsed a nil assessment for the assess....
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....exercise of jurisdiction under Section 263 and it is only when an order is erroneous that the section would be attracted. The Supreme Court held that "an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous." In the same category, according to the Supreme Court, would fall orders "passed without applying the principles of natural justice or without application of mind". Consequently, in view of the affirmative principle of law laid down by the Supreme Court, the exercise of the jurisdiction under Section 263 cannot be confined only to those cases where it can be held that the order of the Assessing Officer is not in accordance with law in the restricted sense in which that expression has been used in Gabriel India Ltd. (supra). As regards the order being prejudicial to the interests of the Revenue, the judgment in Malabar Industrial Co. Ltd. (supra) adverts to the decisions of the Karnataka and Gujarat High Courts and of the view of the Division Bench in Gabriel India Ltd. (supra), according to which, a loss of tax has been regarded as prejudicial to the interests of the Revenue. The Supreme Court has held that i....