TaxTMI 
TaxTMI 
2022 (8) TMI 667
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....d after considering submission of the assessee. Thus, the assessment was concluded by the ld. AO. 3. Subsequently, the ld. PCIT called for and examined the case record of the assessee wherein he has stated that the following issues were emerged from the records of the assessment: "During the year assessee had sold a plot of land for net consideration of Rs.1,90,11,000/- and had earned capital gain of Rs.1,89,79,851/-. Further, during the year assessee along with four others had bought a residential house for a total consideration of Rs.4,59,73,000/- and the entire capital gain of Rs.1,89,79,851/- was claimed as deduction u/s section 54F of the Act. It was observed that deduction u/s 54F of Rs. 1,14,93,260/- was available to the assessee and excess capital gain of Rs.74,86,601/- was taxable. Therefore, it is factually apparent that the A.O. has not verified the above issues while completing the assessment. Accordingly, it appears that the assessment order passed u/s 143(3) of the I.T. act 1961 for A.Y. 2017-18 on 01.08.2019 is erroneous in so far as it is prejudicial to the interest of the revenue." 4. Based on the observations, the ld. PCIT exercised an action u/s 26....
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....operty 12.5% only likewise we are also submitted the of affair of Smt. Pratima Poddar for the year ended 31.03.2016 and 31 03 2017 where she has shown her share in property 12.5%." 6. On receipt of reply of the assessee, ld. PCIT observed and stated that while completing the assessment on 01.08.2019, the Assessing Officer has not examined the issues on which case was selected for scrutiny. Thus, the claim of deduction u/s 54F has not been claimed correctly and Assessing Officer has not seen these aspects. The assessee has filed the copy of memorandum of understanding, to prove the share of the assessee upon which the deduction was claimed now and not before the assessing officer. The PCIT hold a view that as it was not on record and it is also executed after purchase deed is registered and thus ld. PCIT hold a view that this evidence is after thought. The ld. PCIT further observed that if the assessee claimed his claim to the extent of 50% deduction u/s 54F, surely, the payment received from sale of plot would have been paid in acquiring the house but the relevant joint bank statement was not available on record by the assessee. 7. Based on the observations, the ld. PCIT fina....
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....the case and in law the ld PCIT has erred in exercising the revisionary powers by passing the order u/s 263 of 1.T. Act, 1961 setting aside the order passed u/s 143(3) dated 01.08.2019. The action of the ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order passed u/s 263. 2. In the facts and circumstances of the case and in law the ld. PCIT has erred in holding the order passed u/s 143(3) dated 01.08.2019 as erroneous and prejudicial to the interest of the revenue. The order passed u/s 263 is bad in law and therefore, the action of the ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order passed u/s 263 and holding the order passed u/s 143(3) dated 14.08.2019 as not erroneous and prejudicial to the interest of the revenue. 3. The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing." 10. During the course of hearing, ld. AR of the assessee has filed the following written submission:- "I. The assessee individual, for the year under consideration, filed her retur....
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.... IX. The year in which investment was made i.e. the year A.Y. 2016-17 was selected for scrutiny. After making extensive enquiries with regards to purchase of property and source thereof the returned income was accepted vide order dated 24th Sept, 2018 [PB 75-77]. X. Thereafter, the case of the assessee, for the year under consideration i.e. A.Y. 2017-18, was selected for limited scrutiny and notice u/s 143(2) was issued on 29th Sept, 2018 (just after 5 days of completion of assessment of A.Y. 201617). After making extensive enquiries ld. AO completed assessment under section 143(3) vide order dated 1st Aug, 2019. Returned Income was accepted. XI. Chronology of events is as under: Particulars Date A.Y. PB Purchase of Residential House Property 21st Dec, 2015 2016-17 33-65 Execution of Memorandum of Understanding as per which assessee's share was 50% 15th Jan, 2016 2016-17 6-7 Sale of Plot of Land 14th Oct, 2016 2017-18 27-32 Filing of ITR for A.Y. 2016-17 24th Feb, 2017 76 Issue of notice u/s 143(2) for A.Y. 2016-17 16th Sept, 2017 109 Date of filing of ITR for A.Y. 2017-18 ....
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....ssessee made investment in residential house property, on 21st Dec, 2015, in A.Y. 2016-17 only. The assessee had placed on record the following details with regards to the payment for purchase of new property [PB 78-111]: 5.1. The fact that property was majorly financed through housing loan [PB 92]. 5.2. Sanction letter and EMI schedule of PNB Housing Finance Ltd [PB 93104] 5.3. Details of payments made to seller and source thereof [PB 81] 5.4. Bank Statements of all the joint owners evidencing direct payments to seller [PB 78, 80, 82-86] 5.5. Bank Statements of Joint Account evidencing direct payments to seller and repayment of EMI [PB 87-91] 5.6. ITR of all the joint owners [PB 79] 6. After scrutinizing transaction of purchase, source of making investment and assessee's ownership to the extent of 50% retuned income was accepted as it is. It is pertinent to note that the assessment of A.Y. 2016-17 was not subjected to revisionary proceedings u/s 263. Hence, the action of ld. AO was found correct and justified. 7. Ld. AO after appreciating all the facts and evidences, as placed before him in the proceedings for....
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.... ownership along with 3 persons, however, was the owner of 50% of the share in the property. 15. It was nowhere mentioned in the Purchase Deed that all the joint owners were sharing the property equally [PB 33-65]. The share of the joint owners was decided mutually and a Memorandum of Understanding was executed which was duly placed before ld. PCIT [PB 5-7]. 16. The law does not provide that in the cases of joint ownership, all the joint owners shall share the property equally. Mutual understanding among the parties, documentation of such understanding and extent of payment are the deciding factors of ownership. Since in the present case all the evidences (including the following) as placed on before ld. PCIT suggested that the assessee was having 50% share in the property the order of ld. AO could not be held as erroneous: 16.1. Memorandum of Understanding evidencing share of assessee to be 50% [PB 6-7] 16.2. Statement of Affair of Mohit Poddar (Joint Owner) for F.Y. 2016-17 [PB 8- 11] and F.Y. 2015-16 [PB 16-19] evidencing his share to be 12.5% 16.3. Statement of Affair of Pratima Poddar (Joint Owner) for F.Y. 2016-17 [PB 12-14] eviden....
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.... found that the order of AO is erroneous and prejudicial to the interest of revenue. In the present case ld. PCIT not only failed to conduct any enquiry but also failed to point out any defect in the evidences placed before her to substantiate the claim u/s 54F. Therefore, the jurisdiction u/s 263 does not lie and was, thus, wrongly assumed. 21. It is submitted that ld. PCIT further considered the order of ld. AO to be erroneous by observing as under: "..AO has also not enquired about the source of money and payment so made.." (PCIT Page 4) 22. In this regard it is submitted that the asset was purchased by the assessee in immediately preceding year. In such year, during the assessment proceedings, the assessee placed on record details of purchase, details of source of purchase, details of payments made for purchase, etc (refer Para 5 above). After finding that source of assessee's share to be justified ld. AO accepted the returned income [PB 76-77]. Hence, the observation of ld. PCIT is baseless. 23. Without prejudice to above, without agreeing it is submitted that even if the source of purchase was not examined in the preceding year then also si....
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.... of capital gain that has arisen and chargeable to tax in the year under consideration. The only dispute in this case is share of the assessee in that property acquired jointly by the assessee with her husband, his son and his daughter in law. As share of each co-owners not incorporated in the purchase deed the PCIT hold a view that it should be equal. The parties have executed a memorandum of understanding dated 15th January, 2016 wherein each coowners share clarified. Also the liability to repay the loan was also incorporated in that MOU, as the property has been acquired by availing the loan and obligations of each party to repay these loans and percentage of share of in the property purchased has been predetermined amongst themselves and this has been recorded in the Memorandum of Understanding wherein each parties have placed their signature with date and said memorandum of understanding was executed before Notary Public. Therefore, the same cannot be said an afterthought which was contended by Pr. CIT in his order and before us. ld. DR also. The ld. Assessing Officer has very well taken into account the assessment for the year under consideration and immediately preceding yea....
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....n the property is sold in the year under consideration against which the assessee has claimed the investments benefit u/s 54F of the Act. The property purchased in previous year, the ld. AR of the assessee has also prayed to draw to our attention to the computation of income filed by the assessee before Assessing Officer and placed in assessee's paper book at page No. 114 wherein while claiming the exemption u/s 54 of the Act, eligible amount written computation of income is shown at the share at 50% and relevant extract of computation is extracted for sake of convenience STATEMENT OF LONG TERM CAPITAL GAIN Particular Sales Price/Year Indexed Cost/Year Transfer Expenses Indexed Cost of Improvement Exempt Capital Gain PLOT NO TARU CHAYYA 19011000.00 (14/10/2016) 31149.00 (02/02/1992) 0.00 0.00 18979851.00 0.00 Total 19011000.00 31149.00 0.00 0.00 18979851.00 0.00 PLOT NO TARU CHAYYA- Value of property as per stamp valuation authority: 19011000; Cost 5510* (1125/199) = 31149: Exempt U/S 54F : 18979851 [23348680]" 15. So, with this set of argument the ld. AR of the assessee submitted that the only dispute raise....
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....the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 18. Further, he has also relied upon the judgment of Hon'ble High Court of Bombay in the case of CIT, Nagpur vs. Ballarpur Industries Ltd. [2017] 85 taxmann. com 10 (Bombay) as under:- "14. The decision of the Apex Court in Max India Ltd. (supra) relied upon by the respondent-assesse....
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.... directing a fresh assessment; or (ii) an order modifying the order under section 92CA ; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section.]" 21. The ld. AR from the said provision argued that the ld. Pr.CIT suppose to view the record before him and record does not include the record of this particular year but it also includes the records of earlier years and he has not seen the previous year records. He has also submitted that while replying to the show cause notice u/s. 263 the ld. AR placed on record the fact that the assessment of Mohit Poddar is also completed based on the these information and the same is already available on record. The ld. AR for this term record he has relied upon the decision of Hon'ble Gujarat High Court in the case of Vallabhdas Vithaldas [2005] 56 Taxman 300 wherein the Hon'ble Gujarat High Court has extracted the explanation given in the Finance Act, 1988 when the term records has been introduced in the Act and the relevant extract reads as under:- "48...... (a) On the interpretation of the term 'record' : it has been held in some cases that the word 're....
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....rs in property has already been clearly appearing in the A.Y 2016-17 i.e. in the year of investment which is one year before the assessment is concluded in the year under consideration. The same has also been discussed and considered in the assessment proceedings for A.Y 2016-17 in that cases and each family share is disclosed before the capital gain arise in the year under consideration in the case of the assessee not only that the assessee has already disclosed her share in the computation of income and the AO satisfied with the disclosure made by the assessee merely AO has not called for certain more information knowingly and unknowingly, the fact of the case did not change and the allowability of the deduction and thereby based on that question only the order cannot be considered as erroneous or prejudicial to the interest of revenue. Even otherwise considering the evidence placed on record the PCIT should have considered the records as the ultimate revenue is not affected considering the set of evidences placed on record. As the share of the assessee in the joint property is already reflected in the MOU, computation of income and the other joint holders have already disclosed ....
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....cord includes as whole available at the time of making proceeding under section 263. Not only that the ld. AR of the assessee further relied upon the decision of Hon'ble jurisdictional High Court in the case of CIT Vs. Ganpat Ram Bishnoi 152 Taxman 242(Raj) where in the court has observed that "10. From the record of the proceedings, in the present case, no presumption can be drawn that the Assessing Officer had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the Assessing Officer was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction under section 263 of the Income-tax Act. 11. Undoubtedly, the jurisdiction under section 263 is wide and is meant to ensure that due revenue ought to reach the public treasury and if it does not reach on account of some mistake of law or fact committed by the Assessing Officer, the CIT can cancel that order and require the concerned Assessing Officer to pass a fresh orde....