TMI Blog2023 (2) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the Assessing Officer while completing the assessment proceeding did not make enquiries which he ought to have made. It is necessary to look into what enquiries the Assessing Officer made on the issues raised in the order u/s.263 of the Act. It is clear from the submissions and material available on record with regard to claim of assessee u/s 54F of the Act, that Assessing Officer got the details of the properties and examined the nature of properties and then framed the assessment order. In appropriate cases he made further inquiry also. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the Assessing Officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. Appeal of the assessee is allowed. - ITA No.120/SRT/2022 - - - Dated:- 22-2-2023 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Hiren M. Diwan, C.A For the Respondent : Shri Ravinder Sindhu, CIT-D.R ORDER PER DR. A. L. SAINI, AM: By way of this appeal, the assessee has challenged the correctness of the order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Umra, Surat for total sale consideration of Rs.1,35,10,000/- which was acquired on 08.06.1990 and long term capital gains on sale of this asset of Rs.1,32,24,658/- was claimed as deduction u/s 54F of the Act by virtue of acquisition of new residential property situated at No.30 B/VTC Law College, Athwalines, Surat at total cost of Rs.1,46,34,000/- by registered sale deed executed on 11.04.2017. In this regard, it was noted by Ld. PCIT that as per the provision of Section 54F of the Act, the assessee is not eligible for deduction where the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset. On perusal of balance sheet submitted by the assessee as on 31.03.2017, it was noted by ld PCIT that assessee already owned below mentioned residential properties: (i) 701-Pancham Heights (ii) Flat DVF-F-25 (iii) Property at 5/1203 (iv) Property at 5/1208 (v) Property at 76-Sai Kutir Further the assessee had purchased new property on 11.04.2017, therefore, provision of section 54F of the Act shall not apply in assesee`s case. Therefore, total amount of Rs.1,32,24,658/- was required to be disallowed by Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire sale proceeds received on 16.09.2016 of Rs.1,30,00,000 was paid to seller on 23.01.2017 (within the financial year). Subsequently registered deed was executed on 11.04.2017. So, entire transaction was done within time allowed on or before due dated u/s 139(1). Therefore, exemption is allowable u/s 54F. 5. As all requisite conditions laid down in Section 54F have been satisfied, there is no case for withdrawal of exemption of Section 54F. Therefore, I strongly urge to allow exemption u/s 54F. 6. During the course of hearing, I had submitted all documents asked by A.O for your ready reference I am attaching the relevant documents again. However, if your honour requires further documents/details. Kindly intimate me and give an opportunity, so that I can submit the same. 7. I am an advocate and senior citizen. I have been discharging my duty of a citizen by way of regular payment of income tax, for which I have been also honour by I.T. Department by issuing certificate of appreciation. If, proposed exemption is withdrawn then at this old age I will be put under severe mental stress and will cause mental and financial irreparable loss. Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han one residential house other than the new asset purchased during the year. During the year under consideration the assessee was owning total six properties. As per balance-sheet as on 31.03.2017, submitted during the assessment proceedings, a property addressed at 5/1982 is mentioned as being used for office purpose. However, rest of five properties; nature of the properties is not mentioned in balance-sheet. As per details submitted by the assessee, it was found by the Ld. PCIT that all are the residential properties except one 76-Saikutir claimed as open plot and property 5/1208 claimed as used for commercial purpose by wife of the assessee. Even if both the above properties are considered as non- residential property of the assessee even the assessee was still owner of the three residential properties other than the new asset on the date of transfer of the original assets which has been sold. The assessee has therefore not fulfilled the condition mentioned in proviso of the Section 54F of the Act. (iii) The assessee further claimed that out of the remaining three properties two were given for rent and one was being used for his own residence. However, it is nowhere men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is placed at paper book pages 4-5. After going through the reply of the assessee, the assessing officer has applied his mind and provided the relief to the assessee, therefore it can not be said that assessing officer has not applied his mind. The Ld. Counsel also submitted a statement showing computation of total income, which is placed at paper book pages 6 to 8 and stated that assessee does not any other income other than the business income and the capital gains. To substantiate, his arguments, the ld Counsel stated that assessee submitted the copy of ledger account of property sold, before AO, which is placed at paper book page-9 and the assessee submitted copy of ledger account of property purchased, which is placed at paper book pages 10-11 and the assessee submitted copy of sale deed dated 11.04.2017, for property sold, which is placed at paper book pages 104-138 and the assessee also furnished the Balance-Sheet as on 31.03.2017, and all these above documents and evidences were submitted before Assessing Officer by the assessee, during the assessment stage. 11. This way, Shri Diwan, with help of the above facts, explained the Bench that details of the properties held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer even not conducted any inquiries about nature of properties and there is no discussion in the impugned assessment order. To purchase more than one house, in the pretext of promotion of housing scheme and to cheat the revenue, is not the object of section 54F of the Act. The assessee has to prove with cogent evidence that the property held by him is a commercial property and is in the nature of commercial purpose and such nature has not been proved by the assessee during the assessment stage. The Ld. PCIT also pointed out that assessee is having three residential properties and out of which two properties are given on rent basis. Therefore, assessee has to establish that these properties are in a commercial nature and such nature was not discussed in the assessment order. Therefore, assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue and hence the order passed by ld PCIT may be upheld. 14. In short rejoinder, Shri Diwan, submitted that during the assessment stage, the assessee has explained the commercial nature of the property and out of the two properties one property is being used for residential purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en circumstances of a case is well settled. The Ld.PCIT can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. We derive support for the proposition as stated above from the decision of the Hon ble Delhi High Court in the case of Gee Vee Enterprises 99 ITR 375 (Del). 18. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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