TaxTMI 
TaxTMI 
2021 (4) TMI 1000
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....the returned income of the assessee. The ld. Commissioner took cognizance of assessment record and formed an opinion that the assessment order is erroneous and prejudicial to the interest of the Revenue. Therefore, a show cause notice under section 263 of the Act was issued and served upon the assessee. Though the show cause notice has been reproduced in the impugned order passed under section 263, its copy is also available at page no. 76 to 78 of the paper book. We deem it appropriate to take note of this show cause notice, which reads as under: "On verification from the computation of income & other details submitted by you during the course of assessment proceedings, it is noticed that you have shown working of capital gains as under: Sale consideration of 28Flats: - Rs. 4,76,00,000/- Less:- Indexed cost Rs. 2,26,30,066/- Improvement Rs. 11,22,32s/- Rs. 2,37,52391/- Rs. 2,38,47,609/- Less:-Exempt U/s 54 Rs. 2,61,00,000/- Rs. 2,38,47,609/- Long term capital gains . Rs. Nil/- 2. On perusal of the case records, it is noticed that the Collector, B....
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.... the interest of revenue. 6. From the above, it is clear that the Assessing Officer has failed to carry out enquiries as warranted by the facts and circumstances of the case and assessment has been completed without examining all aspects which were required to be looked into for determining the total income of the assessee, It has been held in number of cases by the Hon'ble courts that unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, the Assessing Officer Is not only an adjudicator but also an investigator. He cannot remain passive on the face of a return, which is apparently in order but calls for further enquiry. It is his duty to establish the truth of the facts stated in the return of income when the circumstances of the case are such as to provoke enquiry. If there is failure to make such enquiry, the order is erroneous and prejudicial to the interest of revenue. In this regard references were made to the following cases: Gee Vee Enterprises Vs. Addl. CIT, 99 ITR 375 (DEL) Rampyari Devi Saraogi Vs. Commissioner of Income-tax, 67 ITR 84 (SC) Malbar Industrial Co. Ltd. Vs. CIT, (2000) ....
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....d for scrutiny assessment for the AY 2013-14. In response to the notice CA Chirag Shah and authorised representative attended and submitted requisite detail which is placed in the record. The Assessing officer consider the same and allowed the exemption claimed by assessee is valid. However, the proceedings u/s. 263 has been Initiated by your good office claiming that the order passed by the learned AOu/s 143(3) is erroneous and prejudicial to the interest of revenue and show cause notices issued. In view of above/your assessee has provided the following clarifications to prove the Issues raised in your above notice Is not valid and the assessment completed is correct and not erroneous as the order is passed after making proper enquiries & verification. 1. Claim of Improvement As per the notice issued to assessee In para 3 of notice for proceeding u/s. 263 your good office stated that, "the collector, baroda had given permission for conversion................................. the order is erroneous and prejudicial to the interest of revenue." In view of the same, we may mention that the cost of improvement/construction was Rs. 8,26,500. Out of co....
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....ined to learned AO that the building in scrap mode and only plinth was use able. Your assessee has used the same plinth to construct a fresh/new house and submitted all related documents which proves that a house is constructed on the said piece of land. Your assessee already submitted the copy of list of cost incurred alongwith the map, dastavej and capital gain savings account for the whole period from date of deposit up to the date of expenditures/payment to your good office in submission no. 5 dated 15.02.2016 as per Annexure 4, 5 & 6. Further, the copy of the same is also attached for your ready reference as per Annexure 2. The same was duly verified by him and found correct claim of cost of improvement and hence therefore the contention that the same was accepted without any verification is not correct and does not require any further verification etc. 3. Indexed cost of acquisition The notice stated that in para 5 that "you have claimed indexed cost of Rs. 2,26,30,066 and a valuation report in this......................................... adopted by you is excessive being regard to the instances of the sales in the vicinity of the impugned land. ....
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....th was use able. Your assessee has used the same plinth to construct a fresh/new house and submitted all related documents which proves that a house is constructed on the said piece of land. Your assessee a/ready submitted the copy of list of cost incurred along with the map, dastavej and capital gain savings account for the whole period from date of deposit up to the date of expenditures/payment. In addition to the same, we herewith submit the payment proof in form of Receipt of Contractor and Ledger copy as per books of accounts for your ready reference as per Annexure 1. The same was duly verified by him and found correct claim of cost of improvement and hence therefore the content/on that the same was accepted without any verification is not correct and does not require any further verification etc. We may further mention that the valuation of the property was done by Mr. Dhrumesh Shah, a government approved valuer with a registration no is F-21609. The same was submitted to your good office in our earlier above dated submission. Further, we may mention that we have already submitted copy of BanaKhat dated 7th February 1981 to learned AO in submission no. 5 Da....
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....here any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any co....
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.... was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot....
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....r exemption under section 54. Relevant submissions made in this letter read as under: In the Development agreement, on the page no. 3 it is clearly mentioned that Rs. 16,600 per sqr.mtr is given to land owner against the sale of flats. However, the calculation sheet is as under: Particulars Area of sqr.mtr. Remark Total land 3266.72 As per development agreement on page no.3 Less: Road cutting 89.60 Less: Common plot 317.70 Balance Area 2859.42 FSI 2.5 7148.55 (2859.42*2.5) Add;FSI-2.5for Road area 224 Total FSI 7372.55 Totalareafor72 flats Amount to be given to land owner 12,23,84,330 (i.e. Rs. 16600 per sq.mtr x 7372.55 sq.mtr) Amount given per flat 17,00,000 approx. (12,23,84,330/72 flats 5. The ld. Commissioner has assigned three reasons for branding the assessment as erroneous and prejudicial to the interest of the Revenue. As far as first issue regarding cost of improvement is concerned, we will take this reasoning at the end. First we take the second reasoning given by the ld. Commissioner. It is pertinent to note he....
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....e the value of land comes to Rs. 1,82,180/-. So the rate per sq.ft comes to 1,82,180/782 sq.ft = Rs. 232.96 The property is nucleolus zone, I consider the value 15% less. So, net value of land is derived at 232.96 -15% (34.94) = Rs. 198.01/sq.ft Hence I consider the fair value of Rs. 196/- per sq.ft in 1981 because this land is between two nucleus zone 1 & 2." 6. The registered valuer has made a reference to a sale instance, and thereafter worked out the value of the property as on 1.4.1981. Apart from this aspect, the copy of the agreement dated 7.2.1981 has been placed on record. By way of this agreement, the assessee and others have purchased the suit property from the seller viz. Maganbhai Gordhabhai Patel. In the Schedule-A attached with this agreement, the rate prescribed was Rs. 180/- per sq.feet. The assessee has placed on record true copy of translation of the alleged banakhat, and we take note of the relevant part from the schedule-A, which reads as under: "Schedule-A The land bearing survey no. 95 and 96 paiki, admeasuring 9287 sq.mts. is situated in Mouje Nagarvada, Vadodara City, Tal. Vadodara, District Vadodara,....
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....the year 1993-94. It was duly recognized in the return of income for Asstt. Year 2006-07. Without going into that controversy, it is to be appreciated how the assessee has made working of the capital gain, which is reproduced by the ld. CIT page no. 9, which reads as under: Sale consideration of 28 flats Rs. 4,76,00,000/- Less: Indexed cost Rs. 2,26,30,066/- Improvement Rs. 11,22,325/- Rs. 2,37,52,391/- Rs. 2,38,47,609/- Less: Exempt u/s.54 Rs. 2,61,00,000/- Rs. 2,38,47,609/- Long term capital gain Rs. NIL If a sum of Rs. 11,22,325/- is also added to the amount of Rs. 2,38,47,609/-, then also it is lesser than the exemption worked out by the assessee at Rs. 2.61 crores. In other words, even if this improvement cost disallowed to the assessee, then also she has more higher exempt amount under section 54 which can take care of this Rs. 11,22,325/-. Net result in that is that no capital gain tax will be required to be paid by her. Thus by disallowing this amount to the assessee will not ultimately effect on computation of capital gain because she is having higher amount available for exe....