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2020 (6) TMI 430
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..... That in the facts and circumstances of the case, the Ld. Pr. CIT, Central-1, Kolkata has erred in passing order u/s 263 of the Act and initiating proceedings u/s 263 of the Act and subsequently setting aside the order passed by D.C.I.T Central Circle(4), Kolkata u/s 153A/143(3) of the Act for examining the allowability of deduction u/s 54F of the Act, when there was no scope for making any disallowance by the Assessing Officer in the order passed by him u/s 153A/143(3) of the Act, since no incriminating documents whatsoever was found during search operations u/s 132 of the Act on the appellant. The action taken by the Ld. Pr. CIT, Central-1, Kolkata is ab-initio-void and accordingly order u/s 263 of the Act is liable to be quashed. 2. Without prejudice to the above, that in the facts and circumstances of the case, the Ld. Pr. CIT, Central-1, Kolkata has erred in passing order u/s 263 of the Act and subsequently setting aside the order passed by D.C.I.T Central Circle-(4), Kolkata u/s 153A/143(3) of the Act for examining the allowability of deduction u/s 54F of the Act, when the issue of allowability of deduction u/s section 54F was already examined by the Ld. Assessing O....
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....s made within one year before the date of sale of original asset and house property, therefore,AO allowed deduction u/s.54F and section 54 of the Act respectively. 6. However, ld PCIT, on further examination of record, noticed that the assessee had taken Home Loan from ICICI Home Finance Ltd. in May 2004 to book a fiat to be constructed by Sahara Grace at Gurgaon and paid installments from F.Y.2003-04 onwards till March 2010. Thus, it is clear that the assessee booked the flat which was going to be constructed by the builder i.e., Sahara grace in F.Y.2003-04. Therefore, claim of the assessee made before the AO for purchase of flat has been found to be a case of construction of flat and not purchase as per judicial decisions overwhelmingly held in this regard viz. In case of Farida A Dungerpurwala -vs- ITO(2014) 35 ITR 205 (Mumbai Trib.) and ACIT -vs- Sagar Nitin Parikh (Mumbai Trib. Vide ITA No.6399/Mum/2011 dated 03.06.2017, it has been held that the booking of a flat which is going to be constructed by a builder has to be considered as a case of "Construction of Flat" and deduction u/s.54F and 54 is available only if the assessee constructs a new house within three years after....
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.... a period of one year before or two years after the date on which transfer took place (of old house property or original asset) or as the case may be (ii) the new house should have been constructed within a period of three years after the date on which transfer took place (of old house property or original asset as the case may be). Considering the above two conditions provided in the provisions of section 54 and 54F, the first thing the AO should have decided is whether booking of new flat made with Sahara Grace, Gurgaon in F.Y.2003-04 was for construction or for purchase of flat already constructed. In this regard, no written query raised by the AO is found on record. The submission of the assessee dated 22/12/2016 filed during assessment proceeding on which the Id. AR has relied upon to put his argument that the issue of eligibility u/s.54/54F has been examined by the AO while passing the assessment order, is reproduced as under: "Details of Long Term Capital Gain along with supporting documents are enclosed herewith and marked as per Annexure-C. The sale of shares of Shree Ram Electrocast Private Limited was made on 27/02/2010 and the payment was rece....
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.... above has been clarified by the CBDT in Circular No.672 dated 16/12/1993. In this Circular, it has been clarified that acquisition of flat through allotment by DDA was to be treated as construction of flat would apply to cooperative societies and other institutions. The most, important point of consideration is whether purchase of flat from the private builders would fall in the categories of "Other Institutions" as has been held by various courts in following judgments as cited and relied upon the assessee as under: i) Kishor H. Galaiya vs. Income Tax Officer, Ward-8(2)(3) [2002] 24 com 11 (Mumbai) ii) Assistant Commissioner of Income Tax, Circle-25(3) Smt. Sunder Kaur Sujan Singh Gadh [2005] 3 SOT206 (Mumbai) iii) Sri Ved Prakash Rakhra vs. Assistant Commissioner of Income tax, Circle-6(1), Bangalore (ITAT) iv) Mrs. Jyoti Arun Kothari VITO, (TS-737-ITAT-2014(Mum) v) CIT V Smt. Brinda Kumari (2001) 114 Taxmann 266(Del.) vi) CIT v Kuldeep Singh (2014) 49 Taxmann.com 167 (Del.) vii) Farida A Dungurpurwala v ITO (2014) 52 Taxmann.com 227 (Mum. Tribunal) In the above cases, the competent courts have held that the....
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....nstruction" or by way of "purchase" after taking into account the judgements and the CBDT's Circular No.471 dated 15.10.1986 and 672 dated 16.12.1993 discussed in the previous paras of this order and accordingly, decide about allowing or disallowing the deduction u/s.54 and 54F of the Act, keeping in view of my findings discussed in this order also. Thereafter, a fresh assessment order is to be passed by the Assessing Officer in speaking manner discussing entire facts and circumstances of the case along with the explanation of the assessee and his decision on allowing or disallowing the deduction u/s 54 or 54F. 6. In view of my above decision, the assessment order passed u/s 153A / 143(3) dated 30/12/2016 for A.Y. 2010-11 is set aside and restored to the file of the Assessing Officer to the extent of examining the allowability of deduction u/s 54 and 54F keeping in view the directions given by me in previous para and then pass a fresh assessment order. Other additions made in original assessment order dated 30.12.2016 shall remain intact." 9. We have heard ld DR for the Revenue and carefully gone through the submission put forth on behalf of the assessee along with ....
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....ot agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue "unless the view taken by the Assessing Officer is unsustainable in law". 10. Taking note of the aforesaid dictum of law laid down by the Hon'ble Apex Court, let us examine whether assessment order passed by AO u/s 153A/143(3) of the Act dated 30.12.2016 is erroneous in so far as it is prejudicial to the interest of revenue. We note that during the revision proceedings under section 263 of the Act, the assessee submitted written submissions before the ld PCIT ( vide para 4 of Ld PCIT`s order at page 4) stating that " issue of eligibility of exemption under section 54/54F has been examined by assessing officer while passing assessment order (refer page 10-17 of paper book)". Therefore, it is abundantly clear that during the original assessment the issue relating to exemption under section 54/54F of the Act have been examined by assessing officer. It is important to note that in assessee`s case the search and seizure action has been conducted on 05.03.2015 whereas the assessment year under consideration is A.Y. 2010-11, which is abated assessment. We note that no incriminating materials....
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....3A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the LD AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the LD AO. (vii) Completed assessments can be interfered with by the L....
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....ny right in the flat under construction, it cannot be said that the assessee has acquired any flat by way of 'Purchase or "Construction. Therefore, the AO has wrongly allowed deduction u/s 54 & 54F, only on the basis of purchase of right in a flat under construction. From examination of record of AY 2014-15, it has been found that this right has been sold by the assessee in September, 2013. Therefore, I found that prima facie deduction u/s 54 & 54E, was wrongly allowed by AO without examining the detail of nature of acquisition made by the assessee of a flat from Bengal Unitech. Considering the above facts and circumstances of the case, as discussed above and taking Into account the fact that no submission has been made by the assessee against my notice u/s 263, I set aside the assessment order passed by the AO u/s 143(3)/153A dated 30/12/2016 and restore it to the file of the AO to the extent of examining the issue relating to allowing deduction to assessee u/s 54 & 54F after examining the nature of right purchased by assessee in a flat under construction at Uniworld City Horizon in New Town Kolkata being built whether it is within the time period given in the provisi....
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....ating material found/seized. It emerges from the case records that the assessee had claimed the impugned section 54 and 54F deduction relief at the first instance in former assessment. This issue nowhere formed subject matter of deduction in the latter assessment therefore. We conclude in these facts that since the Assessing Officer could not have even taken up the assessee's above deduction claim during latter assessment, the PCIT has erred in law and on facts in terming the same as erroneous causing prejudice to interest of the Revenue. We therefore restore the Assessing Officer's regular assessment dated 25/30.12.16 and reverse the PCIT's revision directions under challenge." 13. We also note that the Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon'ble Supreme Court in Malabar Industries Ltd. vs. CIT (supra). Since the order of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrate....