TaxTMI 
TaxTMI 
2025 (11) TMI 411
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....y notices u/s. 143(2) and 142(1) of the Act. Various details were called for by ld. Assessing Officer (AO) in the questionnaire issued to which necessary details were filed. Books of account and other financial statements were examined. Ld. AO concluded the assessment after making addition u/s. 69C and 69A of the Act at Rs. 39,82,750/- and 15,60,000/- respectively and assessed income at Rs. 1,54,87,170/-. 3. Thereafter, assessment records were examined by ld. PCIT within the powers conferred u/s. 263 of the Act and he observed that on certain immovable properties the assessee has shown rental income during the year and has claimed depreciation at Rs. 81,24,101/- by observing that when income from let out property has been offered under the head 'Income from House Property then the depreciation claimed on such properties cannot be allowed u/s. 32 of the Act for the year under consideration. Accordingly ld. PCIT issued a show cause notice dated 30.05.2024 u/s. 263 of the Act on the sole issue that ld. AO failed to disallow the depreciation at Rs. 81,24,101/- claimed by the assessee alleging use of properties for business purposes. 4. In response to notice u/s. 263 of the Act, a....
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....een examined by ld. AO and a legally permissible view has been taken. Reference was made to the notice issued by ld. AO in the course of the original assessment proceedings and the submissions filed by the assessee. Further, reference placed on the decision of this Tribunal in the case of Sanjay Amrutrao Satav (HUF) Vs. ITO in ITA No.200/PUN/2021 dated 30.06.2022 and judgment of Hon'ble High Court of Delhi in the case of ITO Vs. D.G. Housing Projects Ltd. reported in (2021) 20 taxmann.com 587 (Delhi) and also the decision of this Tribunal in the case of Goel Eisha Capitals Vs. PCIT (central), Pune in ITA No.1006/PUN/2024 dated 07.04.2025. 7. On the other hand, ld. DR vehemently argued supported the order of ld. PCIT. 8. We have heard the rival contentions and perused the record placed before us. The first grievance of the assessee is that ld. PCIT grossly erred in assuming jurisdiction u/s. 263 of the Act on the issue which has already been enquired and thoroughly examined by ld. AO. We find that the provisions of Section 263 of the Act has direct bearing on the issue raised before us, therefore, it is pertinent to take note of this section which reads as under: "263....
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....l Tax Tribunal, the High Court or the Supreme Court. Explanation- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 8.1. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of....
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.... a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - RampyariDevi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). [Emphasis Supplied]" 9. Now examining the facts of the instant case in light of the above judicial precedents, we note that the certain immovable properties were rented out and for part of the year assessee has earned rental income and for the remaining period has claimed depreciation on use of properties for business purposes. Details of the same are as under : Sr.No. Asset Particulars Depreciation claimed in P&L a/c (in Rs. ) Rental income (in Rs. ) 1 Building at Gultekdi- Navkar (shop) 41,65,920/- 22,70,000/- 2 Flat at Bombay 10,63,732/- 1,80,000/- 3 Office at Sumit Plaza Shop No.46 2,48,728/- 1,20,000/- 4 Warehouse at Vadki (60% portion) 26,45,721/- 18,58,280/- 81,24,101/- 44,28,280/- 10. We further notice that during the course of impugned proceedings assessee made submissions g....
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....e 3 for your verification. Later, the assessee has asked the third party to vacate the flat and thereafter the assessee has himself used the flat for the purpose of storage of files and other business-related documents of the branch of assessee at Mumbai. Therefore, as the flat was vacated and used for the purpose of business, the assessee has claimed depreciation on the said flat. c) The assessee has rented office located at sumit plaza at Rs. 30,000/- p.m. for 4 months only, afterwards assessee use such property for the purpose of office use. We are attaching herewith the letter of communication with the tenant as Annexure 4 for your verification d) The assessee has rented warehouse located at Wadki for 4 months only, afterwards assessee use such property for the purpose of storage of stock. As in the year under consideration the stock in hand was increased, the assessee decided to shift the entire stock at the warehouse. 2. Details and PAN of the Tenant: A chart giving details of Name and address of the tenant along with the copy of PAN attaching herewith as Annexure 5 for your verification. 3. Copy of Bank Statement: Your honour it m....
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.... law have been made by the assessee. We further observe that ld. AO during the course of assessment proceedings, issued a show cause notice dated 22.09.2022 placed at pages 27 to 29 of the paper book, and the very first issue raised by ld. AO in this show cause notice is regarding the depreciation claimed at Rs. 1,43,56,980/-, which as per the observation of ld. AO is substantially higher as compared to the previous years. Ld. AO has asked about the proof to justify whether these premises were used for business purposes for the year under consideration. There is a specific query about the claim of depreciation with specific observation that the said claim is on higher side. We further find that assessee in its reply dated 25.09.2022 has furnished the details to the AO about the valid claim of depreciation and for the sake of convenience reply filed by the assessee before ld. AO is reproduced below : "Respected Sir, In connection with above mentioned assessment proceedings for AY 2020-21 we are submitting herewith the further information called by your honor as under: 1. On perusal of the financial statements for the year under consideration it is seen tha....
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....The asset must be used for the purposes of business or profession. 3. The asset must be used during the previous year. The use of the asset during the previous year may be active use or passive (le, kept ready for use). As per the above provision the depreciation is rightly allowable read with section 32 of the Income Tax Act 196. As asset is owned and used by the assessee for business purpose. Further the fixed assets chart contains the details of the depreciation expenses." 12. From the above reply of assessee, we find that the issue which has been referred by ld. PCIT in the impugned order relating to claim of depreciation on the buildings has specifically been enquired by ld. AO during the course of assessment proceedings and the assessee has also given detailed reply to such queries. On perusal of evidence placed on record, it is discernible that for the partial period assessee has rented those properties and has shown rental income and for the remaining period when it was used for business purposes it has claimed depreciation. Now for the issue that has been thoroughly examined by ld. AO and assessee has given detailed replies to the satisfaction of the l....
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....annot be said to be erroneous for want of enquiry on the claim. 10. The courts have made a distinction between "lack of enquiry" and "inadequate enquiry". If there was enquiry even an inadequate that would be itself give no occasion to the Commissioner to exercise the power of revision u/s 263 as held by the Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd., 203 ITR 108 (Bombay) and followed by the Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd., 332 ITR 167 (Delhi) and in the case of CIT vs. Anil Kumar Sharma, 335 ITR 83 (Delhi). The relevant paragraphs of the decision of the Hon'ble Delhi High Court in the case of Sunbeam Auto Ltd. (supra) are extracted hereunder :- "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 Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in q....
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....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]. ......" 11. Further, we find that the ld. Pr.CIT had not brought on record any material to show that the claim made for deduction u/s 54B is not allowable to the assessee. The power of revision u/s 263 cannot be exercised with a view to initiate a roving and fishing enquiry in the matters which we have already concluded. In this regard, the observation made by the Hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. vs. ITO, 106 ITR 1 (SC) is reproduced hereunder :- "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....