TMI Blog2018 (9) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... en held that if the flats purchased by the assessee are adjacent or contiguous to each other and are used as a single residential unit having common entrance and common kitchen, they have to be considered as a single residential unit satisfying the condition of section 54 of the Act. Directions of the Principal Commissioner of Income-tax to the Assessing Officer while setting aside the assessment order is conflicting and contradictory. While in Para–6 of the impugned order, he has directed the Assessing Officer to examine the claim of the assessee, to the effect that the two flats are single units, and decide the issue after affording opportunity of being heard to the assessee, whereas, in Para–7 of the order, he has directed the Assessing Officer to restrict the deduction under section 54 of the Act to one flat at ₹ 54,12,800. Once the learned Principal Commissioner of Income-tax directs the AO to restrict the deduction under section 54 of the Act to one flat, the other direction for examining assessee’s claim that the residential unit is a single unit becomes redundant. - Decided in favour of assessee - ITA No. 3787/Mum./2018 - - - Dated:- 7-9-2018 - Shri Saktijit Dey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. He observed, if the assessing officer allows a claim without making any enquiry, the revisional authority has jurisdiction to revise the order passed by the Assessing Officer. As regards the merits of the issue, the learned Principal Commissioner of Income Tax held that since the assessee has invested the capital gain in purchase of two flats the deduction under section 54 of the Act has to be restricted to one flat. Accordingly, he set aside the assessment order with a direction to the Assessing Officer to restrict the deduction u/s 54 of the Act to one flat purchased by the assessee. 3. The learned Authorised Representative submitted, the observations of the revisional authority that before allowing assessee s claim of deduction under section 54 of the Act the Assessing Officer has not made any enquiry is factually incorrect and without any basis. Drawing our attention to notice dated 13th January 2016, issued under section 142(1) of the Act a copy of which is at Page 1 of the paper book, the learned Authorised Representative submitted that in the annexure to the said notice, the Assessing Officer has specifically raised the issue relating to allowability of deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of section 54 of the Act applicable to the impugned assessment year, the expression used is investment in a residential house . He submitted, the expression a residential house has been interpreted by High Courts and different Benches of the Tribunal not to mean one residential house. He submitted, as per the said interpretation if more than one flat adjacent to each other are joined together and have a common entrance with common kitchen and in all respect is a single residential unit, deduction under section 54 of the Act is allowable. The learned Authorised Representative submitted, in any case of the matter, the assessee has factually proved before the Assessing Officer that the two flats purchased by the assessee have been converted to one and in all respect it is a single residential unit. Therefore, assessee s claim of deduction under section 54 of the Act. For such proposition, he relied upon the following decisions: i) Sri D. Anand Basappa v/s ITO, ITAT, Bangalore Bench, order dated 28.10.2003; ii) K.G. Vyaa v/s Seventh ITO, ITAT, Mumbai Bench, order dated 06.01.1986; and iii) K.C. Kaushik v/s Fifth ITO, [1990] 51 taxman 051. 5. The learned Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in the judicial precedent cited before him. Therefore, the observation of the learned Principal Commissioner of Income-tax that the Assessing Officer has not examined the issue is factually incorrect. As regards the observation of the DCIT that in view of Explanation 2 to section 263 of the Act the Commissioner of Income-tax has jurisdiction to revise the assessment order if he feels that enquiry which ought to have done has not been done, in our view, Explanation 2 to section 263 of the Act cannot be interpreted in a manner to suggest that by virtue of such explanation, the revisional authority is clothed with unbridled power to invoke his jurisdiction under section 263 of the Act simply because in his opinion the enquiry conducted by the Assessing Officer is either insufficient or not carried out in a manner acceptable to him. If the material on record reveal that the Assessing Officer in course of the proceedings has made proper enquiry and arrived at a conclusion after considering all aspects of the issue and if such conclusion is not opposed to law, the revisional authority cannot hold the order of the Assessing Officer erroneous and prejudicial to the interests of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is conflicting and contradictory. While in Para 6 of the impugned order, he has directed the Assessing Officer to examine the claim of the assessee, to the effect that the two flats are single units, and decide the issue after affording opportunity of being heard to the assessee, whereas, in Para 7 of the order, he has directed the Assessing Officer to restrict the deduction under section 54 of the Act to one flat at ₹ 54,12,800. Once the learned Principal Commissioner of Income-tax directs the Assessing Officer to restrict the deduction under section 54 of the Act to one flat, the other direction for examining assessee s claim that the residential unit is a single unit becomes redundant. The aforesaid facts reveal that the impugned order has been passed mechanically. Be that as it may, on overall consideration of facts and material on record in the light of the decisions cited at the bar, we are of the view that exercise of jurisdiction under section 263 of the Act in the present case is invalid. Accordingly, we quash the impugned order passed under section 263 of the Act and restore the assessment order passed by the Assessing Officer. Grounds raised are allowed. 9. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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