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2021 (10) TMI 747 - AT - Income TaxRevision u/s 263 by CIT - Case of assessee selected for limited scrutiny - Quantum of capital gain arising to assessee as well as towards eligibility of deduction under section 54F - PCIT has regarded the Assessment Order as erroneous mainly on the ground that construction work has been completed to the extent of 70% only as reported by the DIT (I&CI) - construction of the residential house must be completed within three years from the date of transfer of original asset to be eligible for deduction under section 54F - HELD THAT:- The judicial precedents have read down the conditions of the provisions of Section 54F of the Act to align it with its object and observed that the utilisation of the consideration in the construction of residential house is sufficient to be eligible for deduction notwithstanding the fact that the construction of residential house has not been fully completed within three years. The thrust is on utilisation rather than completion of construction of residential house. The view taken by the A.O. to allow deduction under section 54F based on parameters of utilisation made in construction is thus plausible view and cannot be faulted. This being so, the order of the A.O. cannot be held to be erroneous and prejudicial to the interest of the revenue. Consequently, the powers available under section 263 of the Act cannot be exercised in the facts of the case. Plea of the assessee that a fresh information coming to the knowledge of the PCIT after completion of the assessment cannot be relied upon adverse to the assessee without following the basic principles of natural justice - As can be seen from the assessment records, vide letter dated 09.03.2021, requested the Revisional Commissioner to provide a copy of verification report of Inspector of ADIT (I&CI). However, the PCIT did not choose to confront the assessee with said report. No reference to the contents of the report is mentioned in the Revisional Order either. Such casual approach of the PCIT while disturbing the completed assessment cannot be endorsed. It is trite that evidence not confronted to the assessee coming to the knowledge of the revenue cannot be relied upon. The so called report thus cannot be taken cognizance of in the absence of such report. When such report is ignored, there is no other material available before the PCIT to condemn the action of the A.O. Hence, looking from any angle, the Revisional Order of the PCIT is unsustainable in law. - Decided in favour of assessee.
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