TMI Blog2014 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the CIT in respect of the investment in purchase of land in the absence of any show cause notice being issued to the assessee u/s 263 of the Act and the same are reversed. Enquiries made by the AO vis-à-vis the cost of construction of the plot of land - Claim of the assessee u/s 54 – Held that:- The assessment was made after the case was selected for scrutiny through CASS on the basis of AIR information – AO has given a finding that the assessee had filed the reply and has also furnished the information as called for during the assessment proceedings - merely because the copy of sanctioned plans was not available on record, does not imply that the plans were not sanctioned - assessee in all fairness admitted that the plans were produced before the AO – following the decision in Malabar Industries Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME Court] – the AO had already taken a view on the issue and there was no merit in the order of CIT in taking a different view on the issue –thus, there was no merit in exercise of power u/s 263 by the CIT and the same is cancelled – Decided in favour of assessee. - ITA No.431/CHD/2014 - - - Dated:- 28-8-2014 - SHRI T.R.SOOD AND Ms. SU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax was of the view that there was no justification in the deduction allowed under section 54F of the Act. Show Cause Notice dated 11/12.12.2013 was issued to the assessee, the contents of which are reproduced at pages 1 and 2 of the order passed under section 263 of the Act. In response, the assessee submitted written submissions which are reproduced at pages 2 to 4 of the said order. The plea of the assessee was that photo copy of the Purchase Deed of the plot was filed alongwith return of income and further copy of bank loan taken for construction of the residential house was also filed. The supporting documents regarding map and other papers were produced before the Assessing Officer during the assessment proceedings. 5. Another plea raised by the assessee was that the bank loan was disbursed in installments which proved that construction was in progress. The assessee further submitted the copy of approved map before the Commissioner of Income Tax which was claimed to have been produced during the assessment proceedings. The Commissioner of Income Tax on analysis of the document noted that the assessee had furnished copies of purchase and sale deed of the houses and had fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng afresh assessment. 10. In the facts of the present case, the original assessment in the case was completed under section 143(3) of the Act. The assessee during the year under consideration had sold a piece of land and the sale proceeds thereof were invested in another piece of land on which construction was made by the assessee by utilizing the sale proceeds and also by obtaining loan from the bank against housing loan. The plea of the assessee before us was that the said construction was made after getting the plans approved from the Municipal Corporation and the necessary copies of the approvals are placed at pages 7 to 13 of the Paper Book. Further, the sale proceeds of the original house were deposited in account of M/s Sita Ram Parkash Chand, out of which withdrawals were made from day-to-day for investing in the construction of the new plot of land purchased. The copy of the said account is placed at pages 16 to 18 of the Paper Book. Further, the assessee claims to have taken a housing loan of ₹ 24,70,000/- which in-turn was utilized for the purpose of investment in the new property purchased by the assessee. The assessee claims that the new plot of land was purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the evidence of the source of investment was filed during the proceedings under section 263 of the Act before the Commissioner of Income Tax as per which loan of ₹ 25 lacs was received from the Sangrur Central Cooperative Bank Ltd., Sangrur. In view thereof, the Commissioner of Income Tax was of the view that where necessary enquiries had not been made by the Assessing Officer and the Assessing Officer was directed to make afresh assessment on the issue of deduction under section 54F of the Act. 12. Another aspect noted by the Commissioner of Income Tax was that the loan documents obtained from the bank show that the cost of plot of land purchased during the year itself for ₹ 11,62,360/- was declared at ₹ 34 lacs. The assessee, in reply submitted that the said document was not part of the record for issue of notice under section 263 of the Act and further, it was the market valuation of the said plot for obtaining loan from the market. The Commissioner of Income Tax also referred the issue of investment in the land back to the file of Assessing Officer. 13. Under the provisions of section 263 of the Act, it is stipulated that the Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act which does not appear to have been done by you. Thus the compliance of section 54F(4) of the Act has not been made and no documentary evidence regarding investment made in the construction of said plot, has been furnished. Hence, the deduction u/s. 54F for construction of residential house has been wrongly allowed by the A.O. 3. The order of assessment passed by the said Assessing Officer is thus both erroneous and prejudicial to the interests of revenue, within the meaning of the expression occurring in section 263 of the Income Tax Act,1961. 4. Now, therefore, in exercise of powers conferred under section 263(1) of the Income Tax Act, 1961, I propose to set aside the said order of assessment dated 30.11.2012 passed under section 143(3) by the Assessing Officer and to direct the framing of a fresh assessment in respect of the aforesaid issue. However, before doing so, I hereby give you an opportunity of being heard. ' 14. The perusal of the said show cause notice issued under section 263 of the Act reflects that the enquiry was made in respect of the construction on the new plot of land purchased by the assessee. The claim of the assessee under section 54F o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record, does not imply that the said plans were not sanctioned. The assessee in all fairness admitted that the said plans were produced before the Assessing Officer and the copies of the same were produced before the Commissioner of Income Tax and have also been placed in the Paper Book filed before us. The perusal of the said plans reflect the same being sanctioned by the Municipal Corporation on 10.10.2008 which relates to assessment year 2007-08. Thereafter, the copies of the sanctioned plan have also been placed at pages 9 to 13 of the Paper Book which in-turn further establishes the case of the assessee. The Commissioner of Income Tax has also noted from the perusal of assessment records that the copy of housing loan obtained from the bank was also available on record which again approves the case of the assessee that it had constructed the property during the year. 16. The Hon'ble Supreme Court in Malabar Industries Co. Ltd. v. CIT [243 ITR 83 held as under: 'There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner 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.' 17. Further, the Hon'ble Supreme Court in Max India Ltd [295 ITR 282 (SC)] upheld the judgment of the Hon'ble Punjab Haryana High Court in the said case, wherein it was held that if the view expressed by the Assessing Officer was a possible view, the CIT would have no jurisdiction to interfere with such a view, while exercising the power u/s 263 of the Act. The Hon'ble Supreme Court in the said case further clarified that where two views are possible and the Assessing Officer had taken one view with which the CIT does not agree, the order of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of Revenue, unless the view taken by the Assessing Officer was unsustainable. 18. Following the ratio laid down by the Hon'ble Apex Court and in the facts and circumstances of the case, where the Assessing Officer had already taken a view on the issue, we find no merit in the order of Commissioner of Income Tax in taking a different view on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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