TaxTMI 
TaxTMI 
2024 (6) TMI 1222
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.... 2. That the Id. Pr. CIT (IT)-Delhi-1 is grossly erred in law as well as on the facts of the case in invoking S. u/s 263 of the Act. The same is being purely contrary to the provisions of law, therefore the impugned order u/s 263 as well as notice u/s 263 of the Act may kindly be quashed. 3. That the Id. Pr. CIT (IT)-Delhi-1 is grossly erred in law as well as on the facts of the case in taking the action u/s 263 of the Act on the allegations that: (a). The assessee was not for Long Term Capital Gain Exemption u/s 54 amounting to Rs. 82,28,577/-. (b). That the assessee purchased new residential house after two years. (c). That the Id. AO wrongly allowed the deduction of Rs. 82,28,577/- u/s 54 Which are contrary to the facts, without considering the material evidences available on record in their true perspective and sense and such a finding being perverse, the impugned action is bad in law without jurisdiction and being void ab initio, the impugned order u/s 263 may kindly be quashed. 4. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing." ....
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....ave sold property for consideration of Rs. 1,00,33,670/- on which you have claimed Long Term Capital Gains. As per the computation, you have claimed deduction u/s 48. However, you have not submitted the documentary evidence (Sale deed/ Purchase deed/ Bank statement and sources of payment for purchase). Thus in the absence of the above, the cost of acquisition, improvement & indexation cannot be provided. Also the property will be considered for Short Term Capital Gains with the cost of Acquisition as Nil. You are required to show cause why STCG of Rs. 1,00,33,670/- must not be considered for Short Term Capital Gains. (b) Also you have claimed deduction/exemption u/s 54 of the Capital Gains by claiming purchase of property of Rs. 1,05,12,601/- on 24.04.2015 for which you have not submitted any documentary evidences. (c) On calling information u/s 133(6) from M/s Sana Land Developers Pvt Ltd, the assessee vide e-mail dated 01.03.2022 submitted that the booking of Flat No. 604 of Burj Burhan Apartment was cancelled by you and money was retumed in F.Y. 2016-17. Thus the deduction u/s 54 claimed by you amounts to wrongful and malafide claim. You are thus required to sh....
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....earnest money/advance money was returned by the builder during the F.Y 2017-18. Thereafter, the assessee purchased a flat from M/s. Nyati Builders Pvt. Ltd. worth Rs. 34,00,000/- on 28.12.2017 and claimed exemption u/s 54 of the Income Tax Act, 1961 including expenses related to various furniture, furnishing house hold items, Interior & brokerage etc. He further noted that the assessee had purchased the flat on 28.12.2017 against sale on 07.04.2015, which was purchased after the two years from the date of sale or transfer of long term assets, thus he was not eligible to claim exemption u/s 54 as per conditions laid down in the said section. Based on that set of facts he issued a notice u/s. 263 of the Act proposing to revise the order of the assessment and thereby the assessee was issued a detailed show cause notice dated 16.02.2024. The assessee replied the same on 08.03.2024. The ld. CIT noted that the reply of the assessee was duly considered and the same was not found tenable because of the following reasons : (i) The assessee had made investment by booking of flat from the Builder M/s Sana land and developers on 24.04.2015 during the F.Y 2015-16 relevant to A.Y 2016-1....
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....essment order passed by the Assessing officer under the provisions of section 147/144 of the Act dated 26.03.2022 is hereby set aside and the AO is directed to pass an order afresh after verifying the claim of assessee under the provisions of section 54 and section 2(14) of the Income Tax Act, 1961. The AO should also verify the genuineness of expenses incurred on account of interior, house hold expenses and furniture expenses mostly paid in cash. 8. Needless, to say that the AO should provide sufficient opportunity before passing the consequent order as per direction given." 5. Assessee, feeling aggrieved and dissatisfied from the finding so recorded in the order of the ld. CIT(IT), has preferred the present appeal on the grounds as raised and reproduced in para 2 above. In support of the various grounds so raised by the ld. AR of the assessee, the written submissions have been filed. The written submissions so filed by the ld. AR of the assessee, read as under : "GOA : 1-3: Invalid jurisdiction and Action u/s 263 FACTS: 1. The brief facts of the case are that the assessee is a NRI form last 30 years doing business at Dubai Pvt. Ltd and regular IT ass....
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....mitted his reply on dated 11.03.2022, 21.03.2022, 23.03.2022 and 24.03.2022. Information u/s 133(6) of the Income-tax Act was called for verification of the claim made by the assessee. On the basis of the material on record, the final show cause notice was issued to the assessee vide notice dated 08.03.2022 which is reproduced as under: "Please refer to the notices u/s 142(1) dated 30.06.2021, 26.11.2021, 16.02.2022 and 24.02.2022 vide which you have been asked to justify your claim. In response to the above, you have not filed proper justification with documentary evidences. Vide your response dated 23.11.2021 and 08.12.2021 you have not been able to justify your claims. You are therefore required to show cause why the following addition shall not be made in your case: (a) You have sold property for consideration of Rs. 1,00,33,670/- on which you have claimed Long Term Capital Gains. As per the computation, you have claimed deduction u/s 48. However, you have not submitted the documentary evidence (Sale deed/ Purchase deed/ Bank statement and sources of payment for purchase). Thus in the absence of the above, the cost of acquisition, improvement & indexa....
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....03.2022 by taking a reasonable and possible view. 4. Thereafter the ld. Pr. CIT-(Intl)-Delhi-1 has issued the notice u/s 263 on dt. 16.02.2024 by alleging that the order passed by the AO is found to be erroneous as it is prejudicial to the interest of the revenue on the issue vide notice dt. 16.02.2024(PB16-17). In this notice the ld. Pr. CIT has alleged that: "As the AO did not make proper enquiries in respect of Long Term Capital Gain Exemptions u/s 54 amounting to Rs. 82,28,577/-. In this case, the assessee initially booked a flat worth Rs. 1,05,12,601/- for purchase from M/s. Sana Land Developers Pvt. Ltd. for exemption u/s 54 against the above LTCG but vide email dated 01.03.2022 the assessee submitted that the booking of this flat was cancelled by him and money was returned in FY 2016-17. Thereafter, he purchased a flat from M/s. Nyati Builders Pvt. Ltd. worth Rs. 34,00,000/- as registered on 28/12/2017 and claimed exemption u/s 54 against returned LTCG showing total purchase cost of the flat Rs. 83,36,530/- by including expenses on various furniture, furnishing, house items & brokerage etc. As the assessee purchased flat on 28/12/2017 against sale ....
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....e and house hold expenses are not part of capital assets, thus, the assessee is not eligible for claim of exemption on new assets being residential house u/s 54 of the Income Tax Act, 1961 on these items. After considering the reply of the assessee as well as the facts and circumstances of the case as stated above, the assessment order passed by the Assessing officer under the provisions of section 147/144 of the Act dated 26.03.2022 Hence the ld. CIT has held that the assessment order u/s 147/144 dt. 26.03.2022 passed by the AO is hereby set aside and the AO is directed to pass an order afresh after verifying the claim of assessee under the provisions of section 54 and section 2(14) of the Income Tax Act,1961. The AO should also verify the genuineness of expenses incurred on account of interior, house hold expenses and furniture expenses mostly paid in cash. Thus the ld. Pr. CIT has set-aside the assessment to be made afresh. SUBMISSIONS: 1. Wrong order and action u/s 263: 1.1 Action of the Pr. CIT is invalid and without jurisdiction: It is submitted the action and direction of the ld. Pr. CIT is without jurisdiction and invali....
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....m :- In the present case the ld. AO passed the assessment allowing relief u/s 54 after making the inquiring into the claim which is very clear from the record itself that is why the ld. Pr. CIT has used the word proper inquiry which is not given u/s 263. (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119 :- There is no any direction in the present case admittedly (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.]:- there is no such decision. If so then how the action can be taken u/s 263, hence liable to be quashed. 1.2 On perusal of the order of the ld. AO as well as the order of the ld. Pr. CIT itself it is very clearly proved that the order of the AO has neither erroneous nor prejudicial to the interests of the revenue. Because as we would like to draw kind attention of the honble bench that in the above matter the case of the assessee has been reopened u/s 148 was issued for purpose to know the source of invest....
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.... was prejudicial to the interest of the Revenue. In the present case the appellant has furnished a detailed reply (PB35- 39)with the details to the show cause notice by making the reference to the facts of the case and legal position. Despite that the Pr. CIT did not prove or bring any material or circumstantial evidence on record that the details contentions of the assessee on these issues are not genuine, bogus, not verifiable and not correct. 2. Case reopened u/s 148 for limited issue: Further when the very basis of reopening of the case under section 148 was on account of investment in purchase of immovable property, then how it can be said that the AO has failed to make the inquiry, where the scope of inquiry is limited only to the extent of that issue and in the action u/s 148 the issue of deduction u/s 54 was not there. And till date the position is same there is no change. It was not a regular assessment it was a reassessment for the limited purpose or issue and on perusal of the entire record or detailed it cannot be said that the ld. AO has not made inquiries. ". Vide copy of reasons recorded (PB19). If so then how the ld. Pr. CIT can assume the jurisdiction on t....
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....017 after recording the reasons, as the reason was cash deposits of Rs. 50,55,800/- in the bank account. In response of which the assessee filed its return of income on 28/04//2017 declaring total income of Rs. 1,08,464/- and claimed the deduction u/s 80P. Thereafter, Scrutiny assessment was started by the A.O., who had issued statutory notice U/s 143(2) and also 142(1) of the Act dated 06/06/2017 thereby raising query and in his query letter which has been responded by the assessee vide filing reply which has already been placed on record at page No. 3-4 and 6-11 of the paper book. The A.O. thereafter considered, examined and verified the same and also examined the books of account which have been placed on record by the assessee. Thereafter, the assessment was completed U/s 148 r.w.s 143(3) of the Act by the A.O. vide his order dated 30.06.2017 after examining all the details. 12. We observed that the ld. PT.CIT or the Commissioner may call for and examine the record of any proceeding U/s 263 if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interests of the revenue. However, on perusal of the order passed by the....
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....ile exercising jurisdiction u/s 263 of the Act our view. The case of the assessee was more specific to the limited scrutiny or it is not case of the assessee for complete scrutiny u/s 143(3) for regular assessment and the very basis of reopening of the case under section 148 was on account of cash deposits in the bank, then how the ld. Pr. CIT can hold that the AO has failed to make the inquiry, where the scope of inquiry is limited only to the extent of that issue and in the action u/s 148 the issue of deduction u/s 80P was not there. Thus in the proceedings u/s 263 the ld. Pr. CIT cannot assume or except or direct to the ld. AO to examining the issue which was not subject matter of the reasons recorded u/s 148 and under the 148/147 assessment. Our this view found strength from the decision of Coordinate Bench of this Tribunal in the case of Mahendra Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun 30, 2021 (2021) 62 CCH 0271 Jaipur Trib The present case of the assessee is more strong footing here being the assessment u/s 147/148. Therefore, in light of the above facts and position, the ld. PT.CIT could not be said to be justified in holding that the assessment order w....
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.... was selected for limited scrutiny, revisional jurisdiction cannot be exercised for broadening scope of jurisdiction that was originally vested with A.O while framing assessment-As per CIT, reason for which matter was selected for limited scrutiny i.e, mis-match of sales turnover vis-à-vis ITR, CIB & AIR has a direct bearing on opening and closing stock of cost of construction and W.I.P and in turn, on taxable income, therefore, AO was duty bound to examine these issues and AO having failed to examine these issues, AO has effectively failed to examine issues for which matter was selected for limited scrutiny-As far as matters for which case was selected for limited scrutiny in terms of mis-match of sales turnover, same has been duly examined by AO and even CIT has not recorded any adverse findings in terms of lack of enquiry or inadequate enquiry on part of AO-Order passed by CIT u/s 263 is set aside-Assessee's appeal allowed." (2.4) In the case of Paul Bharwaj vs. Pr.CIT in ITA No. 463/Chd/2019 May 13, 2021 (2021) 62 CCH 0120 Chd Trib Revision-Order erroneous or prejudicial to revenue-Over exercise of power-Assessee an individual filed his return declaring income a....
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....e fresh assessment on issues which were not subject matter of assessment framed on basis of limited scrutiny-Assessee's appeal allowed. Thus in the present case the position are same and the principal of the above judgments are also applicable in the present case. Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification when firstly the case of reopened for the limited purpose secondary despite the same assessee has produced all the details which examined and deduction allowed 3. As before the ld. Pr. CIT through letter dt. 08.03.2024(PB24-27) we had explained that "it is submitted that as the ld. AO had allowed the exemption u/s 54F after considering all reply, the material and details furnished before him and in his view the same was allowable. As the issue as raised by your honor had already been asked by the ld. AO vide page 2-3 of the assessment order where the ld. AO reproduced the SCN and in response to this SCN assessee had filed the reply on dt. 11.03.202022, 21.03.2022, 22.03.2022 and 24.03.2022 where he has clearly mentioned....
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....ars 2015-16 and 2016-17 copy of ledger account is enclosed and expenses for other construction, furniture and fixture have also been incurred as the possession had already been taken, copy of allotment letter is enclosed. The GST/VAT deducted, expenses/charges incurred in M/s Sana Builders is also the part of investment because assessee has not get any benefit rather bearded loss. Hence it is not the case that the assessee had made the entire payment on 28.12.2017, thus the investment had been made within two years. In this circumstances deduction u/s 54 cannot be denied during the year under consideration. Further for the default and cheating a builders a poor assessee should not be suffered. Thus, it cannot be said that no inquiry or examine has been made by the AO on these issues. The AO has made the inquiry on the above issues. On perusal of the query letter and replies and when the transaction has been shown there and explained and the AO made detailed inquiry and assessee filed all the details related thereto. No one (AO) can read the mind of other person (Pr. CIT) while doing the work on its sprite and cannot guess the expectation or manner of his superior authority....
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.... his consideration. Such a view or action is not well founded in the law or by various Hon'ble courts. Kindly refer direct decisions in case of Smt. Leela Choudhary v/s PR. CIT 289 ITR 226(Gau.) also refer, Saw Pipes Ltd v/s Add. PR. CIT 94 TTJ 1036(Del) Also refer Malabar Industrial Co. Ltd. v/s PR. CIT 159 CTR(1)(SC), PR. CIT v/s Rayn Silk Mills 221 ITR 155(Guj.) Same view has been expressed in the case of Kamal Kumar Gupta v/s Pr. CIT 142 TTJ 9(Jp) wherein it has been held that "assessee was asked by the AO to file the details of trade creditors which are shown in the name of agriculturalist. In the reply, assessee filed written submission enclosing the list of creditors. Thus, the AO made the inquiry and it is not a case of lack of inquiry but can be case of insufficient enquiry. Pr. CIT was not justified in passing the order u/s 263." In the present case also is the same position. And also followed in the case of Sh. Gyan Chand Jain v/s Pr. CIT 50 TW 109(Jp). Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification. The ld. Pr. CIT has presented hi....
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....409 (Mumbai) delivered by the hon'ble President and vice president as under: "20. Undoubtedly, the expression used in Explanation 2 to Section 263 is "when Commissioner is of the view," but that does not mean that the view so formed by the Commissioner is not subject to any judicial scrutiny or that such a view being formed is at the unfettered discretion of the Commissioner. The formation of his view has to be in a reasonable manner, it must stand the test of judicial scrutiny, and it must have, at its foundation, the inquiries, and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be. If we are to proceed on the basis, as is being urged by the learned Departmental Representative and as is canvassed in the impugned order, that once Commissioner records his view that the order is passed without making inquiries or verifications which should have been made, we cannot question such a view and we must uphold the validity of revision order, for the recording of that view alone, it would result in a situation that the Commissioner can de facto exercise unfette....
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.... verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be. 21. That brings us to our next question, and that is what a prudent, judicious, and responsible Assessing Officer is to do in the course of his assessment proceedings. Is he to doubt or test every proposition put forward by the assessee and investigate all the claims made in the income tax return as deep as he can? The answer has to be emphatically in negative because, if he is to do so, the line of demarcation between scrutiny and investigation will get blurred, and, on a more practical note, it will be practically impossible to complete all the assessments allotted to him within no matter how liberal a time limit is framed. In scrutiny assessment proceedings, all that is required to be done is to examine the income tax return and claims made therein as to whether these are prima facie in accordance with the law and where one has any reasons to doubt the correctness of a claim made in the income tax return, probe into the matter deeper in detail. He need not look at everything with suspicion and inve....
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....the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section 263. In the case of Malabar Industrial Co Ltd Vs CIT [(2000) 243 ITR 83 (SC)], Hon'ble Supreme Court has held that "Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law." The test for what is the least expected of a prudent, judicious and responsible Assessing Officer in the normal course of his assessment work, or what constitutes a permissible course of action for the Assessing Officer, is not what he should have done in the ideal circumstances, but what an Assessing Officer, in the course of his performance of his duties as an Assessing Officer should, as a prudent, j....
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....llan etc. Revision order of the PR. CIT Set Aside. Also refer Subrata Kumar Nag v/s PR. CIT 127 TTJ 238(Kol), Rajiv Arora v/s PR. CIT (Supra). We would like to refer the case of Kartik Financial Services Ltd V/s CIT 55 CCH170 (Mum. Tribunal)(2019). The principal of the case is also applicable here in the present case. In the case of Nalco Company vs CIT 200 DTR 275 (Pune-C) ITA No.1217/Kol/2017 dt. 05.02.2021 it has been held that if the AO makes inquiry, examines the issue which is born out from the record of the assessment proceedings, then reaches a conclusion in favour of the assessee which is legally possible, the assessment order cannot be characterized as erroneous and prejudicial to the interest of the Revenue. Since none of the four clauses of the Expln. 2 to s. 263(1) appies to the case under consideration, revisionary power, even under the enlarged scope of the Expl. 2, was not legally exercisable. 7.1 No requirement of deep investigation: Thus, on the perusal of the order of the Pr. CIT it is very clear that he was of the view that the AO must have made deep investigation or inquiry and in the case of Arvind Bhartiya Vidhyalaya Samiti v/s ITO ....
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....us and prejudicial order-Lack of proper enquiry- There was a time of two years for investigation, the AO had issued questionnaire, the assessee had produced books of account, bills, etc. and replied to various issues raised by AO-Thus, it could not be said that order was passed in haste without making any inquiry on the issues-AO had taken one view where two views are plausible and such view cannot make the order erroneous and prejudicial to the interest of the Revenue-CIT's view cannot be invoked to substitute the view of the AO-Assessment also does not become erroneous where queries raised during the assessment proceedings are not recorded in the final assessment order. 8.2. On perusal of the order in the present case the ld. CIT has taken action u/s 263 only on the assumption and presumption that the no inquiry has been made by the AO on the issues and not verified. Kindly refer CIT v/s Paras Cotton Co. 288 ITR 211(Raj.) where held that CIT could not have acted on mere assumption. Mere suspicion cannot take place of proof and the order of CIT u/s 263 cannot be sustained. 8.1 In CIT V/s Girdhari Lal 258 ITR 331(Raj.) it has been held, "When the Assessing Officer....
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....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 AO was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction under s. 263. When enquiry in fact has been conducted and the AO 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 the invocation of jurisdiction by the CIT was unsustainable. As the exercise of jurisdiction by the PR. CIT is founded on no material, it was liable to be set aside. Jurisdiction under s. 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. The finding of the Tribunal that the ITO had passed assessment order after relevant enquiries and considering the aspects of the matter required by the CIT to be considered by him is a finding of fact. Although in t....
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....fficer is unsustainable under the law. (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the PR. CIT, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercise quasi-judicial power vested in him and if he exercise such power in accordance with law and arrives as a conclusion, such conclusion cannot be termed to be erroneous simply because the PR. CIT does not feel satisfied with the conclusion. (viii) The PR. CIT, before exercising his jurisdiction under section 263 , must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation be a letter in writing and Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because ....
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....e word 'erroneous' includes the failure to make enquiry. It is submitted that the AO made the enquiry and it is not a case of lack of enquiry. The Hon'ble Delhi High Court in the case of CIT v. Vikas Polymers [2010] 236 CTR (Del.) 476 had an occasion to consider the passing of order under s. 263 of the Act by the learned CIT when the AO made an enquiry and the assessee filed the reply. The Hon'ble Delhi High Court held that assumption of jurisdiction under s. 263 of the Act by learned CIT is not warranted. It will be useful to reproduce the head note from this decision: "Provisions of s. 263 when read as a composite whole make it incumbent upon the PR. CIT before exercising revisional powers to : (i) call for and examine the record, and (ii) give the assessee and opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is only on fulfillment of these twin conditions that the PR. CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the PR. CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofa....
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....rom the SC (P) Ltd. was duly reflected in the assessment order of the said person." The reliance is also placed in the order of the Hon'ble High Court of Bombay in the case of PR. CIT v. Gabrial India Ltd. [1993] 71 TAXMAN 585 (BOM.). It will be useful to reproduce the held portion of the case: Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1973-74 - Assessee claimed a sum of Rs. 99,326 described 'as plant relay out expenses' as revenue expenditure and ITO, after making enquiries in regard to nature of said expenditure and considering explanation furnished by assessee in that regard, allowed assessee's claim- Subsequently, Commissioner, exercising powers under section 263, cancelled order of the ITO observing that order of ITO did not contain discussion in regard to allow ability of claim for deduction which indicated non- application of mind and that claim of assessee required examination as to whether expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him - Whether under section 263 substitution of the judg....
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....ainable. In the case of Shree Salasar Overseas (P) Ltd. vs. PR. CIT (2012) 144 TTJ 0041 (UO) held Revision-Erroneous and prejudicial order-Lack of proper enquiry- CIT set aside the assessment order on the ground that the AO has not verified as to whether the provision for development expenses claimed as deduction by the assessee-developer was made on scientific basis having regard to the accrued liability incurred by the assessee-Not justified-Assessee had filed relevant details before the AO in a letter stating that such deductions was also allowed in earlier years-Hence, this is not a case where there was no enquiry-Action under s. 263 cannot be taken on account of inadequate enquiry-Therefore, CIT was not justified in setting aside the assessment order by exercising power under s. 263-Swapan Sakar Insurance Consultant & Marketing Services (P) Ltd. (ITA No. 117/JP/2010, dt. 6th Jan., 2011) followed. In the case of CIT vs. Ashish Rajpal 320 ITR 0674 (Del) it has been held that Revision-Erroneous and prejudicial order-Lack of proper enquiry-After issue of notice under s. 143(2), several communications were addressed by the assessee to the AO whereby the informatio....
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....nts and judgments referred therein are also applicable in the present case. Copy is enclosed. As in these case it has been held that if the assessee has invested the amount in time and the possession is not received due to the circumstances beyond control to the assessee. In the case of Abodh Borar vs. ITO IN I.T.A. No.5114/DEL/2016 (2019) 76 ITR (Trib) 0030 (Delhi) (S.N.) It Has Been Held That Capital Gain-Investment in residential house property-Assessee filed her return of income claiming exemption of capital gain u/s 54 and 54F-Assessee had sold two properties- Entire capital gain was invested in residential plot-AO disallowed same on ground that assessee had not completed construction of residential house within period of 3 years-CIT (A) confirmed order of AO-Held, assessee had made investment within prescribed period-Payment was made to developer, who issued allotment letter and entered into agreement-As per agreement developer was supposed to hand over possession of plot within 18 months from date of allotment letter-However, developer did not deliver possession-Hence, assessee could not complete construction within prescribed period of 3 years- This delay ....
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....d the query on all the facets of the issue (APB 5 to 15). The assessee replied to those query letters as recorded by the ld. AO and he applied his mind and took a view on the issue. Even the ld. AO issued notice u/s. 133(6) of the Act to collect independent evidence related to the issue. The ld. AR of the assessee has drawn our attention to para (c) of the show cause notice wherein the ld. AO blamed that the claim of the assessee u/s. 54 amounted to wrongful and malafide claim. The assessee refuted that blame. The explanation of the assessee was considered by the ld. AO. The same issue though considered by the ld. AO cannot be raised by the ld. CIT without proving that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue. There is no finding of the ld. CIT(IT) on that aspect of the matter and therefore, based on the legal decision and written submission, ld. AR supported the order of the ld. AO and submitted that there is no scope to invoke the provision of section 263 of the Act based on the set of facts already on record. 8. The ld. DR has relied on the findings recorded in the order of the ld. CIT(IT). The ld. DR submitted that the case of the a....
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....rom the above, show cause notice that the assessee's claim was doubted by the ld. AO considering the information collected u/s. 133(6) of the Act. The assessee replied to the said show cause and the claim of the assessee was accepted by the ld. AO. Thus, it is evident that the claim of assessee u/s. 54 of the Act was examined, not only from the details furnished by the assessee but also from the outside information collected u/s. 133(6) of the Act i.e from M/s. Sana Land Developers Private Limited and the ld. AO knew that the investment claimed u/s. 54 of the Act was cancelled and the assessee had booked another property and the investment for the year under consideration was subsequently reinvested in another property. Against that order of the assessment, the ld. CIT invoked the provision of section 263 of the Act being of the view that the ultimate property is not covered by the provision of section 54 of the Act. While doing so, he supported his action on the ground that the assessee made investment by booking of flat from the Builder M/s Sana land and developers on 24.04.2015 during the F.Y 2015-16 relevant to A.Y 2016-17, however, as per builder M/s Sana land and developers, ....
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....IT. He was satisfied with the conduct of the ld. AO on the issue for which the notice u/s. 148 was issued. But he went on to examine the other issue of deduction claimed u/s 54 of the Act by the assessee amounting to Rs. 82,28,577/-. In this case, the assessee initially booked a flat worth Rs. 1,05,12,601/- for purchase from M/s. Sana Land Developers Pvt. Ltd., and accordingly claimed exemption u/s 54 against the long term gain of the assessee, but vide email dated 01.03.2022 the assessee submitted that the booking of this flat was cancelled by him and money was returned in F.Y. 2016-17 i.e. subsequent to the year under consideration. As the money came back and the earlier deal was cancelled, the assessee purchased a flat from M/s. Nyati Builders Pvt. Ltd. worth Rs. 34,00,000/- as registered on 28/12/2017 and claimed exemption u/s 54 against returned LTCG showing total purchase cost of the flat Rs. 83,36,530/- by including expenses on various furniture, furnishing, house items & brokerage etc. As the assessee purchased flat on 28/12/2017 against sale on 07/04/2015, it was after two years from the date of sale or transfer, the ld. CIT was of the view that the assessee was not eligib....
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.... on the information collected. Thus, no further defect was found from the record collected by the ld. AO. Since, in this case, ld. AO has clearly incorporated the extract of enquiry conducted in the body of the assessment order and revenue did not pinpoint any error on the part of the Assessing Officer the order passed after due application of mind could not be subjected to proceeding u/s. 263 of the Act. 13. Be that as it may, in our considered view, the ld. A.O while framing the assessment had taken a possible view, and revenue did not demonstrate any error on the part of the ld. AO. In fact, when the ld. AO had conducted the required enquiry and none of the conditions mentioned for revision of order as required by Explanation 2(a) of Section 263 of the Act has been fulfilled, the order passed by the Assessing Officer could not be deemed to be erroneous so as to be prejudicial to the interests of the revenue. For this, it is relevant to extract the Explanation 2 of section 263 which the ld. DR has heavily relied upon: Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in ....
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....d as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the ld. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. In this process, even the AO had no power to review his own order. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC) held: "Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law." 16. Even the ld. AR of the assessee has brought to our ....