TMI Blog2020 (6) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment unless there is incriminating material unearthed by the search team, since in assessee`s case under consideration there is no incriminating material therefore order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. AO has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the AO cannot be treated as erroneous and prejudicial to the interest of the revenue as held in Malabar Industries Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT]. Since the order of the AO cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is null in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 by the Principal CIT. - Decided in favour of assessee. - ITA No.1151/Kol/2018 - - - Dated:- 17-6-2020 - Shri S.S. Godara, JM And Dr. A.L. Saini, AM For the Appellant : None For the Respondent : Shri RadheyShyam, CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim deduction under section 54F of the Act. The action of the Ld. Pr. CIT, Central-1, Kolkata in coming to such conclusion was not justified in the facts of the case. 5. That the appellant craves leave to add, alter, and delete all or any grounds of appeal at the time of hearing. 4. Brief facts qua the issue are that in case of the assessee, a search and seizure operation was conducted on 05.03.2015. Subsequent to search, assessment order in case of the assessee has been passed for A.Y.2010-11U/S.153A/143(3)of the Income Tax Act, 1961 (hereinafter referred as the Act ) vide order dated 30/12/2016 by the DCIT, Central Circle-1(4), Kolkata hereinafter referred as the AO determining the assessed income at ₹ 12,52,580/- as against the returned income of ₹ 12,23,460/-. In this assessment order, only one addition of ₹ 29,116/- has been made on account of disallowance made u/s.l4A of the Act. Later on, ld Principal Commissioner of Income Tax (PCIT) exercised his jurisdiction under section 263 of the Act. The ld PCIT,on examination of assessment order along with the assessment record, noticed that the assessee sold two offices at Dhanbad (relating to his sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use property and certain shares and even the sale agreement for the new flat and possession of new flat was taken before the date of sale of old house property and shares on which LTCG was computed. Therefore, ld PCIT held that the assessee in present case had not been found to be eligible for deduction u/s.54 and 54F of the Act because the assessee had been found to have constructed a house prior to the date of transfer/sale of old house property and shares. Thus, ld PCIT noted that the AO had wrongly allowed deduction u/s.54 and 54F of the Act without examining the full facts of the case, whether acquiring of new house property by the assessee is construction of flats or purchase of flats (which prima facie on the basis of details available on record has been found to be construction) and accordingly, all the conditions of section 54 and 54F of the Act have not been fulfilled.Therefore, assessment order passed by AO u/s 153A/143(3) of the Act dated 30.12.2016 is erroneous in so far as it is prejudicial to the interest of revenue, hence assessment order needs to be revised as per the provision of Section 263 of the Act. 7. As the order passed by the AO was erroneous in so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of agreement dated 09.03.2009. Supporting documents for flat at Gurgoan is enclosed herewith and marked as per Annexure-E. Supporting calculations for exemption under section 54F of the Act are enclosed herewith and marked as perAnnexure-F. 5.3 From the above submission, it is clear that the issue whether the booking of flat made by the assessee with Sahara Grace, Gurgaon in F.Y.2003-04 was for construction of flat or was for purchase of ready built house, had never been under his consideration. He had already accepted such new flat as being purchased on the basis of earlier submission dated 02.12.2016 made by the assessee before him and only wanted to know the date of purchase of the new flat to ascertain only that whether new flat was purchased within a period of one year prior to the date of transfer of old house property or shares. In this regard, the assessee in her submission clarified as the date of purchase being 09.03.2009 on the basis of registered purchase deed being dated 09.03.2009 that is within one year of the date of transfer of old house property and shares and accordingly, claim of deduction u/s.54 and 54F has been justified. 5.4 Consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, on identical question, i.e. whether the booking of flat with the builder is to be considered a case of purchase or construction was considered by Mumbai Bench of Tribunal in the case of ACIT vs. Sardar Kaur Sujan Singh and it was held to be a case of construction. 5.7 After discussing the legal position as held in various judgements of courts with regard to nature of acquiring a house/flat from a builder after its booking with builder at the time of starting of construction and then paying the cost of construction in installments, if facts of present case is examined, it is prima facie found that it is the case of Construction and not Purchase because the assessee booked the flat in May, 2004 with Sahara Grace, Gurgaon (builder) when it started constructing flats. The flat was booked after taking home loan from ICICI Home Finance Ltd. Thereafter, payments were made to builder in installments to meet the cost of construction and finally, possession of flat was handed over on 09.03.2009. The original asset being house and shares were sold on 21.07.2009 04.02.2010 and 27.02.2010 respectively and LTCG earned on their sale has been computed. Both assets are sold af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings as on the date of search. It is not in dispute that the assessment for the Asst. Year 2010-11 was originally completed and thereafter a search and seizure action was conducted on 05.03.2015, therefore, assessment year 2010-11 is an unabated assessment. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. For that we rely on the judgment of the Hon ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) held as under:- '37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately precedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. Therefore, in assessee`s case original assessment was completed much prior to search and seizure therefore the assessment year under consideration, that is, A.Y. 2010-11 is unabated and in unabated proceedings, the AO cannot disturb the findings given thereon in the original assessment unless there is incriminating material unearthed by the search team, since in assessee`s case under consideration there is no incriminating material therefore order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. 12. We note that on the identical facts, in case of one of the assessee`s covered under the said search and seizure action, this Tribunal has quashed the order of ld PCIT under section 263 of the Act, vide ITA No.1164/Kol/2018, in case of NityanaandSonthalia, for A.Y. 2010-11, the findings of the tribunal is given below: 2.It transpires during the course of hearing that the PCIT has assumed his revision jurisdiction whilst setting aside the assessment in question dated 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order shall remain intact. 6. In the result, the assessment order dated 30.12.2016 is set aside to the extent of examination of deduction u/s.54 and 54F and passing of a fresh assessment order as directed above. 3. We now advert to the basic relevant facts. There is hardly any dispute that we are in assessment year 2009-10. The department had carried out search in question dated 05.08.2014 in M/s Kushal Group, Kolkata. The same culminated in initiation of section 153A proceedings vide notice dated 20.03.2015. The assessee filed his return on 15.05.15 stating income of ₹ 18,62,070/-. The Assessing Officer then completed the regular assessment accepting the above return income. Suffice to say, it is the said assessment which has been subjected to revision proceedings in PCIT s order under challenge on the ground that the Assessing Officer has wrongly accepted the assessee s section 54 54F deduction claim (supra). 4. Both the learned representatives reiterated their respective pleadings against and in support of the PCIT s assumption of revision jurisdiction. Hon ble apex court s landmark decision in Malabar Industries Co. vs. CIT 243 ITR 83 holds that bef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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