TaxTMI 
TaxTMI 
2022 (8) TMI 667
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....e. 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 263 by issue of notice dated 17.02.2022 asking the assesse....
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.... 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 finally decided to invoke provisions of section 263 stating that the AO has not applied his mind on a....
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....961 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 return of income on 24th Jan, 2018 declaring Total Income of Rs. 4,52,230 [PB 112-114]. II. The assessee, on 21st Dec, 2015 i.e. during immediately ....
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....rder 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 24th Jan, 2018 112 Assessment Order u/s 143(3) for A.Y. 2016-17 24th Sept, 2018 76-77 Issue of notice u/s 143(2) for A.Y. 2017-18 29th Sept, 2018 72 Assessment Order u/s 143(3) for A.Y. 2016-17 1st Aug, 2019 XII. The aforementioned assessme....
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....ereof [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 the year under consideration i.e. A.Y. 2017-18 as well as in the proceedings of immediately preceding year i.e. A.Y. 2016-17, found the deduction u/s 54F as claimed by the assessee to be proper and justified. 8. In view of above factual background the fact of ld. AO having conducted detailed enquiry cannot be disputed. The present case cannot be a case of lack of proper enquiry specially for the issue for which the case was selected for limited scrutiny. Only on being satisfied with t....
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....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] evidencing her share to be 12.5% 17. It is submitted that the property was purchased in F.Y.2015-16 on 19th Dec, 2015. The following details substantiate the agreed ratio of ownership amongst the family members: % Value of Asset as per Registry Liability as per Loan Amortization Schedule Asset as appearing in Financials PB Liability as appearing in Financials PB Total 100 % 4,66,97,360 3,52,26,000 Renu Poddar 50% 2,33,48,680 1,76,13,000 2,33,48,680 15 Mahesh Poddar 25% 1,16,74,340 88,06,500 ....
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....aced 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 since the purchase was made in the preceding year the source was to be examined in the preceding year only. If ld. AO failed on doing so the case could have been subjected to revisionary proceedings. However, non-verification of source in preceding year cannot be held to be error of the year under consideration. Therefore, the revisionary proceedings are without jurisdiction. In view of above ld. PCIT assumed jurisdiction u/s 263 illegally and, therefore, the order of ld. PCIT deserves to be quashed." 11. In addition to above written argument, ld. AR of the assessee filed the paper book containing various case laws as listed here in below : * Hon'ble ITAT, Jaipur Bench in the case of Lata Phulwani- ITA No. 246/JP/2020 * Jurisdictional Rajast....
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....herein 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 year. At the time of investment and at the time of allowing exemption u/s 54F of the Act in the year under consideration exempted both the issues at length. Therefore, the order cannot be said to be prejudicial and erroneous in the interest of Revenue. Thus, there is no apparent error as is claimed by the ld. AR of the assessee based on the evidences placed on record. The ld. AR of the assessee further submitted that in the proceedings before Pr. CIT MOU executed between the parties was very well placed on record. The ld. AR of the assessee relied on chorology of events as submitted by him in his submission that the share of the assessee cannot be considered as in dispute and ignoring that MOU. The same cannot be considered at 25% instead of at the time of purchase, it was 50% and the claim was made acc....
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.....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 raised that the claim of the assessee made u/s 54F of the Act for which the property acquired in the previous year where in the deed of purchase the share of each co-owner was not disclosed and the same is disclosed in the MOU executed by each parties after the registration of document. The ld. AR further submitted that the relevant to assessment year 2016-17 the assessee has purchased the property and an another property sold in the A.Y 2017-18 and on sale of this property in A.Y 2017-18, the assessee has claimed benefit of the investment made under section 54F of the I.T. Act of property which was acquired in A.Y 2016-17 and in the absence of specific percentage of investment not shown in the said purchase deed there cannot be an order which is passed by the Assessing Officer after verifying all the records cannot be termed as prejudicial or erroneous. ....
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....n 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-assessee to our mind would not come to its rescue for the reason that in the present facts the statement of the case does not indicate that the view taken to allow the claim under Section 80 HHC of the Act was after examination/inquiry. Mere taking of a view by the Assessing Officer without having subjected the claim to examination would not make it a view of the Assessing Officer. A view has necessarily to be preceded by examination of the claim and opting to choose one of the possible results. In the absence of view being taken, merely because the issue itself is debatable, would not absolve the Assessing Officer of applying his mind to the claim made by the assessee and allowing the claim only on satisfaction after verification/enquiry on his part. A view in the absence of examination is no view but only a chance result. Therefore, even the decision of the Andhra Pradesh Hig....
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....racted 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 'record' in Section 263(1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order was passed by the Assessing Officer. Such an interpretation is against the legislative intent and defeats the very objective sought to be achieved by such provisions, since the purpose is to revise the order on the basis of the record as it available to the Commissioner at the time of examination." 22. Relying on the above judgment of the Hon'ble Gujarat High Court, the ld. AR of the assessee submitted that ld. Pr.CIT has not been seen the record in terms of MOU placed before him, the computation of income, records of the past assessment order of the other co-owners. In the assessment order merely, the AO in the relevant A.Y knowingly and unknowingly not called for particular record which is already available in the department record in the case of Mohit Po....
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....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 their share in the property the share of the assessee in that property cannot be under questioned merely the MOU is executed after the purchase deed and the same is not placed on record. As regards the MOU as afterthought we found force in the arguments of the ld. AR that the same is already executed and declared about the share of the each co-owners the same by no means can be considered as afterthought, as MOU is duly signed and witnessed with date and same is executed before Notary public and cannot be termed as made merely to increase the claim in the return of income. Merely based on that assumption and presumptions the order passed by the assessing officer cannot be termed as order erroneous and prejudicial to the interest of revenue. 24. The ld. DR relied upon the case law of CIT Vs. Ballarpur Industries Ltd. reported at 85 Taxmann.com 10 wherein the issue is differently about the claim of the assessee under section 80HHC ....
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....venue 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 order in accordance with law after holding a detailed enquiry. But when enquiry in fact has been conducted and the Assessing Officer has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings, in the present case, without anything to say how and why the enquiry conducted by the Assessing Officer was not in accordance with law, the invocation of jurisdiction by the CIT was unsustainable. As the exercise of jurisdiction by the CIT is founded on no material, it was liable to be set aside. Jurisdiction under section 263 cannot be invoked for making short enquiries or to go into) the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. 12. The finding of the Tribunal that the ITO had passed assessment order after relevant enquiries and considering the aspects of th....