TaxTMI 
TaxTMI 
2024 (1) TMI 104
X X X X Extracts X X X X
X X X X Extracts X X X X
....0.2020 and 24.11.2020. After considering the above replies, the Ld. A.O. accepted the returned income and passed the assessment order dated 16.12.2020, under section 143(3) of the Act. 3. On verification of the above assessment order, the Ld. PCIT noticed that in response to the notice u/s. 142(1) dated 18.09.2020 and reply letter dated 03.10.2020 the assessee failed to file any evidence in support of the expenses claimed in the computation of capital gain namely (i) Land levelling, fencing work of Rs. 3,20,341/- (ii) Consultation charges of Rs. 6,32,247/- and (iii) Land development charges of Rs. 39,55,675/- in all totaling Rs. 49,08,263/-. 3.1. In view of the above Ld PCIT issued a show cause notice dated 10-03-2023 requesting the assessee as to why the assessment order dated 16-12-2020 relating to the Assessment Year 2018-19 should not be revised as per provisions of Section 263 of the Act since no proper enquiry was made by the AO. In response, the assessee filed its submission on 16-03-2023 explaining that during the assessment proceedings, the Ld. A.O. had made enquiry regarding Long Term Capital Gain by issuing notice u/s. 143(2) of the Act d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act. The following are list of replies filed by the Assessee: (1) Reply dated 10/01/2020. Vide said reply the Assessee has furnished detailed working of Capital Gain and relevant documentary evidences. The Assessee has also submit detailed explanation on Long Term Capital Gain earned against sale of Land as under: 7. Details of Long Term Capital Gain. In respect of Long term capital gain of Rs. 1,18,27,589/- your Good Self have asked for complete details. In this connection the Assessee submits herewith detailed working of its Long Term capital gain of Rs. 1,18,27,589/- as under: INCOME FROM LONG TERM CAPITAL GAIN Sr. Particulars Date of Sales Date of purchase Sale Value Purchase Value Indexed Improvement Value Indexed Transfer Cost Gain/Loss 1 Land 28-03-18 08-06-07 95775710 39813631 83948121 11827589 Index of 2017-18 272 Total 11827589 As explained at preceding para there was compulsory auction by the lenders. The val....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the cost of factory building the Assessee has claimed depreciation and was part of its Block of assets. 3.4 It is not out of place to submit that the Assessee was regularly filling return of income and was also assessed to tax. As explained earlier the capitalization of Land cost and Building cost were made in earlier years and the then A.O. has duly accepted the capitalization of cost of capital assets, and the Assessee's claim of Depreciation during the course of Assessment Proceedings of earlier years, which leaves no scope for any further explanation in this regards. (III) Reply dated 03/10/2020. Vide said reply again the Assessee has given detailed justification as regards to claim of Land cost. The said reply is reproduced as under of your kind reference purpose: .... ...... .... (iv) The Land cost totaling to Rs. 3,98,13,631/- was capitalized in books of accounts of previous preceding year. Further as the Land in question was acquired in F.Y. 2007 - 08, and in view of peculiar fact of the case i.e. possession by the banker and subsequent e-auction, the Assessee is not in possession of supporting vouchers, invoices copies etc. in respec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd cost in toto and oblige. [IV Reply letter dated 24/11/2020 in response to SCN issued by National E assessment Centre Delhi on 11/11/2020 is reproduced as under: 1. The Assessee being Private Limited company is subject to statutory audit as per Companies Act as well as tax audit as per provision of Income Tax Act. The auditor has after verifying the relevant supporting evidences/ voucher as per his audit procedure issued audit report without any adverse remark as regard to the cost of capital assets. Independent audit report leaves no scope to doubt the genuineness of land cost claimed by the Assessee. The capital cost of Land of Rs. 3,98,13,631/- was opening balance and carried forward as such from the year of its acquisition. No additional expenditure was incurred during the year under consideration. 2. In addition to above, the Assessee submits that it was also subject to scrutiny assessment under section 143(2) of the Act in preceding previous years. The land costs of Rs. 3,98,13,631/- was accepted as such by the then A.O. during the course of scrutiny assessment of earlier year. Hence land cost claimed by the Assessee of Rs. 3,98,13,631/- being ope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lity concept, together with audited annual account, assessment order of preceding years, no. of years lapse etc., there is no scope for any adverse inference in this regards. The Assessee requests your Good Self to kindly accept the Land acquisition cost in total and Capital gain offered to tax as such. 3.5 Further, your Good Self have proposed to add disallowance of Rs. 49,08,263/- as "Unexplained income" of the Assessee. Against the said proposal, the Assessee submits that disallowance proposed by your Good Self was out of Opening Land cost brought forward from audited annual accounts of preceding years. As stated earlier, audited accounts of preceding years were duly accepted during the course of Assessment Proceedings of preceding previous years. Hence any disallowance out of Land cost, cannot be termed as "unexplained income" of the Assessee under any of the provision of Income Tax Act. 4. At the outset the Assessee further submits that in view of exorbitant Brought forward losses and unabsorbed depreciation, the gain earned against the sale of Land in question was set off against the brought forwards losses of earlier year. The availability of sufficient bro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tation charges and Land development charges. 5.2. As per the clause (b) of section 142(1) of the Act, the A.O. cannot call for the details pertaining to period more than three years prior to the previous year. That is for the Assessment Year 2018-19, the A.O can ask for details up to 2015-16, he cannot expect to ask for details, while framing the assessment beyond three years period. Even as per Rule 6F of the Income Tax Rules, retention of books of accounts for a period up to six years are sufficient compliance of the provisions of the Income Tax Act. Thus the Assessing Officer after detailed consideration of the replies filed by the assessee dated 10.01.2020, 06.08.2020, 03.10.2020 and 24.11.2020 accepted the explanation offered by the assessee and has not made any additions. Thus considering overall circumstances the conclusion arrived by the A.O. is one of the plausible view taken by him, while completing the assessment and relied upon various case laws. 6. Per contra, Ld. CIT-DR Shri Akilendra Pratap Yadav appearing for the Revenue supported the order passed by the PCIT and requested to uphold the same. 7. We have given our thoughtful consideration and perused the mat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd.-Vs-CIT 243 ITR 83. However, an assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. 8. Our above view is supported by the following judicial precedents: (a) Supreme Court of India in case of CIT Vs. Nirav Modi [2017] 77 taxmann.com 78 (SC) wherein it was held as under. Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credit (Gift) - Assessment years 2007-08 and 2008-09- Assessee received certain amount as gifts from his father and sister who were non- residents in India Assessing Officer after making detailed enquiries, took a view that assessee had duly proved identity, source and creditworthiness of donors Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her Assessing Officer in assessment order is not required to give detailed reasons and once it is clear that there was application of mind by an enquiry, Commissioner, merely because he entertains a different opinion in matter, cannot invoke his powers under section 263 Held, yes [Para 59] [In favour of assessee] (d) Decision of Gujarat High Court in case of Aryan arcade Ltd. Vs. CIT [2017] 84 taxmann.com 293 wherein it was held as under: Section 24, read with section 263, of the Income-tax Act, 1961 Income from house property - Deductions (Interest) - Assessment year 2011-12 Assessee-company was engaged in renting of property During relevant period assessee raised funds by issuing debentures - Funds raised through such debentures were utilised for repayment of past loans taken for purpose of construction of building Assessee pointed out this aspect to Assessing Officer during original assessment Through accounts assessee could establish precise correlation between debentures and repayment of past loans Assessing Officer after examining issue accepted assessee's claim for deduction under section 24(b) even with respect to interest paid on debentures which were....