TMI Blog2020 (5) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of renovation which were carried out in the flat sold by him and the Assessing Officer, by taking one of the possible two views, accepted the sam - it cannot be said that the Assessing Officer did not make any enquiry what so ever in this regard. The Assessing Officer called for certain details and the assessee submitted them. On the Assessing Officer being satisfied with the same, the Assessing Officer took one of the possible views to which the Ld. Pr. CIT might not been in agreement but which the Ld. Pr. CIT has no power to change if the same has been taken after enquiry by the Assessing Officer. Cannot be held that order passed by the Assessing Officer was erroneous in so far as being prejudicial to the interest of the Revenue. Non deduction of tax on the expenditure claimed towards cost of improvement - It was never a part of the show cause notice and a perusal of the reply submitted by the assessee before the Ld. Pr. CIT also makes it apparent that the assessee was not confronted with this issue and was not given any opportunity to respond to the same. The impugned order also does not mention that the assessee was later required to respond on this issue. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was bound to refer the matter to the Departmental Valuation Officer (DVO) but since the same was not done, the order was liable to be set aside. It was also stated in the show cause notice that the cost of improvement amounting to ₹ 6,88,500/- was in the nature of repairs and maintenance and did not qualify towards cost of improvement. 2.2 In response to the show cause notice, it was submitted by the assessee that the issue had been examined by the Assessing Officer (AO) during the assessment proceedings wherein the details of costs of improvement were duly submitted and the Assessing Officer had allowed the same after proper verification. It was also submitted by the assessee that the application of Sec.50C of the Act was not mandatory in all cases and that the AO had chosen not to apply the provisions of section 50C in his case and that the reference to the DVO was not mandatory. 2.3 However, the Ld. Pr. CIT did not accept the submissions of the assessee and held that since the assessment order passed by the Assessing Officer had been passed without making any enquiries into the claim of the assessee and further because the AO had failed to make the mandatory refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 6,88,500/- is neither erroneous nor prejudicial to the interest of revenue. 4. That the PCIT further erred in law and on merits for a finding in the impugned order u/s.263 that TDS was not deducted on cost of improvement of ₹ 6,88,500/-, the issue which was not covered in the show cause notice therefore, any finding or direction on this issue is outside the scope of impugned proceedings u/s. 263 of the I.T. Act. 5. That on raising only two issues in SCN i.e. u/s.50C and examination of cost of improvement for calculation of capital gain on sale of flat, the Ld. PCIT erred in law and on merits in setting aside the complete assessment order which tantamount to setting aside all other issues and total assessment without any show cause notice on other issues. 3. The Ld. Authorized Representative submitted that the Ld. Pr. CIT had wrongly invoked the provisions of Sec.263 by holding that the Assessing Officer should have referred the valuation of the residential flat to the DVO for the purpose of Sec.50C of the Act. Our attention was drawn to provisions of section and it was submitted that the word used is may and therefore, the same is not mandatory. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improvement expenditure, the Ld. Authorized Representative submitted that this issue was not raised in the show cause itself and, therefore, the same was outside the scope of the impugned order and no direction could have been given by the Ld. Pr. CIT in this regard. The Ld. Authorized Representative prayed that the impugned order preserved to be quashed as the Ld. Pr. CIT had exceeded his jurisdictional in exercising his revisionary powers. 4.0 In response to the arguments of the Ld. Authorized Representative, the Ld. Departmental Representative vehemently supported the order of the Ld. Pr. CIT and submitted that provisions of Section 263 had been rightly invoked by the Ld. Pr. CIT and that it was apparent from the assessment order that there was a complete lack of enquiry by the Assessing Officer with respect to the issue of computation of capital gains. 5.0 We have heard the rival submissions and have also perused the material on record. It is seen that in response to the query raised by the Assessing Officer, the assessee had furnished copies of sale deed and purchase deed and also the bill pertaining to renovation work carried out in the residential flat sold by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possible views to which the Ld. Pr. CIT might not been in agreement but which the Ld. Pr. CIT has no power to change if the same has been taken after enquiry by the Assessing Officer. Therefore, we are not in agreement with the view taken by the Ld. Pr. CIT that the order passed by the Assessing Officer was erroneous in so far as being prejudicial to the interest of the Revenue. 5.2 The issue of non deduction of tax on the expenditure claimed towards cost of improvement was never a part of the show cause notice and a perusal of the reply submitted by the assessee before the Ld. Pr. CIT also makes it apparent that the assessee was not confronted with this issue and was not given any opportunity to respond to the same. The impugned order also does not mention that the assessee was later required to respond on this issue. Thus, there was a complete lack of natural justice on the part of the Ld. Pr. CIT while setting aside the assessment order for this reason. Therefore, we are afraid, the same cannot be taken as a reason for treating the assessment order as erroneous. This is in line with the judgment rendered by the Hon ble Apex Court in the case of CIT vs. Amitabh Bacchan in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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