TaxTMI 
TaxTMI 
2021 (5) TMI 387
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....in the circumstances of the case and in law the Ld. Pr. CIT erred in setting aside the assessment order as passed by the Ld. AO just to re-verify to the plots relating to the calculation of Income from capital gain on sale of plots and examine which has already been verified... the course of original assessment .... after full application of mind. The order so passed by the Pr. CIT by invoking the provision of section 263 of the Act is therefore illegal and bad in law, the said order requires to be quashed. 3. That on the facts and in the circumstances of the case in the present case the Ld. Pr. CIT erred in setting aside the original assessment passed by the Ld. AO and invoking the provision of section 263 of the Act for examination of issue related to the Capital gain on sale of plot and deduction as claimed by the assessee u/s 54F without properly appreciating the facts of the case and submission made before him. The order as passed by the Ld. Pr. CIT requires to be quashed. 4. The assessee reserve its right to add, alter, modify or amend the grounds of appeal as and when required. 2. Brief facts of the case as culled out from the records are that the assess....
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....orded by the Pr. CIT are listed as under: 1 Guideline value at the time of sales was of Rs. 1,30,20,000/- whereas the appellant has offered the same at Rs. 97,65,000/- 2 FDR's as prepared for Rs. 46,13,000/- was on account of capital gain scheme or not was not examined by the assessing officer 3 Deduction as claimed for construction of House was not correct for Rs. 43,31,991/-. 6. The relevant portion of the show cause notice issued u/s 263 of the Act is reproduced as under- 4.12Two main issues to be examined under limited scrutiny were difference in consideration property sold and large deduction claimed against capital gain income. On perusal 0/ assessment records it is seen that you had entered into an agreement to sale (presented on 3013/~012) a plot of land with M/s Daksha Homes Private Limited (hereinafter referred to in as. "Daksha") for: a reconsideration of Rs. 97,65,OOO/- out of which barring a paltry sum 0/ Rs:50001- (to be paid at the time of registry within one month), entire amount was paid on or before the date of the said agreement. The said plot of land was' in-turn sold to two Porwal 'brothers for declared consideration of Rs.....
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....ection 54F. The AO has not examined the claim of deduction u/s54F from this angle also. In view of the above. if is noticed that the AO has failed to examine the veracity of deduction as claimed by you amounting to Rs. 43,31,991/- claimed u/s 54F(J) & Rs. 46, 13,OOO/- claimed u/s 54F( 4). 7. The show cause notice was duly replied by the assessee submitting that all the issues mentioned in the show cause notice have been duly examined by the assessing officer, who called for necessary information which were duly supplied and on the basis of which Ld. AO concluded the assessment. However, Ld. Pr. CIT accept for the second issue relating to claim of deduction u/s 54F of the Act in respect of deposit of Rs. 46,13,000/- in the capital gain deposit account scheme of which necessary documentary evidences were examined to the satisfaction of Ld. Pr. CIT for the remaining two issues was of the view that the order of the assessing officer is erroneous so far as prejudicial to the interest of revenue as the Ld. AO has not made necessary enquiry and verification, thereby, allowing relief without enquiring into the claim. 8. Against above finding of Ld. Pr. CIT, assessee is in ap....
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....le consideration of Rs. 1,30,20,000/- was received by the Seller No 2 viz M/s Daksha Homes P Limited and nothing was received by the appellant The appellant rightly offered sale consideration as agreed between him with M/s Daksha Homes P Limited. The guideline value as on the date of agreement was also of Rs. 97,60,000/-. The appellant placed reliance on the following direct decisions: - Citation Reference ACIT vs M/s Balmer Lawrie Van Leer Ltd ITA No 4361/Mum/2016 dt 20-11-2018 for the Asst Year 2010-11 Rajaram Patidar ITA No 371/ Ind/ 2015dt 28-09-2018 for the Asst Year 2010-11 DCIT vs Venkat Reddy (2013) 57 SOT 117 ( Hyd Bench ) Lahiri Promoters vs ACIT ITA No 12/Vizag/ 2009 dt 22-06-2010 Sanjeev Lal & Anr Vs CIT & Anr (2014) 365 ITR 389 (SC) Shri Mohd Imran Baig, Hyderabad & Others ITA Nos 1942-1954/ Hyd/ 2014 dt 27-11-2015 Bharathi Dev Anandani vs ACIT ITA No 882/ Bang/ 2014 dt 12-02-2016 CIT vs Shimbhu Mehra ITA No 373 of 2010 dt 12-10-2015 [ 236 Taxman 561(Al....
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....57,868/- only, the wife of the appellant contributed an amount of Rs. 16,81,609/- against her share in old house. Thus, the cost of house was reduced from Rs. 41,57,868/- to Rs. 24,76,259/-. The said old house was dismantled by the appellant. New MAP was sanctioned, copy of the sanction letter dt 03-04- 2013 is enclosed on Page No 119 to 122 of the Compilation The expenses as incurred for construction of House was to the tune of Rs. 43,31,991/- which also includes Rs. 218994/- as paid for sanction of MAP The expenses incurred were for construction of new house after demolition of the old house. Hence, the appellant was rightly eligible to claim deduction under section 54F of the Act The Ld Pr CIT merely on the basis of amount as reflected in the Balance sheet doubted the genuineness of the construction expenses as incurred which in any case is not justifiable. The appellant for claiming deduction under section 54F of the Act can invest in additional one house in addition to his existing house. In the present case, existing house was demolished and permission was obtained for construction of ....
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....2012 359046 17,60,000 30-03-2012 Total 97,60,000 3.6] That an amount of Rs. 20,00,000/- as received vide Ch No 359048 and an amount of Rs. 17,60,000/- as received vide Ch No 359046 were credited in the bank account of the appellant as on 30-03- 2012 and balance amount was credited in the bank account of the appellant on 19-12-2012. 3.7] That during the course of original assessment proceedings the appellant has submitted a detailed reply in respect of said transaction and has properly explained the nature of transaction and also furnished duly registered sale agreement (without Possession). The sale agreement was registered and consideration was also received through an account payee cheque. Thus, as per amended proviso of section 50C of the Act the guideline value as on the date of agreement is to be considered as full value of consideration. The appellant is therefore rightly offered sale consideration of Rs. 97,65,000/- in his return of total income. 3.8] The Date wise event of Property as sold by the Appellant and which is under question is summarized as under for better understanding:- Date Particula....
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....in the case of Shri Raja Ram Patidar Vs ITO 1(2), Bhopal [ Appeal No ITA No 371/Ind/ 2015 dt 28-09-2018 for the Asst Year 2010-11 ] 2. That Hon'ble Allahabad high Court in the case of CIT V. Shimbhu Mehra as reported in [2016] 65 taxmann.com 142 (Allahabad) 3.That Hon'ble Delhi Bench of ITAT in the case of ITO V/s Modipon Ltd. as reported in 168 TTJ 480 4. Hon'bleHyderabad Bench of ITAT in the case of Shri Mohd. Imran BaigV/s ITO [ ITA No. 1942/Hyd/2014] 5. 3.12.1] That as per first and second proviso to section 50C(1) of the Income Tax Act as inserted as inserted by the Finance Act, 2016 w.e.f 01-04-2017 read as under: Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account ....
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....eduction u/s 54 F was allowable or not before allowing the same. 4.2] That Appellant during the course of original assessment proceedings had filed the copies of Capital gain scheme FDR made with Dena Bank totaling to Rs. 46,13,000/-. Details of FDR made by the appellant are as under:- FDR No. Date [ Due date for filing of return extended to 30-11-2014] Amount [Rs] SDRE8258986 29.11.2014 1613000 SDRE8258985 29.11.2014 1000000 SDRE8258984 29.11.2014 1000000 SDRE8258983 29.11.2014 1000000 Total 4613000 Copies of Said FDR are enclosed for kind reference and are available on pages 109 to 111 of the paper book filed before the Hon'ble Bench 4.3] That appellant has prepared the said FDR's under the Capital Gain Deposit Scheme totaling to Rs. 4613000/- on 29.11.2014 which is before the due date of filing of Return for A.Y. 2014-15 on 30.11.2014. 4.4] That against the said amount, the Bank also opened a Saving Account wherein the proceeds of FDR were first transferred from FDR account and then the same were utilized for making payment towards construction of House. 4.5.1] The appellant....
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....ed with the explanation of the appellant accepted his contention.In view of the above it is submitted that appellant has properly claimed deduction u/s 54F of the Income Tax Act of Rs. 46,13,000/- in his return. The same may kindly be treated as legal and proper. 5.1] That the third reason as mentioned by the Pr. CIT for issuing the notice u/s 263 to the appellant is as under: ● That appellant has claimed to have invested Rs. 43,31,991/- upto date of filing of return in construction of a new house (apparently AH 28- 29). However on perusal of the balance sheet placed on record it is seen that as on 31.03.2014 there is " House Account" Rs. 4376862/- whereas as on 31.03.2013 the same is at Rs. 4157868/-. As on 30.11.2014 there are two entries on the balance sheet viz New House Construction Rs. 4331991/- and house account (AH 28-29) Rs. 2476259/-. Hence it is not clear that in which house the appellant has made new investment. That as per the balance sheet there is one more flat account Rs. 330000/- thus it is not clear whether the appellant fulfills the condition of not owning more than one residential house besides the new assets as envisaged in Section 54F. ....
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..... That appellant has demolished the Old house after he got permission for construction in April 2013. That later on after 01.04.2014 the appellant has started construction of new house and thereby he has incurred an amount of Rs. 43,31,991/- till 30.11.2014 towards construction of new house. 5.6] The appellant has duly filed the details of all the expenses incurred by him towards House Construction and produced books of accounts before the Ld. A.O. during the original Assessment Proceedings also as to substantiate the Construction Cost incurred by him. The assessing officer after being satisfied with the explanation of the appellant accepted the claim of deduction under section 54F of the Income Tax Act. 5.7] That as per the provisions of Sec. 54F of the Act if an Individual or HUF transfers any L.T. Capital Asset other than a residential house and within a period of one year before or two year after the date on which transfer took place, purchased a new house or has with in a period of three years after that date, constructed a new residential house then it would not be liable to pay tax on such Capital Gain if it fulfills other conditions as mentioned in said se....
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....sessment and directing a fresh assessment. [ Emphasis supplied ] 6.2] That prior to invoking the provision of section 263 of the Income Tax Act, the order in question must be erroneous and also prejudicial to the interest of Revenue. That both these conditions must be simultaneously satisfied. The assessing officer in the present case in hand as allowed the claim of deduction u/s 54 F and therefore he has taken one of the possible views. Thus, the order as passed by the assessing officer was not a erroneous order. Hence, the Ld CIT was not justified in invoking the provision of section 263 of the Income Tax Act. 6.3] In the facts of the present case, the assessing officer conducted due inquiries and accepted the claim of the appellant only after being satisfied with the explanations of the appellant duly supported with the requisite documentary evidences. The assessing officer took a plausible view based on facts and circumstances of the case after due examination of the material placed on record. Hence, order passed by the assessing officer cannot be termed as erroneous so as to warrant the invoking the provisions of section 263 of the Income-Tax Act, 19....
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.... & Horticulture Pvt. Ltd. Vs Pr. CIT-2 [ITA No. 605/Ahd/2015] 9. Per contra Ld. Departmental Representative (DR) vehemently argued reiterating the finding given by Ld. Pr. CIT in the impugned order and also placed reliance on the following decisions: s. No. CASE LAW Reported 1 Malabar Industrial Co. Ltd. Vis Commissioner of Income Tax 243 ITR 83 (SC) 2. Smt. Taradevi Aggrawa1 Vis Commissioner 88 ITR 323 (SC) 3 Rampyaridevi Saraogi V Is Commissioner of Income Tax 67 ITR 84 (SC) 4 Commissioner of Income Tax Vis Nagesh Knitwears Pvt. Ltd. 345 ITR 135 (Delhi HC) 5 Gee Vee Enterprises Vis Addl. Commissioner of Income Tax 99 ITR 375 (Delhi HC) 6 Bhushan Steel Ltd. Vis Asstt. Commissioner of lncome Tax IT AT A Bench Delhi 7. Commissioner of Income-tax v.Deepak Kumar Garg 299 ITR 435 (Madhya Pradesh) 8. Commissioner of Income-tax v. Mahavar Traders 220 ITR 167 (Madhya Pradesh) 9. Smt. Renu Gupta v. Commissioner of lncome-tax 301 ITR 45 (Rajasthan) 10. PT. Lashkari Ram v. Commissioner of Income-tax 272 ITR 309 (Allahabad) 11. Commissioner of Income-tax, Patia1a v. Himachal Prade....
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.... in para 8 of the impugned order, accepting that during current proceedings u/s 263 of the Act assessee had duly furnished copy of the certificate from the concerned bank and sample copy of application for withdrawal all amount from the capital gain account scheme. Since the Ld. Pr. CIT is satisfied this issue does not remains live. Now, we take up the remaining two issues 14. First issue is with regard to applying of the guideline value on the sale consideration shown by the assessee. We find that the assessee executed registered sale agreement dated 30.03.2012 for the sale of plot of land at Indore to M/s Daksha Homes P. Ltd. for a consideration of Rs. 97,60,000/-. Consideration of Rs. 37,60,000/- was received on 30.03.2012 and Rs. 60,00,000/- on 19.12.2012. Sale deed was finally executed on 26.03.2014 and consideration was shown at Rs. 1,30,20,000/- and the plot was ultimately sold to Shri Sanjay Porwal and Shri Radheyshyam Porwal by M/s Daksha Homes P. Ltd. The entire sale consideration of Rs. 1,30,20,000/- was received by M/s Daksha Homes Pvt. Ltd. The guideline value as on the date of registering sale agreement i.e. 30.03.2012 was Rs. 97,60,000/-. The assessee has of....
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.... a house on AS-28 and AH-29 was vacate. That initially the entire payment for construction of the original house was made by the appellant duly shown as the investment in the house in the balance sheet. During financial year 2014-15 relevant to A.Y. 2015-16 against the investment of Rs. 41,56,868/- the appellant received Rs. 16,81,609/- from his wife towards her share. The cost of house was reduced to Rs. 24,76,259/-. The said House situated at AH-28 is claimed to be demolished by assessee A.Y.2014-15 and construction of new house started on both plots of land i.e. AH-28 & AH-29 for which necessary permission was taken from Municipal corporation. 19. We further observe that during the course of assessment proceedings a detailed query letter was issued to the assessee to file various details and in reply to which submissions were filed which also included the details for claim of investment in residential house u/s 54F(1) of the Act. The assessee gave a breakup of the cost of construction which included the following: i. Lease Renewal Housing Bond of Plot 28AH Rs. 12,500/- ii. New Construction Rs. 2,18,994/- ii. Construction Rs. 41,00,497/- ....
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....suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub10 section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions "erroneous", "erroneous assessment" and "erroneous judgment" have been defined in Black's Law Dictionary. According to the definition, "erroneous" means "involving error; deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles". 12....
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....wer under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exer....
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.... that two views were inherently possible. Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 particularly when as stated above we have to% take into account the position of law as it stood on the date when the Commissioner passed the order dated March 5,1997, in purported exercise of his powers under Section 263 of the Income Tax Act. 3. For the above reasons, civil appeals filed by the department stand dismissed." 26. We have given thoughtful consideration to the orders of the authorities below. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise....