TaxTMI 
TaxTMI 
2024 (12) TMI 690
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....de the assessment framed. 4) Order passed by A.O. u/s 143(3) of I.T. Act 1961 was after proper enquiries and taking possible view on facts and evidence on record. Thus order passed cannot be termed as erroneous and prejudicial to the interest of revenue for invoking provisions of sec. 263 of I.T. Act 1961. 5) Any other ground shall be prayed at the time of hearing." 3. The factual matrix is culled out to understand the contour of bone of contention. For the year under consideration, the assessee filed her return of income on 03/07/2017, disclosing total income of Rs. 3,93,980. Assessee's case was selected for limited scrutiny through CASS for examination of issues viz. (i) deduction / exemption from capital gain; and (ii) investment in immovable property. The Assessing Officer after making enquiries and examination concluded assessment under section 143(3) of the Act on 21/09/2019, accepting the income as per return filed by assessee. 4. The learned PCIT invoked jurisdiction under section 263 of the Act. The learned PCIT on a perusal of the record observed that the Assessing Officer had not verified issues during the course of assessment proceedings. The PCI....
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....bility of exemption u/s. 54ECis concerned, theBond was purchased on 04.12.2015 and till that date an amount of Rs. 2,97,00,000/- was received as a sales consideration. Bonds waspurchased out of advance money received on account of property sold. Claim of New Agricultural land for Rs. 17332940/- is correctly allowable as assessee has sold 1H. 92R Agricultural Land alongwith House constructed on part of land admeasuring of about 58.55 Sq. Mts. Onlyand land sold which is still as on day is a Agricultural Land. As per provision of section 54B of I.T. Act, 1961, exemption is correctly claimed and allowed by the assessing officer. Cost of improvement as claimed as per list is correctly allowed as all the payment are made by account payee cheques and all these transaction are reflected in bank statement and are explained to Assessing Officer at the time of assessment proceedings. The assessee enclosed copies of 07/12 extracts, bank statement and copy of major bills towards cost of construction." 5. The learned PCIT, on analysis of the order passed by the Assessing Officer as well as while considering the submissions of the assessee held that the order passed by the As....
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....y relating to deduction / exemption claimed by the assessee. Therefore, the order passed by the Assessing Officer is erroneous and prejudicial to the revenue in view of Explanation 2 to Section 263 of the I.T. Act. Reliance is placed on the following decisions of Hon'ble Courts. 5.1 The Hon'ble ITAT Bench in the case of Apollo Tyres Ltd vs Assistant Commissioner of Income Tax, as reported in the 65 ITD 263 (Delhi) has held as under: It is a well-settled law that where the Assessing Officer fails to make proper inquiries and investigation, such failure on the part of the Assessing Officer will result in prejudice to interests of the revenue and initiation of action under section 263 by the Commissioner under such circumstances will be perfectly valid and justified. 5.2 Rajmandir Estates Private Limited V. Principal Commissioner of Income Tax'-2016 (5) TMI 801-CALCUTTA HIGH COURT- The High Court held that lack of enquiry, where enquiry is necessary, can be treated as prejudicial to the interest of the Revenue so as to justify revisional jurisdiction. It was for non inquiry, the validity of action under Section 263 was held justified in ....
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....Gain Bonds Series and Bank Statement; v) Copy of Purchase Deed dated 23/06/2017; vi) Reply to ITO, Ward-2, Amravati; vii) Copy of acknowledgment of Income Tax Return & computation of income for A.Y. 2017-18; viii) Sale Deed dated 22/03/2017; ix) Detailed Note on the sources of funds for the purchase of property along with bank statement; x) Statement of particulars regarding income from other sources, capital gain and deductions claimed u/s 80C; xi) Reply to ITO, Ward-2, Amravati dated 20/09/2018; xii) Copy of bank statements and working sheet to explain payment of cost of improvement; xiii) Copy of sample bills & ledger account; xiv) Notice for hearing dated 16/02/2022; xv) Assessment order u/s 143(3) r/w section 263 r/w section 144B in assessee's case for A.Y. 2017-18, order dated 27/03/2023; and xvi) Order u/s 155(15) in assessee's case for A.Y. 2017-18. 7. The learned Counsel for the assessee further placed reliance on the following case laws in support of his arguments:- i) CIT v/s Max India Ltd., [2007] 295 ITR 282 (SC); ii) CIT v/s Gabrial India Lt....
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....a 4 it has been noted that A.O. has not properly examined. At para 6 it is noted that A.O. failed to examine and therefore order is set aside for conducting necessary enquiries. C) The assessment framed u/s 143(3) of I.T. Act 1961 on 21/09/2019 was for limited scrutiny through CASS selection for examination of deduction/exemption from capital gains and investment in immovable property. A.O. has framed assessment after due verification. At page 1 of assessment order issues for limited scrutiny are noted as deduction/ exemption from gains and investment in immovable property. It has been noted in the assessment order as to issue of notice u/s 142(1) seeking information on the issues under examination and same are verified and placed on record D) Notice u/s 142(1) dated 04/06/2019 seeking details on issue of limited scrutiny. E) Notice of hearing u/s 263 dated 16/02/2022 issued indicates three issues for which jurisdiction is sought to be assumed. It has been noted as under: i) Accepted the claim of exemption 54EC of I.T. Act 1961. ii) Allowed exemption u/s 54B in respect to purchase of new agricultural land. iii) Cost of improveme....
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....Rs. 170.72lacs. Exemption u/s 54EC is Rs. 50lacs and balance amount is allowed u/s 54B. K) Order passed u/s 263 of I.T. Act 1961 does not indicate as to what enquiry has not been made on the facts and evidence on record. In show cause notice and in order passed u/s 263 no inquiries as are required is specified. Condition precedents for invoking provisions of section 263 are absent. Reliance on: i) PCIT v/s Kanin (India), (2022) 141 taxmann.com 83 (P & H);and ii) VipulModi vs. PCIT (2022) 139 taxmann.cm 89 (Mum.); L) A.O. has made due verification and thus order passed by A.O. cannot be termed as erroneous or prejudicial to the interest of revenue for which jurisdiction u/s 263 could be invoked." 10. On the other hand, the learned Departmental Representative vehemently submitted that the revisional proceedings have been correctly initiated. He submitted that the assessee had miserably failed to comply with the conditions of section 54B and 54EC of the Act and thus the appeal needs to be dismissed. He submitted that in any case, the assessee's case has only been set aside for fresh assessment and he need not be aggrieved since he has go....
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....any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. Explanation.-[Omitted by the Finance Act, 1....
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.... The assessee has shown from the records that the land was under cultivation during the immediately two preceding years and the assessee had grown Soyabean and Jowar crops on the land. The assessee has satisfied the conditions that the land is being used in two immediately preceding years for the purpose of agriculture before the date of sale. 11. The assessee has placed reliance on the decision of Co-ordinate Bench of the Tribunal in the case of Ramesh Narhari Jakhadi Vs. Income Tax Officer (supra) to suggest that it is not necessary that the land should have used for agricultural purposes for full two years immediately preceding the date of transfer. Even if the land is used for some days in the year earlier to preceding year it would be sufficient for compliance of the provisions of section 54B of the Act. The relevant extract of the findings of Tribunal are reproduced here-in-below : "9. Another aspect that is required to be considered is that the section contemplates user of agricultural land in the two years immediately preceding the date of transfer and therefore, the reference is to the years and not during the whole period of two years as viewed by the au....
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....lt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45: Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees: Provided further that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. (2) Where th....
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....s Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988); or (ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), and notified by the Central Government in the Official Gazette for the purposes of this section with such conditions (including the condition for providing a limit on the amount of investment by an assessee in such bond) as it thinks fit: Provided that where any bond has been notified before the 1st day of April, 2007, subject to the conditions specified in the notification, by the Central Government in the Official Gazette under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause; (ba) "long-term specified asset" for making any investment under this section,- (i) on or after the 1st day of April, 2007 but before the 1st day of April, 2018, means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 but before the 1st day of April, 2018; (ii)....
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....itled to the respondent assessee benefit of Section 54EC of the Act. 6. We find that the Sale Deed dated 5th April, 2007 is produced. This itself in clause (d) thereof records the fact that the Agreement to Sale had been entered into on 21stFebruary, 2006 in respect of subject property and the amounts being received by the vendor (respondent assessee) under that Agreement to Sale. Thus, these amounts when received as advance under an Agreement to Sale of a capital asset are invested in specified bonds, the benefit of Section 54EC of the Act is available. In the above view, the Tribunal holds that the facts of the present case are similar to the facts before the Tribunal in Bhikulal Chandak HUF (supra). The Revenue does not dispute the same before us. Moreover, on almost identical facts, this Court in Ms.Parveen P. Bharucha Vs. DCIT, 348 ITR 325, held that the earnest money received on sale of asset, when invested in specified bonds under Section 54EC of the Act, is entitled to the benefit of Section 54EC of the Act. This was in the context of reopening of an assessment and reliance was placed upon CBDT Circular No.359 dated 10thMay, 1983 in the context of Section 54E of th....
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....e order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (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." 18. We further find that the Hon'ble Jurisdictional High Court in MOIL Limited v/s CIT, [2017] 396 ITR 244 (Bom.) has held as follows:- "5. On a perusal of the orders passed by the Authorities, it appears that before the assessment order was passed, a notice was served on the assessee under Section 142 (1) of the Act and 20 queries pertaining to different heads were made therein. The ninth query in the notice under Section 142 (1) of the Act pertains to the expenditure for the Corporate Social Responsibility. By the said query, the assessee was directed to give a detailed note of expenditure for the Corporate Social Responsibility along with bifurcation of the expenses under different heads. An exhaustive reply was submitted by the assessee to the notice ....
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.... query which is exhaustive. We find that the assessee has given the details, as are sought under query no.9 in the notice under Section 142 (1) of the Act. If that is so, the judgments, reported in Fine Jewellery TANVI (India) Ltd. (supra) and Nirav Modi (supra) and on which the learned Counsel for the assessee has placed great reliance would come into play. It is held in the judgments referred to herein above by relying on the judgment in the case of Idea Cellular Ltd. (supra) that if a query is raised during the assessment proceedings and the query is responded to by the assessee, the mere fact that the query is not dealt with in the assessment order would not lead to a conclusion that no mind has been applied to it. In the case of Fine Jewellery (India) Ltd. (supra) this Court found that from the nature of the expenditure as explained by the assessee in that case the Assessing Officer took a possible view and therefore, it was not a case where the provisions of Section 263 of the Act could have been resorted to. Considering the explanation of the assessee in this case, we are also of the view that the Assessing Officer had taken a possible view. In the case of Nirav Modi (supra)....
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....lar limb which only is a pointer to the hollowness of the order. We place reliance on the following judicial pronouncements:- i) ITO v/s D.G. Housing Projects Ltd., [2012] 343 ITR 329 (Del.) "14. The aforesaid observations have to be understood in the factual background and matrix involved in the said two cases before the Supreme Court. In the said cases, the Assessing Officer had not conducted any enquiry or examined evidence whatsoever. There was total absence of enquiry or verification. These cases have to be distinguished from other cases (i) where there is enquiry but the findings are incorrect/erroneous; and (ii) where there is failure to make proper or full verification or enquiry. 15. In the case of Commissioner of Income Tax vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del), Delhi High Court was considering the aspect, when there isno proper or full verification, and it was held as under:- "We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Incom....
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....and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. v. ITO[1977] 106 ITR 1 (SC) at page 10)... From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Incom....
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.... enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. 17. This distinct....
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....e said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue. 19. In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the CIT is that "order passed by the Assessing Officer may be erroneous". The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent's computation figures but he had reservations. The CIT in the order has recorded that the consideration receivable was examined by the Assessing Officer but w....
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....nt proceedings, the Assessing Officer issued a notice under section 142(1) of the Act accompanied by a questionnaire, wherein, the assessee has specifically inquired into the commission payment. In response to the query raised, the assessee had furnished a detailed reply with regard to commission payment. Thus, prima facie, it appears that the Assessing Officer did inquire into the commission of payment. Thus, it has to be concluded that the Assessing Officer has found the commission payment to be genuine after making necessary inquiry. Whereas, learned revisionary authority has raised the issue of non-examination and genuineness of commission payment without explaining the basis, on which, he considers the commission payment to be non-genuine. 9. in fact, except saying that the Assessing Officer has not examined the genuineness of commission payment, learned PCIT has not given any clear-cut finding regarding the genuineness of the commission payment. On the contrary, he has directed the Assessing Officer to inquire into the genuineness of the commission payment. When, in course of assessment proceedings, the Assessing Officer has inquired into the commission payment, it i....