TMI Blog2017 (11) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the investment is made by the assessee in his own name but the legislature while using language has not used specific language with precision and the second reason is that view has also been taken by the Delhi High Court that it can be in the name of wife. In that view of the matter, the contention raised by the assessee is required to be accepted with regard to Section 54B regarding investment in tubewell and others. In our considered opinion, for the purpose of carrying on the agricultural activity, tubewell and other expenses are for betterment of land and therefore, it will be considered a part of investment in the land and same is required to be accepted. - Decided in favour of assessee - D.B. Income Tax Appeal No. 20 / 2016, 118 / 2017, 136 / 2017 - - - Dated:- 7-11-2017 - Mr. K.S. Jhaveri And Mr. Vijay Kumar Vyas, JJ. For Appellant(s) : Mr. Gunjan Pathak with Ms Ishita Rawat For Respondent(s) : Mr. Prateek Kedawat and K.D. Mathur for Mr. R.B. Mathur Judgment 1. In all these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of appeal no.20/2016, the appellant has assailed the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 54B at ₹ 43,50,000/- which includes ₹ 11 lacs incurred on construction of boring pipe, rooms, boundary walls and stamp duty but has proved the source of ₹ 10,44,880/- only. The AO finally assessed total income at ₹ 3,87,330/- which includes salary income of ₹ 2,12,340, capital gain of ₹ 2,00,219/- and income from other sources at ₹ 47,817/-. The ld. CIT-II, Jaipur had examined the assessment and found that the order of the AO dated 5-10-2011 is erroneous and prejudicial to the interest of Revenue. 5. Counsel for the appellant has taken us to the provisions of Section 54B 54F which reads as under:- 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt in accordance with the scheme aforesaid. '54F. Capital gain on transfer of certain. capital assets not to be charged in case of investment in residential house.-(1) Where, in the case of an assessee being an individual, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, - (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 263(1) which is relevant for our purpose : 263. Revision of orders prejudicial to revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation - * * * A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the basis that more enquiry ought to have been conducted to find something. 3. Commissioner of Income Tax vs. Sunbeam Auto Ltd. (DELHC) : (2011) 332 ITR 0167 12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income Tax under Section 263 of the Income Tax Act. As noted above, the submission of learned Counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as Revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income Tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income Tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer. That would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure. It is because the Income Tax Officer has exercised the quasijudicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the aforesaid explanation, he accepted the same. The CIT in his impugned order even accepts this in the following word: AO accepted the explanation without raising any further questions, and as stated earlier, completed the assessment at the returned income. 15. Thus, even the Commissioner conceded the position that the AO made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the AO should have made further inquiries rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry'. 16. Having put the records straight on this aspect, let us proceed further. Is it a case where the Commissioner has concluded that the opinion of the AO was clearly erroneous and not warranted on the facts before him and, viz., the expenditure incurred was not the revenue expenditure but should have been treated as capital expenditure? Obviously not. Even the Commissioner in his order, passed under Section 263 of the Act, is not clear as to whether the expenditure can be treated as capital expenditure or it is revenue in nature. No doubt, in certain cases, it may not be pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as revenue expenditure. With this position in law, it is clear that view taken by the AO was one of the possible views and therefore, the assessment order passed by the AO could not be held to be prejudicial to the revenue. Such an order thus has rightly been set aside by the Tribunal. 21. Thus, from whatever the matter is to be looked into, the conclusion would be that the order of the Tribunal does not call for any interference as the question of law has rightly been decided. We, thus, answer this question in favour of the assessee and against the Revenue, consequence whereof this appeal is dismissed with cost. 4. Commissioner of Income Tax vs. Associated Food Products P. Ltd. and Popular Bread Factory (MPHC) (2006) 280 ITR 0377 8. On a scanning of the anatomy of the said provision, it is demonstrable that certain statutory satisfactions are to be arrived at on acceptable parameters before exercise of the said jurisdiction. As the provision stipulates the order passed by the Assessing Officer should appear to be grossly erroneous and at the same time prejudicial to the interests of the Revenue, both the things should exist together and they should not be considered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de one argument into two and to multiply the litigation '. The power of suo motu revision under Subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this Sub-section, viz., (i) the order is erroneous ; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error ; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds and examining the same is concerned, undoubtedly, it is an administrative act, but on examination 'to consider' or in other words, to form an opinion that the particular order is erroneous in so far as it is prejudicial to the interests of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of re-examination and reconsideration of an order of assessment, which has already been concluded and controversy which has been set at rest, is set again in motion. It is an important decision and the same cannot be based on the whims or caprice of the revising authority. There must be materials available from the records called for by the Commissioner. 9. In view of the aforesaid pronouncement of law and taking into consideration the language employed under Section 263 of the Act, it is clear as crystal that before exercise of powers two requisites are imperative to be present. In the absence of such foundation exercise of a suo motu power is impermissible. It should not be presumed that initiation of power under suo motu revision is merely an administrative act. It is an act of a quasi-judicial authority and based on formation of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation, Baddi (Solan). It shows that after the receipt of components, the first operation undertaken by the assesseerespondent is the vertical machining centre on CNC machine which has been explained as under: One this CNC machine drilling, reaming, chamfering, pad milling operation are being done, with respect to dowel hole on next machine boring machine/and tapping. After the above operation, rear cover will be ready for further assembly. In assembly, few important parts like ram cylinder, response ball, rock shaft etc. are fitted to complete the sub assembly. It is in respect of two type of rear covers received after receiving machine from Baddi. In respect of differential housing and reduction unit, different sets of machines are there for further operation to make the component ready for assembly. As at present, these two components are not in stock, as such the working of the same cannot be shown. 4. Likewise major process is completed by the assessee-respondent and the same has been explained in answer to various questions. All critical machinery operation of chassis parts i.e., rear cover, differential housing and reduction unit are being done at M/s ITL, Hos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of such foundation exercise of a suo motu power is impermissible. It should not be presumed that initiation of power under suo motu revision is merely an administrative act. It is an act of a quasi-judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the Assessing Officer is erroneous as well as prejudicial to the interests of the Revenue. The concept of prejudicial to the interests of the Revenue has to be correctly and soundly understood. It precisely means an order which has not been passed in consonance with the principles of law which has in ultimate eventuate affected realisation of lawful revenue either by the State has not been realised or it has gone beyond realisation. These two basic ingredients have to be satisfied as sine qua non for exercise of such power. On a perusal of the material brought on record and the order passed by the Commissioner it is perceptible that the said authority has not kept in view the requirement of section 263 of the Act inasmuch as the order does not reflect any kind of satisfaction. As is manifest the said authority has been governed by a singul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proper enquiry is not valid (CIT v. Ratlam Coal Ash Co. [1988] 171 ITR 141). The assessee furnished GIR/PAN number, address, confirmation from the creditors, the assessee has discharged the burden to prove the genuineness of parties and transaction in addition to the capacity satisfactorily as such there is no ground for addition (Addl. CIT v. Hanuman Agarwal: [1985]151ITR150(Patna) ). In this regard the Department also has not brought any material to disprove the genuineness of the parties, capacity of the lenders and transactions on the basis of cogent facts on record. The hon'ble Supreme Court in the case of CIT v. Orissa Corporation P. Ltd. : [1986]159ITR78(SC) : 'Held, that in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were Income Tax assessees. Their index numbers were in the file of the Revenue. The Revenue apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit worthy. There was no effort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax vs. DLF Power Ltd. (DELHC) (2010) 329 ITR 02889 17. In fact, having regard to the law on the point, as clarified by the Supreme Court in HCL Comnet (supra), it seems that only one view is possible. In a situation like this, under no circumstance, order under Section 263 could be passed to revise the order passed by the AO, as observed by this Court in Vimgi Investment (P) Ltd. (supra) in the following words: We find that in so far as the present case is concerned, only one view is possible and that was taken by the Assessing Officer and that view was valid with reference to the assessment year 2001- 02. Therefore, there was no occasion for the Commissioner to exercise his powers under Section 263 of the Act to revise the order passed by the Assessing Officer and tax the assessed on the ground that the transaction was an attempt to avoid tax. The purchase and sale of units by the assessed was undoubtedly bona fide and this was accepted by the Assessing Officer. Under these circumstances, the question of the Commissioner invoking his powers under Section 263 of the Act would not arise. Following the decision of this Court in Vikram Aditya and Associates P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer. Every loss of revenue as a consequence of an order of assessing officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner 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. 19. Question of law Nos. (1) and (3), thus, stand answered in favour of the assessee and against the Revenue, which would result in dismissal of the present appeal. We, accordingly, dismiss the appeal with costs quantified at ₹ 25,000/-. 10. Commissioner of Income Tax vs. Honda Siel Power Products Ltd. (DELHC) (2011) 333 ITR 0547 18. From the aforesaid discussion, it is apparent that the expression prejudicial to the interest of revenue appearing in Section 263 has to be read in conjunction with the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 80HHC was to be computed after reducing the amount of deduction under Section 80IB from the profits and gains. There is no doubt that the Assessing Officer had allowed the deduction under Section 80HHC without reducing the amount of deduction allowed under Section 80IB from the profits and gains. He did not say so in so many words, but that was the end result of his assessment order. Since he was holding in favour of the assessee, as has been observed in Hari Iron Trading Company (supra) and Eicher Limited (supra), generally, the issues which are accepted by the Assessing Officer, do not find mention in the assessment order, it cannot be said that the Assessing Officer had not applied his mind. It cannot also be said that the Assessing Officer had failed to make any enquiry because no further enquiry was necessary and all the facts were before the Assessing Officer. Consequently, we are of the view that the decisions cited by the learned Counsel for the revenue, wherein assessment orders were found to be erroneous for want of an enquiry or proper enquiry, would have no application to the present appeals. It is also true that the validity of an order under Section 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as regards aspects which the Assessing Officer had failed to scrutinize. During the course of the revisionary proceedings this was conveyed to the assessee by way of a notice dated 11.05.2006. It is not disputed that in the order dated 18/19.01.2007 the Commissioner has referred to certain other issues which did not form part of the initial notice dated 11.05.2006. To our minds it was always open to the Commissioner to put such issues/discrepancies, found by him based on material on record, to the assessee. It is to be noted, however, that the learned Counsel for the assessee vehemently denied that the assessee had been given any opportunity to meet issues other than those to which reference has been made in the Commissioner's notice dated 11.05.2006. For this purpose, the learned Counsel for the assessee sought to place reliance on the impugned judgment passed by the Tribunal, wherein this aspect of the matter has been discussed elaborately. In order to satisfy ourselves we called upon learned Counsel for the Revenue Mr. Sanjeev Sabharwal to place on record any communication, order or any other document which would show that the assessee had been given an opportunity to deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defect cannot be cured by first reopening the assessment and then granting an opportunity to the assessee to respond to the issues raised before Assessing Officer during the course of fresh assessment proceedings. To buttress his submission the learned Counsel for the Revenue has relied upon the judgment of the Supreme Court in the case of Rampyari Devi Saraogi v. CIT, West Bengal and Ors. : [1968]67ITR84(SC) . This is a case in which, the order issued by the Commissioner, itself revealed that the assessment was being reopened based on an additional supporting material. The Supreme Court in such fact situation thus ruled that non supply of additional supporting material would not effect the basic issue of assessment being carried out without adequate investigation. In the instant case the Order-in-Revision refers to issues and discrepancies which did not find mention in the initial notice dated 11.05.2006 and not to additional or supporting material as in the case of Rampyari Devi (supra). Therefore, to suggest that it would be sufficient compliance of the provisions of Section 263 of the Act, if an opportunity to respond to the discrepancies mentioned in the Order-in-Revision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial power vested in him and if he exercises such powers in accordance with law, arrives at a just conclusion such conclusion cannot be termed to be erroneous only because the CIT does not feel satisfied with the conclusion. 13. Commissioner of Income Tax vs. Jain Construction Co. (RAJHC) (2013) 257 CTR 0336 10. The settled legal position for limitation on the revisional powers of CIT under s. 263 of the Act is that, firstly, they are limited in nature, and secondly, such revisional powers are not to be invoked merely for reviewing the order passed by the assessing authority on a mere change of opinion. The safeguard provided to the assessee in the said provision is that mere erroneous orders are not revisable but the revisional authority has to further establish with the material on record that such erroneous order is also prejudicial to the interest of Revenue. The twin conditions of assessment order being erroneous and it also being prejudicial to the interest of Revenue, keeps the initial burden on the Revenue itself, namely, the CIT, who invokes such jurisdiction. From the following legal precedents, it would be clear that such powers are not allowed likely to be invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited. For the above reasons we are of the view that the Tribunal took the correct view. No substantial question of law arises for our consideration. The appeal is accordingly dismissed with no order as to costs. 2. In Commissioner of Income Tax and Anr. vs. D. Ananda Basappa (KARHC) (2009) 309 ITR 0329, it has been held as under :- 5. A plain reading of the provision of Section 54(1) of the Income Tax Act discloses that when an individual-assesses or Hindu undivided family-assesses sells a residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013) 352 ITR 0418, it has been held as under :- 9. We see no force in the said contention. As held in D. Ananda Basappa's case (1 supra) by the Karnataka High Court, the expression a residential house in Section 54 (1) of the Act has to be understood in a sense that the building should be of residential nature and a should not be understood to indicate a singular number and where an assessee had purchased two residential flats, he is entitled to exemption under Section 54 in respect of capital gains on sale of its property on purchase of both the flats, more so, when the flats are situated side by side and the builder has effected modification of the flats to make it as one unit, despite the fact that the flats were purchased by separate sale deeds. This decision was followed by the Karnataka High Court in CIT Vs. Smt. K.G. Rukminiamma : (2011) 331 ITR 211 (Karnataka) where a residential house was transferred and four flats in a single residential complex were purchased by the assessee, it was held that all four residential flats constituted a residential house for the purpose of Section 54 and that the four residential flats cannot be construed as four residential hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly by the assessee and not a single penny was contributed by the assessee's wife. It also noted that a purposive construction is to be preferred as against a literal construction, more so when even applying the literal construction, there is nothing in the section to show that the house should be purchased in the name of the assessee only. As a matter of fact, Section 54F in terms does not require that the new residential property shall be purchased in the name of the assessee; it merely says that the assessee should have purchased/constructed a residential house . 9. It thus appears to us that the predominant judicial view, including that of this Court, is that for the purposes of Section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. It is moreover to be noted that the assessee in the present case has not purchased the new house in the name of a stranger or somebody who is unconnected with him. He has purchased it only in the name of his wife. There is also no dispute that the entire investment has come out of the sale proceeds and that there was no contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld as under :- 6. On a careful reading of section 54 as well as section 54EC on which reliance is placed makes it clear that when capital gains arise from the transfer of long-term capital asset to an assessee and the assessee has within the period of one year before or two years after the date on which the transfer took place purchases or has within a period of three years after the date of construction of residential house then instead of capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the provision made under the section which grants exemption from payment of capital gains as set out thereunder. Therefore, in the entire section 54, the purchase to be made or the construction to be put up by the assessee, should be there in the name of the assessee, in not expressly stated. Similarly, even in respect of section 54EC, the assessee has at any time within a period of six months after the date of such transfer invested the whole or any part of the capital gains in the long-term specified asset then she would be entitled to the benefit mentioned in the said section. There also it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered by the AO. The AO noted that though all the payments were made by the assessee, the residential house was purchased jointly in the names of the assessee and his wife. The AO then referred to Section 54F of the Act only to the extent of his right in the new residential house purchased jointly with his wife. The AO, therefore, allowed 50% of the exemption claimed under Section 54F of the Act as against total claim of `3,18,59,276/- made by the assessee. The AO allowed claim only to the extent of `1,59,29,638/- and the balance 50% being `1,59,29,638/- was disallowed. 8. At the outset, important factual findings recorded by the Tribunal in this case are that it was the assessee who independently invested in the purchase of new residential house though in his own name but along with the name of his wife also and that it was the assessee who paid stamp duty and corporation tax at the time of the registration of the sale deed of the house so purchased and has also paid commission and legal expenses in connection with the purchase of the house. The Tribunal further records that whole of the purchase consideration has been paid by the assessee and not even a single penny has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed, which stands dismissed accordingly. 12. Consequent upon the dismissal of income-tax appeal, the stay application, filed herewith, does not survive and the same also stands dismissed 9. In Commissioner of Income Tax vs. Gurnam Singh (PHHC) (2010) 327 ITR 0278 it has been held as under :- 4. We have heard the counsel for the Revenue and gone through the aforesaid impugned order. In our opinion, from the impugned order, no substantial question of law is arising for consideration of this Court as the Tribunal while recording a pure finding of fact has dismissed the appeal of the Revenue. Undisputedly, in this case the assessee had sold the agricultural land which was being used by him for agricultural purposes. Out of sale proceeds of the said sale, the assessee has purchased other piece of land (land in question) in his name and in the name of his only son, who was bachelor and dependent upon him, for being used for agricultural purposes within the stipulated time. Further, it is not the case of the Revenue that from the sale proceeds of the agricultural land earlier owned by the assessee, the land in question was purchased for any other purpose than the agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. Explanation. - For the purposes of this subsection, 'long-term capital asset' means a capital asset which is not a short-term capital asset. Relying upon the expression assessee occurring in section 54 of the Act, it is contended for the Department that in order to claim the exemption, the person who sold the house must be the same as the person who purchased the house, that is, the assessee must be one and the same person. The identity must be the same. We are unable to accept this contention. The object of granting exemption under section 54 of the Act is that a person who sells a residential house for the purpose of purchasing another convenient house must be given exemption so far as capital gains are concerned. As long as the sale of the house and purchase of anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for exercise of jurisdiction Under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the Assessee an opportunity of being heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an assessment Under Section 147 of the Act, the power of revision Under Section 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been understood not to require any specific show cause notice to be served on the Assessee. Rather, what is required under the said provision is an opportunity of hearing to the Assessee. The two requirements are different; the first would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the Assessee. Failure to give such an opportunity w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not necessary nor proper for us in this case to consider as to the nature of the enquiry to be held Under Section 33-B. Therefore, we refrain from spelling out what principles of natural justice should be observed in an enquiry Under Section 33-B. This Court in Gita Devi Aggarwal v. CIT, West Bengal ruled that Section 33-B does not in express terms require a notice to be served on the Assessee as in the case of Section 34. Section 33-B merely requires that an opportunity of being heard should be given to the Assessee and the stringent requirement of service of notice Under Section 34 cannot, therefore, be applied to a proceeding Under Section 33-B. (Page 827-828). [Note: Section 33-B and Section 34 of the Income Tax Act, 1922 corresponds to Section 263 and Section 147 of the Income Tax Act, 1961] 11. It may be that in a given case and in most cases it is so done a notice proposing the revisional exercise is given to the Assessee indicating therein broadly or even specifically the grounds on which the exercise is felt necessary. But there is nothing in the Section (Section 263) to raise the said notice to the status of a mandatory show cause notice affecting the initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn. We, therefore, are of the opinion that the learned C.I.T. was perfectly justified in coming to his conclusions insofar as the issue No. (iii) is concerned and in passing the impugned order on that basis. The learned Tribunal as well as the High Court, therefore, ought not to have interfered with the said conclusion. 22. In the light of the discussions that have preceded and for the reasons alluded we are of the opinion that the present is a fit case for exercise of the suo motu revisional powers of the learned C.I.T. Under Section 263 of the Act. The order of the learned C.I.T., therefore, is restored and those of the learned Tribunal dated 28th August, 2007 and the High Court dated 7th August, 2008 are set aside. The appeal of the Revenue is allowed. 6.1 He further relied upon the decision of this court in Tax appeal No.140/2014 (CIT Vs. Shri Prabhati Lal Saini decided on 19.9.2017) wherein this court has taken a view in favour of the department. 7. We have heard counsel for the parties. 7.1 On the first issue of sec.263 in view of the decision of Malabar Industrial company Ltd. (supra) Sec.263 provisions are taken only on the ground of prejudicial and interest los ..... X X X X Extracts X X X X X X X X Extracts X X X X
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