TaxTMI 
TaxTMI 
2022 (9) TMI 516
X X X X Extracts X X X X
X X X X Extracts X X X X
.... should not be enhanced, modified or set aside to be made afresh. This show cause is reproduced as under: "The assessment in your case for A.Y. 2015-16 was completed u/s 143(3 on 27 / 12/2017 at an income of Rs. 6,91,29,150/-against the returned income of Rs 1,27,54,600/-by the DCIT Circle 22(2), New Delhi. 2. On perusal of the case records, it is noticed that the assessment order passed by the AO is not only erroneous but also prejudicial to the interest of the revenue for the following reasons: 3. It is observed that during the year under consideration, the assessee had sold off property for consideration of Rs. 6,88,00,000/- on which capital gain of Rs. 5,63,74,550/- was earned. Deduction u/s 54 of the Income Tax Act, 1961 to the tune of Rs. 5,63,74,550/- was claimed which was disallowed by the AO. It is noticed that the value/cost of the said property as per circle rate according to the Stamp Duty Act is Rs. 16,63,96,000/- which is evident from the statement of Stamp Duty and details of property under Delhi Stamp Rules, 2007 vide e- Stamp Certificate No.lN-DL02472967801889M dated 08/09/2014 which is part of the sale deed. Paragraph 21 of the said sale deed is reproduced....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in his assessment order nor adjudicated by CIT(A), the assessment order dated 27.12.2017 is proposed to be revised to the limited extent of being erroneous and prejudicial to the interest of the revenue. 8. Considering the above facts, it is proposed to initiate proceedings u/s 263 of Income Tax Act, and therefore you are hereby required to show cause as to why the assessment order passed by the Assessing Officer, DCIT Circle 22(2], New Delhi on 27/12/2017 for the A.Y. 2015-16 should not be set aside being erroneous so far as prejudicial to the interest of revenue to the extent of above." 2.1 The submissions of assessee were found not sustainable by the Ld Revisional Authority and it directed; "11. In view of the above discussion, I am satisfied that the assessment order passed by the AO, ACIT, Circle 22(2), New Delhi on 27.12.2017 for Assessment year 2015-16, is not only prejudicial to the interest of revenue but is also erroneous in so far as the AO has failed to make any enquiry on the applicability of section 50C, and refer the matter to the District Valuation officer for determining the correct market value of the property. Therefore, the said order is set aside with a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of jurisdictional made by Ld. Pr. CIT u/s 263 and sending the matter back to the ld AO on the ground that the ld AO failed to make any enquiry on the applicability of section 50C as the ld AO failed to refer the matter to District Valuation Office (DVO) for determining the correct fair market value of the property. It was submitted that the impugned assessment order was neither erroneous nor prejudicial to the interest of revenue as the ld AO had examined in detail the question involved and accepting the fair market value of the impugned property at the transaction price. It was submitted that the ld. Pr. CIT had fallen an error in concluding that it was legally mandatory to make reference to DVO in all the cases. Ld. Counsel submitted that in fact the revisional power was exercised on the basis of audit objection and that itself made the impugned order of revisional authority not sustainable in law. It was also submitted that the Assessee had challenged the assessment order and the ld CIT(A) had set aside the assessment order and the questions examined by the Revisional Authority were very much in the powers of the ld CIT(A) to examine and consider enhancement u/s 251 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olved and as the ld AO was satisfied from valuation of property and he did not refer matter to DVO, it was concluded that view taken by AO was one of the possible view and the revisional order was set aside. 5.2 He further refered to judgment in case of Sangeeta Jain Vs. Pr. CIT (2018) 52 CCH 0101 (Del), Delhi Airport Metro Express (P) Ltd Vs. Pr. CIT (2017 184 TTJ 32 (Del) and the order of the Kolkata Bench of ITAT in ITA No. 1378/Kol/2020 decided on 09.09.2021 to contend that there is no requirement under law to refer the valuation of property to DVO. He submitted that the use of word 'may' in section 50C(2) of the Act is contentious issue and could not have been made basis for exercising revisional power u/s 263 of the Act. Reliance in this regard was also made on the judgment of Jodhpur Bench in case of Meghraj Baid Vs. ITO (2008) 114 TTJ 084 (Jodh) to submit that it is not incumbent on AO to refer the matter to DVO. Reliance was also placed on orders in Eschmann Textures India Pvt. Ltd. VS. CIT ITA No. 3616/2011 dated 21.03.2012 (Mum), ITO Vs. Shri Haresh Chand Agarwal, HUF ITA No. 282/2012 dated 20.12.2013 (Agra), Smt Shere Banoo Kajani Vs. DCIT ITA No. 243/2013 dated 28.03.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is statuary mandate in Section 50C or otherwise held by any judicial verdict of binding or even persuasive value. But apart from the Bare provisions the Revenue does not rely any precedent where "may" in Section 50C of the Act is construed as "shall". On the contrary, based on the judgments relied by Ld. Counsel for the assessee in Monoj Kumar Biswas vs. PCIT (supra), Jitindar Singh Chadha vs. Pr. CIT (supra), Meghraj Baid vs. ITO, Eschmann Textures India Private Limited vs. CIT (supra), ITO vs. Sh. Haresh Chand Agarwal, HUF (supra), Smt. Shere Banoo Kajani vs. DCIT it can be observed that as with regard to the word 'may' in section 50C(2) of the Act, requiring a reference to DVO, in case the AO does not agree with the explanation of assessee with regard to lower sale consideration than the value adopted by Stamp Valuation Authority, there are views on both the sides. In Meghraj Baid vs. ITO the Jodhpur Bench has considered word 'may' to be read 'should' so that the provision is not rendered redundant and accordingly remanded the matter to AO for proceeding. While in Monoj Kumar Biswas, Kolkatta Bench while dealing with the similar matter where Revisional Authority had exercised p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessment proceedings the assessment order was passed and at the same time a request was made that audit objection be considered as settled. 10. It can be further observed that the same, assessing officer vide letter dated 14.06.2019, which is on page no. 298 of the paper book, made a proposal for initiating revision proceedings u/s 263 of the Act by a letter addressed to the Pr. Commission of Income Tax, Delhi-8. In this also the submissions of assessee as per reply dated 27.11.2017 are reproduced. 11. Thus, the findings of Ld. CIT(A) that Ld. AO had not considered the application of Section 50C of the Act by proper inquiries or verification is not sustainable. Indeed in the assessment order there is no discussion in respect of Section 50C but what transpires is that the case of assessee was selected for limited scrutiny for examining deduction u/s 54 of the Act and based upon the analysis an addition was made by making a disallowance u/s 54 of the Act. Thus, even if there is no specific mention of the examination of case u/s 50C of the Act. The fact that in limited scrutiny assessee's claim of deduction u./s 54 was examined in itself is comprehensive and would cover all other....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)) decided on February 3, 2015, following its earlier decision in Idea Cellular Ltd. V. Deputy CIT [2008] 301 ITR 407 (Bom) has taken a similar view that : ". . . if a query is raised during the assessment proceedings and responded to by the assessee, the mere fact that it is not dealt with in the assessment order would not lead to a conclusion that no mind had been applied to it." 12. Even otherwise, the aforesaid discussion establishes that the Revenue Authorities were awaken of the issue due to audit objections alone. There is force in the contention of the ld. Counsel for the assessee that the notice u/s 263 of the Act is merely reproduction of the audit objections which have been mentioned in the letter dated 08.05.2019 by Additional Commissioner of Income Tax, Range-22, New Delhi addressed to Ld. AO with a copy forwarded to Pr. Commissioner of Income Tax, Delhi-8 for information. The copy of same on record at page no. 294 of PB was with direction to examine the facts in entirety and suggest remedial action, at the earliest. It appears that in furtherance of same the Ld. AO vide letter dated 14.06.2019, which the available at 298 of the PB, forwarded a proposal for initiat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee u/s 54 of the Income Tax Act, 1961 and the same is added- back to the income of assessee. 2. Based on the facts and circumstances of the case, the Appellant respectfully submits that the Ld. AO erred in calculating tax and tax demand and thus it is a mistake apparent from record u/s 154 of the Act. 3. Based on the facts and circumstances of the case, the Appellant respectfully submits that the Ld. AO erred in holding that the Appellant has furnished inaccurate particulars in income and thus initiating penalty proceedings u/s 271. 15. Hon'ble Supreme Court in the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688/[1990] 53 Taxman 85 held as under:- "5. In CIT v Kanpur Coal Syndicate, a three Judge bench of this Court discussed the scope of section 31(3)(a) of the Income Tax Act, 1922 which is almost identical to section 251(1)(a). The court held as under: (ITR p.229) "If an appeal lies, section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the AAC may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clau....