TaxTMI 
TaxTMI 
2021 (7) TMI 13
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....ppeals are relatives and are engaged in agricultural activities. In the condonation applications common reason is death of one of the family members and lack of necessary advice to file the appeals and time limit. We have given thoughtful consideration and in the larger interest of justice and the reasons mentioned by the respective assessees, condone the delay in filing of instant appeals and admit them for adjudication. 3. Assessee(s) has raised following common grounds of appeal in ITANos.870 to 874/Ind/2019:- GROUND I: 1.On the facts and circumstances of the case and in law, the Learned Principal Commissioner of Income tax -I, Indore ["the PCIT"] erred in invoking provisions of section 263 of the Income Tax Act, 1961 ("the Act") and directing revision of the assessment order passed u/s. 143 (3)/147 of the Act by the Income Tax Officer-1(4), Indore ("the AO") for examination of capital gains and deductions on the alleged ground that the assessment order was erroneous and prejudicial to the interest of the revenue. 2.The Appellant prays that since the assessment order passed by the AO was after making specific and full enquiries therefore the assessm....
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....odify the grounds of appeal as taken. Assessee(s) has raised following common grounds of appeal in ITANos.435,437 & 438/Ind/2018:- 1.1 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act by invoking the provision of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous prejudicial to the interest of the revenue. 1.2 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act even when the order was passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act after full application of mind. 2. That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act merely for applying the sale consideration as per provision of section 50C of the Income Tax Act even when consideration was received by the assessee in previous years as ....
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.... facts of the case of Kamal Kishore Mukati ITANo.870/Ind/2019 to which consent was given by Ld. Counsel(s) for the assessee and the Ld. Departmental Representative(DR). 6. Brief facts of the case are that the assessee is an individual and source of income is from agricultural operation, capital gain and income from other sources. The assessee along with family members entered into an understanding for sale of his agricultural land admeasuring 3.522 hectares with Shri Vijay Mirchandani Ji who acted on behalf of M/s Global Developers for sale consideration of Rs. 1,91,48,000/- out of which Mr. Kamal Kishore Mukati had to received 1/5th share i.e. Rs. 38,29,600/-. This sale agreement was executed on 31.03.2016 and the consideration was received through banking channels in the respective bank accounts of the sellers on different dates soon after entering the agreement. The sale deed was finally registered on 02.04.2008 between the assessee and M/s. Global Developers. Through annual information return Ld. AO received information about the transaction of sale of immovable property registered on 02.04.2008. In order to initiate the assessment proceedings u/s 147 of the Act, notice u/s ....
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....16 Motilal Mukati 437/Ind/ 2018 28,60,000/- 85,80,000/3 19.01.2016 Motilal Mukati (L/H Ramchandra Mukati) 438/Ind/ 2018 28,60,000/- 85,80,000/3 19.01.2016 Subhash Mukati (L/H Badrilal Mukati) 425/Ind/ 2018 99,26,000/- 99,26,000/- 19.01.2016 8. Subsequently, Ld. Pr. CIT invoked the provisions of section 263 of the Act in case of all the assessee(s) in the instant appeals and issued show cause notice u/s 263 of the Act. Since content of most of the notices issued are common depending on the value of sale consideration and the share of sale consideration and deduction claimed u/s 54of the Act by the respective assessees, we are reproducing below the show cause notice issued in the case of Kamal Kishore Mukati ITANo.870/Ind/2019, Shankarlal Mukati ITANo.433/Ind/2018, Radheshyam Mukati ITATNo.435/Ind/2018 & Subhash Mukati L/H Shri Badrilal Mukati ITANo.425/Ind/2018: Kamal Kishore Mukati 2.1 The relevant portion of the show cause notice u/s 263 is reproduced as under:- (i) It is observed that your case was reopen on the basis of AIR information relating to the A. Y. 2009-10 on account sale of immovable property. A....
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.... that your case was reopen -on the basis of AIR information relating to the A. Y. 2009-10 on account sale of immovable property. As per records you had sold joint agricultural land for a stated consideration of Rs. 85,80,000/- vide sale deed dated 11/04/2008 and shown share in the sale consideration was Rs. 28,60,000/- (85,80,00013). Whereas the market value of the land was assessed by the Sub registrar at Rs. 1,85,02,000/-. Further, the AO had also taken sales consideration at Rs. 28,60,000/-[ i.e.1/3 of 85,80,OOO] and accordingly calculated Long Term Capital Gain while completing the reassessment u/s 147/143(3) of the Income Tax Act. 1961.However, in view of section 50C, the sale value of the land was required to be taken at Rs. 61,67,333/- (1,85,02,000/3) instead of Rs. 28,60,000/-. Subhash Mukati It is observed that your case was reopen -on the basis of AIR information relating to the A. Y. 2009-10 on account sale of immovable property. As per records you had sold joint agricultural land for a stated consideration of Rs. 99,26,000/- vide sale deed dated 11/04/2008 and shown share in the sale consideration was Rs. 28,60,000/- (85,80,00013). Whereas the market v....
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.... part consideration through cheque, as per the sale deed dated 11.04.2008, the seller had reserved the right on the property till the date of sale deed, hence transfer did not take place till the execution of the sale deed. Perusal of the said deed further reveals that- 4.1.3 Thus, it is apparent from the sale deed itself, that the assessee had not handed over possession of the property in questioned till the date of execution of sale deed 11.04.2008. Thus even though the assessee may have entered into an agreement on 31.03.2006 for sale of the property in question and may have received part consideration, possession was not handed over till execution of the deed of 11.04.2008. therefore, the claim of the assessee that the land had been sold as per agreement dated 31.03.2006 is not correct. 4.1.4 Moreover, it is also observed agreement dated 31.03.2006 was entered into by the assessee and other Co-owners with Mis Global Developers, 210, Shalimar Corporate Centre, 8- B, South Tukoganj, Indore, whereas the land was ultimately sold by them on 11.04.2008 to Mis Coral Infrastructures Private Limited, 505-506, Shalimar Maurya Park, New Link Road, Andheri (E), M....
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.... is erroneous and prejudicial to the interest of the revenue. 4.3 As regarding the assessee's claim of deduction uls 54F, the assessee has filed the copy of valuation report for the construction of the house which is dated 22.03.2016 and it is mentioned therein that valuation ofRs. 48,99,0001- is based on Fair Market Price as on 22.03.2016. The AO has allowed the deduction of Rs. 17 ,36,091/- uls 54F on investment of Rs. 28, 19,0001- without examining how much of the amount was invested in the construction of the house as per the sale deed dated 11.04.2008 as per the prescribed conditions uls 54F of the IT Act. Apparently, the AO has not allowed the deduction after examining the issue correctly. Accordingly, the order of the AO is erroneous and prejudicial to the interest of the revenue. 4.4 An order can be erroneous & prejudicial to interest of revenue on the ground that in the circumstances of the casethe Assessing Officer should have made further inquiries. It is duty of the Assessing Officer to ascertain the truth of the facts stated by the assessee. It is incumbent on the Assessing Officer to investigate the facts stated when circumstances would ....
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....he Revenue by him for the reason that no proper enquiries as required in the facts and circumstances of the case were made by the AO while completing the assessment and even such proper enquiries which the AO ought to have made were also precisely identified by him in the said notice. In the cases of Smt. Tara Devi Aggarwal vs. CIT 1973 CTR (SC) 107 .' (1973) 88 ITR 323 (SC) and Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC), it was held by the Hon'ble Supreme Court that the CIT can regard the order of the AO as erroneous on the ground that in the facts and circumstances of the case, the ITO should have made further enquiries before accepting the statements made by the assessee in his return. Following these two decisions of Hon'ble Supreme Court, Hon'ble Allahabad High Court has held in the case of Smt. Lajja Wati Singhal vs. CIT (1997) 138 CTR (All) 320 : (1997) 226 ITR 527 (All) that, an assessment made on income surrendered by the assessee without making any enquiry whether the same was in fact taxable in his hands was erroneous and prejudicial to the interest of the Revenue. Further, as held by Hon'ble Delhi High Court in the cases of Gee Vee Enterpris....
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....of the view that the assumption of jurisdiction by the learned CIT by issuance of notice on 27th Jan., 2004 was in accordance with law and there was no legal infirmity in the impugned order passed by him on this count as alleged by the learned counsel for the assessee. We, therefore, find no merits in the contentions raised by him on this issue and reject the same." 8. Considering the facts of the case the order is considered to be erroneous and prejudicial to interest of the revenue. 9. The order of the AO is therefore set aside to the file of the AO with the direction that he should examine the issues of capital gains and deductions thereon in the light of the observations made and after ascertaining all the facts and affording proper opportunity to the assessee take decision as per law. The order dated 19.04.2016 passed U/S 143(3)/147 is therefore set aside to above extent on the above issues with the direction to the AO for passing a fresh order taking into consideration the observations noted above as per law 10. Now the assessee is in appeal before the Tribunal. Ld. Counsel for the assessee vehemently argued referring to the following written submissions ....
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....inion that the guideline rate as applicable at the time of registry is applicable in the case of the appellant. 1.4.2] The assessee has entered into an agreement for sale of his land with Shri Vijay Mirchdani on behalf of M/s Global Developers. The sale consideration was fixed for his land at Rs. 3829600/-. In Para 5 of the sale agreement it was clearly mentioned that the seller is bound to executed registry either in favour of the buyer or in the name of any other persons as suggested by the buyer. 1.4.3] The sale agreement as executed was never cancelled. The amount as received by the assessee was quoted in the sale registry as executed. The assessee has never entered into an agreement for sale of his land with M/s Coral Infrastructure P Limited. Since, the assessee had received advance against the sale of land in term of sale agreement as executed on 31-03-2006 and therefore he has executed registry in the name of M/s Coral Infrastructure P Limited as directed by the buyer. It is pertinent to mentioned that Shri Vijay Mirchandani entered into an agreement with the assessee on behalf of his firm M/s Global Developers and finally registry was also executed with S....
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....of impugned agriculture land at Rs. 1,68,90,500/- as against the sale consideration confirmed by the Ld.CIT(A) at Rs. 3,83,79,019/-. Accordingly issue No. 1 & 2 mentioned by us in para 11 above which are at Ground No.1, 1.1, 1.2 and 1.3 are decided in favour of the assessee. 1.8.3] That Hon'ble Allahabad high Court in the case of CIT V. ShimbhuMehra as reported in [2016] 65 taxmann.com 142 (Allahabad) has held that:- 12. Sub-clause (ii) of Section 2(47) of the Act states that the transfer, in relation to a capital asset, includes the extinguishment of any rights therein. In SanjeevLal v. CIT [2014] 365 ITR 389/225 Taxman 239/46 taxmann.com 300 (SC), the Supreme Court considered the question as to whether the date on which the agreement for sale was executed could be considered the date on which the property was transferred. The Supreme Court held that when an agreement to sell in respect of immovable property is executed, a right in person am is created in favour of the vendee and when such a right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because the vendee gets a legitimate right to enforce a spec....
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....urther 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 payee cheque or account payee bank draft or by use of electronic clearing system through a bank account 59[or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer: 1.9.2] That though the first and second proviso to section 50C(1) of the Income Tax Act was inserted w.e.f 01-04-2017 but these proviso was inserted to explain date of valuation as applicable as on the date of agreement and not on the date on which registry was actually executed. Hence, both these proviso having retrospective effect from the date on which provision of section 50C of the Income Tax act inserted in the Act i.e. w.e.f 01-04-2003. Similar view was expressed in the following decisions:- S.No Citation Reference 1 Ms ZubeidaShahanshah ITA No 519/ Lkw/2017 dt 31-01-2019 2 DharmshibhiSonaniVs ACIT, Surat [2016] 75 Taxmann.Com 141 [ Ahmedabad Bench ] 161 ITD 627 (Ahd ) 3 Hari Mohan Das Tandon (HUF) 169 ITD 639 (All) 4 M/s Jai Laxmi Developers (P) Ltd Vs DCIT ....
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....t on the various dates as referred by the LdPr CIT 2.3] Copy of Bank account of the assessee is already on record. On perusal of the same it is clear that entire credit represent sale consideration as received by the appellant against the sale of Agricultural land. 2.4] That in the present case in hand, the agreement for sale of Agricultural land of the assessee was executed on 31-03-2006 and the assessee received amount towards sale consideration from the year 2005-06 to till the date on which registry was actually executed. 2.5] The amount as paid by the assessee was actually realized by him against the sale of his Agricultural land. The amount so realized was utilized by the assessee towards purchase of new Agricultural land. Hence, deduction as claimed under section 54B of the Act was legal and proper. 2.6] The appellant first entered into an agreement for sale of Agricultural land on 31-03-2006 and in pursuance to that sale agreement, registry was executed on 11-04-2018. The consideration as received by the appellant was utilized towards purchase of new Agricultural land. Hence, the Ld Assessing officer rightly allowed deduction und....
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....ion was received by the assessee. The subsequent documents consist of correction deed as well as the affidavit of the purchaser has supported the fact that the consideration for sale of the existing land was received at the time of the agreement to sell dated 22/11/2012 and possession was also handed over on the said date of agreement. Hence when the agreement was subsequently acted upon and in performance of the said agreement, the parties have finally executed the sale deed then the transaction will be considered as transferred as on the date of the agreement." 2.8] That in view of the above, the Ld Pr CIT was not justified in setting aside the order as passed by the assessing officer. AS REGARDS DEDUCTION U/S 54F OF THE ACT 3.1] The Appellant had also claimed a deduction of Rs. 1736091 for construction of residential house from the sale proceeds of the sale of impugned immovable property. The claim for deduction was allowed by the learned AO based on various documentary evidences and submissions of the Appellant such as Affidavit in support of construction of new house, withdrawal of amount from bank for construction activity, Physical existence of new....
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....as passed by the assessing officer was neither erroneous nor prejudicial to the interest of revenue. Hence, the Ld Pr CIT was not justified in setting aside the order as passed by the assessing officer. 4.2] That in this case originally notice under section 148 of the Income Tax Act was issued to taxed the fair market value of sale of immovable properties as per provision of section 50C of the Income Tax Act. We have already reply this point in our previous reply as per this land which is matter of scrutiny is sold as per agreement basis which is made on 31.03.2016. We have also produce copy of agreement of sale is made by Rs. 99,26,000/- with Shri Badrilal Mukati and all payment of this transaction has been received through cheques, therefore we have been calculated our capital gain on actual sales receipt basis and documentary evidences already submitted before you for perusal.. Further expenses on sale we claim for is payment of brokerage as per usual market trend, we have been paid brokerage to broker and copy of saudachitti dated 20.03.2006 is attaching herewith for your perusal. We have been calculated cost of property Rs. 60,53,614/- on the basis o....
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.... Ld. DR vehemently argued supporting the orders of Ld. Pr. CIT, contending that the Ld. Pr. CIT has rightly assumed the jurisdiction u/s 263 of the Act and set aside the assessment orders framed u/s 147 r.w.s. 143(3) of the Act to be framed a fresh in light of observations made in the impugned order. 12. We have heard rival contentions and perused the records placed before us and carefully gone through the paper book and written synopsis filed in the case of all the assessees in the instant appeals, impugned orders by the Ld. Pr. CIT, assessment orders framed u/s 147 r.w. 143(3) of the Act and various documentary evidences filed during the course of reassessment proceedings, proceedings u/s 263 of the Act and the documents filed before us. Common grievance in all these appeals made by the assessee is that Ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act, using the revisionary powers and also erred in holding that the orders of Ld. AO framed u/s 143(3) r.w.s. 147 of the Act are erroneous and so far as prejudicial to the interest of revenue. 13. Before going into facts of the case we will like to go through provisions of section 263 of the Act and some settled judi....
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....ect 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 court shall be excluded." 14. Hon'ble Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law willsatisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the reve....
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....impermissible. It should not be presumed that initiation of power under suomotu revision is merely an administrative act. It is an act of a quasi-judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the AO is erroneous as well as prejudicial to the interests of the Revenue. The concept of "prejudicial to the interests of the Revenue" has to be correctly and soundly understood. It precisely means an order which has not been passed in consonance with the principles of law which has in ultimate eventuate affected realization of lawful revenue either by the State has not been realized or it has gone beyond realization. These two basic ingredients have to be satisfied as sine qua non for exercise of such power. On a perusal of the material brought on record and the order passed by the CIT it is perceptible that the said authority has not kept in view the requirement of s. 263 of the Act inasmuch as the order does not reflect any kind of satisfaction. As is manifest the said authority has been governed by a singular factor that the order of the AO is wrong. That may be so but that is not enough. What w....
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....lied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. Relevant observation of the High Court reads as under: "63. We find the Hon'ble Delhi High Court in the case of Vikas Polymer reported in 341 ITR 537 has held as under: "We are thus of the opinion that the provisions of s. 263 of the Act, when read as a composite whole make it incumbent upon the CIT before exercising revisional powers to : (i) call for and examine the record, and (ii) give the assessee an opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is only on fulfilment of these twin conditions that the CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circums....
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....the above discussion, we hold that the assumption of jurisdiction by the DIT u/s 263 of the Act is not in accordance with law. We, therefore, quash the same and grounds raised by the assessee are allowed." 20. Now examining the facts of the instant case in the light of the above judgments and discussions made herein above we note that in the instant cases the agreement to sale was executed on 31.03.2006 with Mr. Vijay Mirchandani acting on behalf of M/s Global Developers. All payments against the sale consideration were received through banking channels. Subsequently on the request of the original buyer M/s Global Developers and as per the conditions mentioned in the agreement to sale, final registry was done in favour of M/s. Coral Infrastructure (through its director Mr. Vijay Mirchandani). Sale deed was finally registered during April, 2008 between the same parties (assessee(s) and Vijay Mirchandani) and the sale consideration mentioned was the same as was mentioned in the agreement to sale entered during March, 2006. Agreement to sale was never cancelled. Mr. Mirchandani is a director of M/s Coral Infrastructure Pvt. Ltd. During the revisionary proceedings Ld. Pr. CIT has....
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....ot 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 payee cheque or account payee bank draft or by use of electronic clearing system through a bank account 59[or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer: 23. Further though the first and second proviso to section 50C(1) of the Income Tax Act was inserted w.e.f 01-04-2017 but these proviso were inserted to explain date of valuation as applicable as on the date of agreement and not on the date on which registry was actually executed. Hence, both these proviso having retrospective effect from the date on which provision of section 50C of the Income Tax act inserted in the Act i.e. w.e.f 01-04-2003. Similar view was expressed in the following decisions:- S.No Citation Reference 1 Ms ZubeidaShahanshah ITA No 519/ Lkw/2017 dt 31-01-20....
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....e Act 27. The facts in brief are that the assessee entered into an agreement in March 2006 for sale of agricultural land used for agricultural purpose. He received sale consideration in parts through banking channels. Sale deed was finally registered between March 2006 and April 2008. Before registering the sale deed assessee purchased other agricultural land from the sale consideration so received and claimed it as deduction u/s 54B of the Act against the capital gain earned from transferring of the capital asset being land used for agricultural purpose in two years immediately preceding the dates on which the transfer took the place. 28. Ld. AO allowed the claim during the assessment proceedings. Ld. Pr. CIT during the course of proceedings u/s 263 of the Act observed that the assessee had not complied with the provision of section 54B of the Act since this benefit was available only if the assessee had made the investments in other agricultural land after the date registered sale deed. As per the Ld. Pr. CIT this aspect was not examined by the Ld. AO and thus needed to be set aside for reexamining the issue of computing capital gain at the end of ld. AO. 29. We, however....
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....se consideration was paid out from the bank account of the assessee only after the sale deed dated 29/11/2012. These facts clearly established that the receipt as well as payment are through post datedcheques and therefore, the assessee has established the existence of the agreement to sell dated 22/11/2012 under which the purchase consideration was received by the assessee. The subsequent documents consist of correction deed as well as the affidavit of the purchaser has supported the fact that the consideration for sale of the existing land was received at the time of the agreement to sell dated 22/11/2012 and possession was also handed over on the said date of agreement. Hence when the agreement was subsequently acted upon and in performance of the said agreement, the parties have finally executed the sale deed then the transaction will be considered as transferred as on the date of the agreement." 30. In light of the above decisions we observe that in the instant case also the agreement to sale was not cancelled and the same was acted upon on at the same sale consideration and finally executed the registered sale deed with the same person though acting on behalf of t....