TMI Blog2013 (2) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... t:- assessee while filing revised return has substantially changed/reduced its losses from Rs.1,20,25,795/- to Rs.6,81,683/- on the basis of registered valuer’s report, which was filed along with the revised return of income. Hence, we treat the revised return of income filed by assessee as a valid revised return filed within the prescribed time of section 139(5) of the Act. Reference of DVO - held that:- the fair market value adopted by DVO at Rs.4,72,370/- is lower than the fair market value adopted by assessee, on the basis of registered valuer’s report, at Rs.77,47,750/- and in our view, as held by Hon’ble Gujarat High Court in the case of Hiaben Jayantilal Shah (supra) cl. (a) of s. 55A of the Act cannot be made applicable because the estimate value proposed by DVO is less than the fair market value disclosed by assessee as on 1.4.1981. Similarly, clause (b) of s. 55A of the Act also cannot be invoked because for invoking cl. (b) of this section is possible only when value claimed by assessee is not supported by an estimate made by registered valuer. Income from House property - held that:- complete information before the AO was available at the time of framing of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly arbitrary and bad in law in relation to the issues raised and adjudicated therein and needs to be summarily deleted. 2. That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax XII, Kolkata (here-in-after referred to as Ld.CIT) was not justified in initiating proceedings u/s 263 of the Income Tax Act, 1961 as the order passed by the Assessing Officer(here-in-after referred to as A.O.) was not erroneous as all the materials and explanations were produced before the A.O. during the course of assessment proceedings u/s 143(3) of the Act. 3. That on the facts and in the circumstances of the case, the Ld. CIT was not justified in initiating proceedings u/s 263 of the Act for mere change of opinion as the A.O. had duly considered all the materials during the course of Assessment Proceedings. 4. That on the facts and circumstances of the case, the report of the DVO received after completion of assessment proceedings u/s 143(3) is null and void and hence proceedings u/s 263 initiated on the basis of such report is bad in law. 5. That on the facts and circumstances of the case, the assessment proceedings completed u/s 143(3) based on the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 143(3) dated 29.12.2006. Hence, the assessment order is erroneous and prejudicial to the interest of revenue. The CIT revised the assessment on following three grounds: i) That no valuation report was filed along with original return, whereas the revised return filed u/s.139(5) along with valuation report is not a valid revised return in terms of section 139(5) of the Act. ii) That in terms of section 55A (b)(ii) of the Act, the AO has option to refer to the matter to DVO and AO was correct in referring the same because there is no valuation report by the registered valuer furnished along with the original return of income. iii) Hence, on receipt of DVO s report on 06.12.2007, there is difference in sale value, cost of improvement and fair market value with the DVO and value done by assessee s valuer by Rs.49,63,371/-, Rs.9,04,335/- and Rs.6,01,986/-, thereby resulting it to under assessment and, therefore, assessment is erroneous and prejudicial to the interest of revenue. In term of the above, the CIT revised the assessment framed by AO u/s. 143(3) dated 29.12.2006, directing the AO to compute the long term capital gain on the basis of valuation report of DVO and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for the relevant assessment year 2004-05 on 01.11.2004, on due date as prescribed u/s. 139(1) of the Act, which was processed u/s. 143(1) of the Act on 29.03.2006. However, notice u/s. 143(2) of the Act was issued on 17.08.2005, which was duly served on assessee on 19.08.2005, and return of income was selected for scrutiny assessment. The assessee filed revised return of income on 30.03.2006 computing a smaller long term capital loss on the basis of registered valuer s report before completion of assessment u/s. 143(3) of the Act. Now the question arises whether the revised return filed u/s. 139(5) of the Act within the prescribed time limit on 30.03.2006 is a valid revised return or not? After going through the provisions of the Act, we find that the liability to pay income tax is founded on sections 4 and 5 of the Act, which are charging sections. Section 143 and others are machinery sections to determine the amount of tax payable. These sections contain various modes for making assessments. A reading of section 143(1)(a) of the Act makes it clear that giving of intimation in terms of that provision was without prejudice to the provisions of section 143(2) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need for a summary assessment u/s. 143(1)(a) of the Act. Hon ble Delhi High Court has gone further in the case of CIT Vs. Punjab National Bank (2001) 249 ITR 763 (Del.) wherein it is held that where an intimation was sent to the assessee u/s. 143(1)(a) of the Act and, thereafter, the AO has issued notice u/s. 143(2) of the Act, any change in the said intimation, if permissible, has to be effected in the assessment order u/s. 143(3) of the Act and not by exercising power u/s. 154 of the Act to rectify such intimation issued u/s. 143(1)(a) of the Act. It means once action u/s. 143(2) of the Act is initiated, no proceedings u/s. 143(1)(a) of the Act or 154 of the Act can be taken up till 143(3) of the Act is passed. 6. In the present case before us also, the facts are very clear that for framing assessment u/s. 143(3), the AO has already issued notice u/s. 143(2) of the Act and thereafter, acted on the return of income and processed the same u/s. 143(1) of the Act. In view of the above judgments, particularly of Hon ble Apex Court in the case of Gujarat Electricity Board (supra), the intimation issued by the AO in this case is not a valid intimation and hence, revise return filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket value as on 01-04-1981 accompanied by the report of a Registered Valuer was filed with the revised return of income. Reference under clause (a) of Section 55A of the Act can only be made if fair market value claimed by the assessee is lower than the actual fair market value in the opinion of the Assessing Officer. But, in the present case, since the assessee has adopted fair market value as the cost of acquisition, taking a lower fair market value would only lead to increase in the amount of Capital Gains. Thus, even if the fair market value adopted by the assessee is lower than the actual fair market value, reference under clause (a) of Section 55 of the Act would not have any meaning. In such cases, reference can only be made under sub clause (ii) of clause (b) of Section 55A of the Act, which is possible only if the estimate of fair market value is not supported by the report of an approved valuer. The fact that reference for the purpose of determining cost of acquisition cannot be made uncle clause (a) or clause (b)(i) is also supported by the departmental Circular no 96 dated 25.11.1972 as reported in (1973) 91 ITR 1 (St.) 17. The Ld. Counsel for the assessee also referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, there is no question of having recourse to sub-cl. (ii) of cl. (b) of s. 55A of the Act. In the present case also the fair market value adopted by DVO at Rs.4,72,370/- is lower than the fair market value adopted by assessee, on the basis of registered valuer s report, at Rs.77,47,750/- and in our view, as held by Hon ble Gujarat High Court in the case of Hiaben Jayantilal Shah (supra) cl. (a) of s. 55A of the Act cannot be made applicable because the estimate value proposed by DVO is less than the fair market value disclosed by assessee as on 1.4.1981. Similarly, clause (b) of s. 55A of the Act also cannot be invoked because for invoking cl. (b) of this section is possible only when value claimed by assessee is not supported by an estimate made by registered valuer. This is not the case here and assessee s revised return of income is accompanied by a registered valuer s report for adopting fair market value as on 1.4.1981. In view of the above, we are of the view that the reference made u/s. 55A of the Act is not as per law in view of decision of Hon ble Gujarat High Court in the case of Hiaben Jayantilal Shah (supra). 9. Another aspect for revision of assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this court that where a sum not earned by 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. Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). 11. In view of the above facts and circumstances, discussion carried out, we are of the considered view that the CIT has erred in exercising jurisdiction u/s. 263 of the Act for revising the assessment framed by AO u/s. 143(3) of the Act as the assessment is neither erroneous nor prejudicial to the interest of revenue. Hence, we quash the revision order passed by CIT u/s. 263 of the Act and appeal of the assessee is allowed. 12. Now, we are taking ITA No.1099/K/2008 (Revenue s appeal). The sole issue in this appeal of revenue is against the order of CIT(A) in deleting the disallowance on account of expenses. For this, revenue ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than the legal and professional charges of Rs.1,09,150/- incurred in relation to improvement of title and/or transfer of capital asset, which is to be allowed under the head Income from Capital Gains . The genuineness of the expenditures claimed, not being in doubt; the AO is directed to allow the expenditures under the head Business . The addition of Rs.7,42,027/- is, therefore, deleted. 14. We find that the AO has categorically recorded that the assessee has made purchases of shares worth Rs.9200/- and also sold debentures worth Rs.138/- during the relevant financial year. The assessee originally is in the business of sale and purchase of shares and it has continued this business. We find that now before us revenue could not contend how the assessee s business is discontinued or during the year no transaction has been carried out in relation to trading. Once this is not controverted, we find no infirmity in the order of CIT(A) and in view of reasoning given in appellate order, we uphold the same. This issue of revenue s appeal is dismissed. 15. In cross objection, the assessee also raised following two effective grounds: 1. That on the facts and in the circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
