TMI Blog2019 (6) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... from the fact that the words a residential house were replaced with one residential house only with effect from 01/04/2015 and accordingly, the amendment was not applicable to impugned AY. Simply because, Ld. Pr.CIT hold adverse view in the matter, in our opinion, would not be a ground to invoke jurisdiction u/s 263 unless any perversity is established in the order of Ld. AO. Once a plausible legally sustainable view has been taken by Ld. AO in the matter, the revisional jurisdiction u/s 263 would not be warranted. - Decided in favour of assessee. - I.T.A. No.4050/Mum/2018 - - - Dated:- 6-6-2019 - Shri Saktijit Dey, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Manish Shah And Ms. Niyanta Mehta-Ld. Ars For the Revenue : Shri Anadi Varma-Ld.CIT-DR ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) :- 1. By way of this appeal for Assessment Year [AY] 2013-14, the assessee has contested the validity of revisional jurisdiction u/s 263 exercised by Ld. Principal Commissioner of Income-Tax-28 [Pr.CIT], Mumbai vide order dated 26/03/2018. For the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim under section 54 of the Act. 2. The Ld. Pr. CIT failed to appreciate that section 54, prior to its amendment by Finance (No.2) Act, 2014 w.e.f. April 1, 2015, did not limit the number of units to be purchased out of the longterm capital gains arising from the sale a residential house for claim of the said exemption and therefore, whether the flats were independent units or not has no bearing on the claim under section 54 of the Act. 3. The Appellant prays that the direction to AO to examine claim under section 54 after verifying whether the newly acquired units were independent units be quashed. WITHOUT PREJUDICE TO GROUND NO. I AND II: GROUND NO. Ill: Claim under section 54 was valid as adjacent units were purchased to be used as single dwelling unit 1. On the facts and circumstances of the case and in law, the ld. Pr. CIT erred in exercising jurisdiction u/s 263 of the Act and directing the AO to examine the building plans to determine whether the units were independent units. 2. Ld. Pr. CIT failed to appreciate and ought to have held that the AO has duly examined th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is considered that the order dated 02.02.2016 u/s. 143(3) of the Income-tax Act, 1961 is erroneous in so far as it is prejudicial to the interest of revenue within the meaning of Sec. 263 of the Income-tax Act, 1961. 5. You are, therefore, allowed an opportunity of being heard and show cause as to why an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment within the meaning of Section 263 of the Income Tax Act, 1961 may not be passed in your case. 2.3 In response, the assessee vide letter dated 04/10/2017, submitted that the assessee sold two residential house property and against sale of each of the house property, the assessee had purchased two adjacent flats intended to be used as single dwelling unit and the deduction u/s 54 was claimed on purchase of new flats. It was submitted that the details of computation of the capital gains of the said transactions was called for by Ld. AO during scrutiny assessment proceedings vide question No. 26 of notice dated 23/12/2015 and after considering the assessee s reply, the assessee s claim was accepted u/s 54. 2.4 In reply, the attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2016 u/s. 143(3) of the Income tax Act, 1961 is erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of sec.263 of the Income-tax Act, 1961 and, as the Assessing Officer failed to conduct proper inquiries, investigation and enquiries, the assessment order is set aside to the Assessing Officer with the direction to verify the claim of the assessee after conducting proper inquiries, investigation and examination and pass a fresh assessment order in accordance with law after affording an opportunity of being heard to the assessee . The order shall be passed under the supervision and guidance of the Jt.CIT-28(1), Mumbai. Aggrieved, the assessee is in further appeal before us. 3. The Ld. Authorized Representative for Assessee reiterating the submissions advanced arguments that the stated issue was duly scrutinized by Ld. AO during original assessment proceedings and accepted the claim with due application of mind and therefore, the same would not warrant revisional jurisdiction u/s 263. Per Contra, Ld. CIT-DR submitted that the failure on the part of Ld. AO to carry out investigations as observed by Ld.Pr.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only with effect from 01/04/2015 and accordingly, the amendment was not applicable to impugned AY. Simply because, Ld. Pr.CIT hold adverse view in the matter, in our opinion, would not be a ground to invoke jurisdiction u/s 263 unless any perversity is established in the order of Ld. AO. Once a plausible legally sustainable view has been taken by Ld. AO in the matter, the revisional jurisdiction u/s 263 would not be warranted. 4.4 We draw support from the decision of Hon ble Bombay High Court rendered in Moil Ltd. Vs. CIT [81 Taxmann.com 420] wherein Hon ble court has held as under: - 5. On a perusal of the orders passed by the Authorities, it appears that before the assessment order was passed, a notice was served on the assessee under Section 142(1) of the Act and 20 queries pertaining to different heads were made therein. The ninth query in the notice under Section 142 (1) of the Act pertains to the expenditure for the Corporate Social Responsibility. By the said query, the assessee was directed to give a detailed note of expenditure for the Corporate Social Responsibility along with bifurcation of the expenses under different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent heads was sought. We have perused the response in respect of this query which is exhaustive. We find that the assessee has given the details, as are sought under query no.9 in the notice under Section 142 (1) of the Act. If that is so, the judgments, reported in Fine Jewellery (India) Ltd. (supra) and Nirav Modi (supra) and on which the learned Counsel for the assessee has placed great reliance would come into play. It is held in the judgments referred to herein above by relying on the judgment in the case of Idea Cellular Ltd. (supra) that if a query is raised during the assessment proceedings and the query is responded to by the assessee, the mere fact that the query is not dealt with in the assessment order would not lead to a conclusion that no mind has been applied to it. In the case of Fine Jewellery (India) Ltd. (supra) this Court found that from the nature of the expenditure as explained by the assessee in that case the Assessing Officer took a possible view and therefore, it was not a case where the provisions of Section 263 of the Act could have been resorted to. Considering the explanation of the assessee in this case, we are also of the view that the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Vs. Hindustan Lever Ltd. 19 Taxman.com 56] following the judgment in CIT Vs. Gabriel India Ltd. [203 ITR 108] observed as under: - 9. Before we deal with the grounds on which the Commissioner sought to exercise his jurisdiction under Section 263 and the decision of the Tribunal in appeal, it would, at the outset, be necessary to advert to the parameters for the exercise of the jurisdiction under Section 263 of the Act. Section 263 empowers the Commissioner to call for and examine the record of any proceeding if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue . The language of Section 263 imposes two requirements, the first being that the order of the Assessing Officer must be regarded as being erroneous and the second that the order must be prejudicial to the interests of the Revenue. Similarly, the Commissioner cannot exercise his jurisdiction under Section 263 merely on the ground that the interests of the Revenue are prejudiced without coming to the conclusion, in addition, that the order in respect of which he exercises his revisional jurisdiction is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount was unconnected with any agricultural operation and was liable to be taxed under the head income from other sources . Both, the Tribunal in appeal and the High Court held against the assessee. The Supreme Court while dismissing the appeal came to the conclusion that the order of nil assessment by the Income Tax Officer was passed without application of mind. There was no material to support the claim of the assessee that the amount paid represented compensation for loss of agricultural income. The Assessing Officer, noted the Supreme Court, had accepted the entry in the statement of account filed by the assessee in the absence of any supporting material and without making any enquiry. On these facts, the conclusion that the order of the Income Tax Officer was erroneous was held to be irresistible and the jurisdiction under Section 263 was held to be a justifiable exercise. 12. The judgment of the Division Bench of this Court in Gabriel India Ltd. ( supra ) had confined the categories within which the jurisdiction under Section 263 could be exercised, to a situation in which the order of the Assessing Officer could be regarded as not being in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, the Revenue is losing tax lawfully payable by a person, it would certainly be prejudicial to the interests of the Revenue. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue. For instance, where the Assessing Officer adopted one of several courses permissible in law or where two views are possible and the Assessing Officer has adopted one view with which the Commissioner does not agree, it has been held that it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken is unsustainable in law. We find the ratio of above decisions applicable to the facts of present case. 4.5 The revenue has placed reliance on the decision of Hon ble Bombay High Court rendered in Shoreline Hotels (P) Ltd. Vs CIT [ITA No. 332 of 2016 dated 11/09/2018]. However, upon study, we find the same to be inapplicable in view of the fact that in that case, there was clear failure on the part of Ld. AO to abide by the statutory mandate and Ld. AO accepted vague and general explanation of the assessee, which made the order erroneous as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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