9911796707
TMI Blog2013 (2) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... im, as under: "On perusal of your assessment records for the A.Y. 2006-07, it has been noticed that you have shown capital gain of Rs. 22,67,451.50 on sale of 12 plots and after deducting the investment of Rs. 14,57,522/- towards residential house at Shastri Nagar, Jodhpur the Long Term capital Gain has been declared at Rs. 8,09,929/-. The AO worked out the LTCG at Rs. 25,73,706/- by applying DLC rates and after deducting the investment of Rs. 14,57,522/- the taxable LTCG has been determined at Rs. 11,16,184/-. The AO without making proper investigation/enquiry accepted your claim that the sale consideration received by you on 12 plots as Long Term Capital Gain despite the fact that you were carrying on the business of purchase & sale of plots and have declared net profit of Rs.,65,156/- from such business. There is nothing available either in the assessment order or in the records on the basis of which it could be said that the issue was analyzed as to whether the gains arising from sale of plot are to be treated as business income or as capital gains. Merely for the reason that sale of plot was shown as investment, it cannot be said that the gains arising from sale of plot is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liabilities without examining them. v. In respect of withdrawals of Rs. 60,000/- and LIC premium, there are neither any evidence/details available on record nor the AO has called for and examined the same. vi. From the entire discussion as above, it becomes amply clear that the AO completed the assessment in undue haste without making required investigations, verifications and inquires. Therefore, I consider that the assessment order so passed by the AO is erroneous as also prejudicial to the interest of revenue and the same requires to be set aside or modified or enhanced, or cancelled accordingly. I would like to invite your attention to the decision of Hon'ble Karnataka High Court in the case of Thalibai F. Jain v. ITO (101 ITR 1) wherein it was held that the assessment made in undue haste or without enquiry is prejudicial to the interest of the revenue, and what is prejudicial to the interest of the revenue must be held as erroneous. In the case of CIT v. Pushpa Devi (164 ITR 639), it has been held by the Hon'ble Patna High Court that if enquiry into the source of the initial capital is crucial for the ITO and if that is not done, the assessment is bound to be erroneous a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. b. The second issue relates to deduction on account of investment in new residential house which was allowed by accepting the contention of long term capital gains. If the gain is treated as business income such claim would not be eligible to the assessee. The copies of registered sale deed were also duly submitted. c. There are certain investments shown in the balance sheet or which roper enquiry has not been made. d. Similarly, there are certain liabilities which also had not properly examined. e. In relation to payment of LIC premium of Rs.60,000/- paid during the year under consideration, the same was also not properly examined. D. In view of above observations it was contended that the order is erroneous and prejudicial to the interest of Revenue and therefore, making fresh assessment in the case of the assessee. E. In relation to the first issue relating to the sale of certain plots on which long term capital gains has been claimed, the assessee has duly submitted the details to the ld. AO. The investment in plots has been made long back and were held by the assessee as an investment. The copies of regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same and there cannot be said to be any error or prejudice to the Revenue. In this regards your kind attention is also invited towards assessee's submissions made 011 19.05.2008 wherein in para 3 it was specifically stated that no addition in any of the fixed assets had been made during the year under consideration. However, in relation to the various investments as mentioned in para 2 of your shown cause notice dated 22.03.2010 we submit herewith details to indicate that all investments are old: S.N Particulars Balance as on 31.03.2006 Balance as on 1. Investment in land 7,21,565 10,57,863 2. Land at Pal 12,07,970 15,71,200 3. Land at Bilara 3,04,500 4. Air conditioner 42,492 49,992 5. Car 2,74,854 3,23,358 6. Residential House 79,95,500 54,95,000 7. Television 3,208 3,773 8. Furniture and Fixture 9,287 10,381 9. Mobile 13,834 16,275 10. FDR 19,366 11,50,000 11. NSC 35,364 32,448 12. PPF 1,22,680 71,000 H. In PPF Rs.1680 was interest and Rs. 50,000/- was investment made for which necessary evidence was duly sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year was amounting to Rs. 4, 65, 156. 37. Rs. 3,50,000/- was received towards Plot No.1 at Jhalamand which was duly registered in the subsequent period. The amount due in the account of Shri Rekesh, Shri Ravi Surana were on account of current liabilities in relation to amount outstanding to them towards salary. The amount due to Amit Kothari for Rs. 7,000/- was towards legal expenses for tax returns. In earlier year also provision of 7,000/- was made which was paid during the year under consideration on 14.09.2005 vide cheque no. 006797. K. In relation to withdrawals of Rs. 60,000/- in LIC premium of Rs. 49,007/-the same was duly debited in the capital account and necessary evidence was duly submitted with the return of income. The withdrawals were verifiable also from the books of accounts provided before the ld. AO and details furnished alongwith letter dated 19.05.2008. In view of above referred facts and circumstances in the case of the assessee. It is submitted that the original order passed by the ld. AO to be said to be erroneous or prejudicial to the interest of the revenue and therefore, the proceedings initiated in the case of the assessee may kindly be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp;4. The impugned order passed by the Ld. CIT is clearly beyond the ambit and scope of section 263. 5. The impugned order passed by the Ld. CIT is bad in law and bad on facts. 6. The appellant craves liberty to add, amend, alter, and modify any of the ground of appeal on or before its hearing before your honour. 7. We have heard the rival submissions and have carefully perused the entire material on record. It would be worthwhile to narrate, in sum and substance, the law relating to revision as settled by the courts. It is trite that an order can be revised only and only if twin conditions of 'error in the order' and 'prejudice caused to the Revenue' co-exist. The subject of 'revision under section 263' has been vastly examined and analyzed by various Courts including that of Hon'ble Apex Court. The revisional power conferred on the CIT vide section 263 is of vide amplitude. It enables the CIT to call for and examine the records of any proceeding under the Act. It empowers the CIT to make or cause to be made such an enquiry as he deems necessary in order to find out if any order passed by Assessing Officer is erroneous insofar as it is prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view under with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the law. (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the CIT, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercise quasi-judicial power vested in him and if he exercise such power in accordance with law and arrives as a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under section 263, must have material on record to arri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted into residential and the assessee has claimed u/s 54F has been allowed without making proper enquiry. 10. We have cogitated all the submissions made before us. We have found that there is no dispute regarding the source of income of the assessee which is mainly from the business of purchase and sale of plots/lands. But it does not mean that such an assessee is debarred from purchasing and holding some plots/land as capital asset and claim benefit u/s 54F. The entire facts regarding this aspect go to prove that the assessee had kept the impugned asset and has earned LTCG, which has been invested in terms of provisions of section 54F. Accordingly, we are convinced that eth action of the A.O. does not lack any enquiry in this regard and he has taken one of the possible view keeping in view the entire facts. The ld. CIT can have his own view and that may be other possible view. But as we have discussed above in such situations, the order cannot be treated as erroneous. Accordingly, in view of our foregoing discussion, we hold that the A.O. had made proper enquiries and has taken a correct decision. The ld. CIT cannot revise the order on this aspect. 11. The A.O. has also made req ..... X X X X Extracts X X X X X X X X Extracts X X X X
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