TaxTMI 
TaxTMI 
2019 (10) TMI 445
X X X X Extracts X X X X
X X X X Extracts X X X X
.... return of income. In response to the notice under section 148 issued by the assessing officer on 13th March 2015, the assessee submitted that original return filed by him may be treated as one filed in response to notice under section 148 of the Income Tax Act. The said income tax return was filed showing the income of Rs. 1,25,880/-, in respect of which, tax was paid. The assessing officer completed the reassessment proceedings under section 148/143(3) accepting the return of income of the assessee. The Ld. Pr. CIT on perusal of the assessment record and relevant material on record found certain apparent discrepancies and errors. Accordingly, show cause notice under section 263 of the Income-Tax Act was issued to the assessee on 12th December, 2017 as follows : "2. A perusal of assessment record for the A.Y. 2008- 09 reveals that the assessee, in this case, along with other co-owners had sold land of Rs. 2,44,31,875/-, out of which his share amounted to Rs. 2,26,88,125/-. Long term capital gain of Rs. 1,86,89,931/- was earned by the assesses on the said sale of land. Deduction u/s. 54B of the Act was claimed by the assessee in respect of investment made for purchase of l....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7. In view of the above, it is clear that the AO has passed the order dated 02.03.2016 for the A.Y. 2008-09 without conducting appropriate enquiries. The order thus appears to be erroneous in so far as it is prejudicial to the interest of revenue in terms of section 263(1) of the Income Tax Act 1961. The assessee is accordingly required to show cause as to why the action should not be taken in his case in terms of section 263(1) of the Act. 8. The assessee is requested to furnish his reply along with the supporting documentary evidences, if any, on the above issues, and to attend this office located at First floor, Aayakar Bhawan, Sector-12, Kamal on 22.12.2017 at 12:00 Noon, personally/through his authorized representative." 3.1. In response to the aforesaid notice, the assessee filed written submissions which is reproduced in the impugned order and reads as under : "Reference to your above mentioned notice, it is submitted as under:- 1) That the assessee, along with his wife Smt. Sunita Devi, sold agricultural land measuring 7 Acre 7 Karnal and I Marla at-village Uchana Distt Karnalin the F.Y 2006-07 for Rs. 2,44,31,075/- which was registered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng on sale of agricultural land for purchase of another agricultural land and it is not material in whose name the land is Registered. The assessee gets support from decisions of various courts quoted as under :- (a) Hon'ble Punjab & Haryana High Court 327 ITR 278 in the case of CIT Ludhiana Vs Curnam Singh. (b) Hon'ble High Court of Delhi 214 Taxman 287 in the case of CIT XII vs Kamal Wahal (c) Hon'ble High Court of Delhi 342 ITR 38 in the case of CIT Vs Ravinder Kumar Arora. (d) Hon'ble ITAT Amritsar Bench ITA No 21 (Asr) / 2015 in the case of Dy CIT Vs Jit Singh. In all the above mentioned cases the Hon'ble Courts have held that the purpose of the section 54, 54B, 54EC and 54F are to ensure that the investment is made in the specified assets and it is not material in whose name the land is registered. (vi) That there is no dispute that the land was actually purchased out of the sale consideration of the agricultural land sold by the assessee and that the same is being used for agriculture purpose by the assessee only. (vii) That as per section 64(1) of the Income Tax Act 196!, even the capital gain on sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sale of land. 29/12/2006 2500000 Cash out of withdrawal from bank account 06/01/2007 10000000 Account payees cheque no 311176 through Sh Randhir Singh (Co-buyer of the land) 06/01/2007 2500000 Account payees cheque no 311177 through Sh Randhir Singh (Co-buyer of the land) 06/01/2007 1770000/- Cash out of withdrawal from bank account 06/01/2007 729650/- Stamp duty paid in cash out of withdrawal from Bank account. TOTAL 18970650 It is further submitted that the assessee has not made any payment in cash to Sh. Randhir Singh. Cash of Rs. 5741000/- was paid directly to the seller of the land and the fact has been confirmed in the sale deed itself wherein it is mentioned that Rs. 2,03,00,000/- out of the total sale consideration of Rs. 3,64,82,000/- was received through cheque and balance in cash. In view of the above submissions, it is most humbly prayed that the proceedings initiated u/s. 263 may kindly be dropped and oblige." 3.1. Through the supplementary written submissions dated 12.02.2018, the assessee stated as follows: - "In continuation to my earlier submissions and further informa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessment order was found to be erroneous insofar as it is prejudicial to the interests of Revenue. The reassessment order was set aside with a direction to the assessing officer to make the assessment afresh as per Law, by giving reasonable, sufficient opportunity of being heard to the assessee. 4. The Learned Counsel for the Assessee reiterated the submissions made before the Ld. Pr. CIT and he has submitted that assessee filed original return of income under Section 139(1) on 27th June, 2008. Notice under section 148 have been issued thereafter on 13th March, 2015 and reassessment order have been passed on 2nd March, 2016 accepting the returned income. PB-27 is audit objection dated 17th August, 2016 which led to the exercise of power by the Ld. Pr. CIT for revision under section 263 of the Income Tax Act. The replies of the assessee are filed in the paper book. The Learned Counsel for the Assessee submitted that revisional jurisdiction should not be exercised merely on an audit objection and relied upon Judgment of the jurisdictional Punjab and Haryana High Court in the case of CIT vs., Sohana Woollen Mills [2008] 296 ITR 238 (P&H). He has submitted that on the date of fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 335 (P&H) (iii) CIT vs., Dinesh Verma [2015] 233 Taxman 409 (P&H) 5.1. The Ld. D.R. in his written submissions also relied upon Judgment of Hon'ble Supreme Court in the case of Deniel Merchants Pvt., Ltd., vs., ITO, Dated 29th November, 2017 (Appeal No.2396/2017); Malabar Industrial Co. Ltd., vs. CIT [2000] 243 ITR 83 (SC) and Rajmandir Estates (P.) Ltd., vs. PCIT [2017] 245 Taxman 127 (SC) on the proposition that when assessing officer did not make proper enquiry and accepted the returned income, the order have been rightly set aside by the Commissioner. 6. We have considered the rival submissions and perused the material available on record. The Ld. Pr. CIT in the show cause notice referred to the decision of the Hon'ble Punjab and Haryana High Court in the case of Jai Narayan vs. ITO (supra), which is dated 13th August, 2007 in which was held as under : "Held, dismissing the appeal, that the assessee having purchased agricultural land in the name of his son or grandson could not be held entitled for exemption under section 54B of the Act." 6.1. The Learned Counsel for the Assessee, however, relied upon later decision of the Hon'ble Punjab and Haryana ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relied upon Judgment of the Hon'ble Delhi High Court in the case of CIT-XII vs., Kamal Wahal [2013] 351 ITR 4 (Del.) in which it was held as under : "For claiming deduction of capital gains under section 54F, new residential house need not be purchased by assessee in his own name." 6.4. It is not in dispute that the assessee filed original return of income under Section 139(1) on 27th June, 2008 for the A.Y. 2008 2009 under appeal. The Judgment of the Hon'ble jurisdictional Punjab and Haryana High Court in the case of Gurnam Singh (supra), Dated 1st April 2008 was squarely applicable in favour of the assessee. There were no other decision referred to against the assessee. Therefore, the assessee in the original return of income has correctly claimed exemption under section 54B as per Judgment of the Hon'ble jurisdictional Punjab and Haryana High Court in the case of Gurnam Singh (supra), whereby assessee was permitted to make investment on account of capital gains in the name of his wife. It may also be noted here that the property sold was joint property of assessee and his wife. Therefore, there were no illegality in the action of the assessee in making investment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and and the possession was handed over to the buyer. The assessee also pleaded that the sale deed could not be registered due to some technical reason, otherwise, the transaction of sale of land was complete in December 2006 when whole of the consideration was received and possession handover. Copy of the sale deed specifying the Cheque No. and amount, for which, the sale consideration was paid and bank statement of the assessee, showing the receipt of the same were also filed on record, which have not been disputed by the Ld. Pr. CIT. Therefore, these facts clearly show that assessee made investment out of the sale proceeds of the agricultural land which were received prior to purchasing the new agricultural land. The Ld. Pr. CIT, however, referred to the Judgment of the Hon'ble Punjab and Haryana High Court in the case of CIT vs., Dinesh Verma (supra), Dated 6th July, 2015, which was subsequent decision after the filing of the original return of income as well as initiation of the reassessment proceedings under section 148 of the Income Tax Act. Therefore, it would not be applicable to the case of the assessee. It may also be noted here that when there were several decisions of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent in the name of his wife and issue was covered in favour of the assessee on the day of filing of the return of income and initiation of reassessment proceedings by Judgment of the Hon'ble jurisdictional High Court in the case of Gurnam Singh (supra), therefore, if the assessing officer has not mentioned the details in the reassessment order, it would not be fatal to the case of the assessee. The above legal proposition is also supported by Judgment of the Hon'ble Delhi High Court reproduced above. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd., vs., CIT 243 ITR 83 (SC) held as under : ".......Every loss of revenue as a consequence of an order of the A.O. cannot be treated as prejudicial to the interests of Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of Revenue unless the view taken by the Income-tax Officer is unsustainable in law." 6.5. Since, in this case, assessi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n account of goodwill. The Income-tax Officer accepted the return filed by the assessee. The Commissioner initiated revision proceedings on the basis of an audit objection. The Tribunal set aside the order of revision. On a reference : Held, that the Tribunal had held that the assessee had disclosed that out of sale consideration, a sum of Rs. 1 lakh was to be received for sale of permit. If that was so, there was no error in the view taken by the Assessing Officer and no case was made out for invoking jurisdiction under section 263." 6.7. Since in this case revisional proceedings have been initiated on mere audit objection and that a different view have been taken by the Ld. Pr. CIT as against the Judgment of the Hon'ble jurisdictional Punjab and Haryana High Court in the case of Gurnam Singh (supra), therefore, it would not be enough to say that the reassessment order was erroneous or prejudicial to the interests of the revenue. The contention of the Ld. D.R. is, therefore, have no merit that the assessing officer has not examined this case and that the Order was erroneous insofar as prejudicial to the interests of revenue. 6.8. The Ld. D.R. al....