TMI Blog2020 (11) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the ratio laid down by the Hon'ble jurisdictional High Court, thus, we are of the considered view that in the light of the judgment of the Hon'ble jurisdictional High Court, Ld. Pr. CIT was not justified in invoking the provision of section 263 - Decided in favour of assessee. - ITA No.486/Ind/2019 - - - Dated:- 21-10-2020 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member For the Appellant : Shri S.N. Agrawal, CA For the Revenue : Smt. Ashima Gupta, CIT-DR ORDER PER KUL BHARAT, J.M: This appeal by the assessee is directed against the order of ld. Pr. Commissioner of Income Tax(in short Ld. Pr. CIT ,-2 Indore dated 29.03.2019 pertaining to assessment year 2015-16. The assessee has raised following grounds of appeal: 1. That on the facts and in the circumstances of the case and in law, the Ld. Pr. CIT erred in setting aside the order as passed by the assessing officer under section 143(3) of the Act by invoking the provisions of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous nor prejudicial to the interests of the revenue. 2. That on the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no agriculture land has been purchased on your name. the said lands have been purchased on the name of your sons and daughter in law. Hence the claimed deduction should have been disallowed as per provisions of Section. 54B of the I.T. Act. The AO has not examined this factor and no enquiry/investigation has been made. Therefore, the assessment order passed by the AO appears to be erroneous in so far as it is prejudicial to the interest of the revenue. You are therefore, required to show cause why provisions of section 263 be not invoked in your case for the reasons mentioned above. 3. In response thereto, the assessee filed written submissions through its Authorized Representative (AR), CA, Satyanarayan Agrawal. However, explanation offered by the assessee was not found acceptable by the Ld. Pr. CIT, he therefore, held that the assessment order dated 27.03.2017 is erroneous in so far as also prejudicial to the interest of the revenue on account of passing of the order without making requisite enquiry/investigation in respect of deduction u/s 54B of the Act . He, therefore, set aside the assessment order and directed the assessing officer to re-examine the issue afresh af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has objected the issuance of notice u/s 263 of the Act in the name of deceased person. Thereby, fresh notice u/s 263 was issued in the name of legal heir of the deceased Shri Jitendra Patidar dated 31-10-2018. B]The appellant in the present appeal has taken the following grounds of appeals before the Hon ble Bench:- 1.1] That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the assessing officer under section 143[3] of the Act by invoking the provisions of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous nor prejudicial to the interests of the revenue. 1.2] That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the assessing officer by invoking the provisions of section 263 of the Act even when the order was passed by the assessing officer under section 143[3] of the Act after conducting necessary enquiries and after due application of mind 2] That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled as property of HUF or joint property. Since, the same was not purchased by the assessee himself from his income in his life time. 1.4.2] That the land as sold by the assessee with the consent of his sons . Since, the said land was inherited by the assessee and therefore his sons also having interest in this Land. Thus, the investment as made in the name of his sons was also eligible under section 54B of the Income Tax Act. 1.5] That the assessee was an old man at the time of sale/ purchase of land. He died on 06-05-2017. That it was not in dispute that the amount as invested in the name of his sons was also from the sale proceed of the land as received by the assessee. The amount as invested in the name of his son is also eligible for deduction under section 54B of the Act. 1.6] That it is now stand settled in favour of the appellant, that if any agricultural land is purchased in the name of the spouse of the appellant, in the name of his son s and also in the name of his son s wife is eligible for deduciton under section 54B of the Income Tax act. 1.7.1] Detail of land as purchased by the assessee in the name of his family members are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re reproduced as under for your kind reference: 1.9.1] That Hon ble Delhi High court in the case of CIT Vs Kamal Wahal [Appeal No ITA 4/2013] dt 11-01-2013 [ refer paras 9 10] has held that: 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 from the assessee's wife. 10. Having regard to the rule of purposive construction and the object which Section 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the revenue. 1.9.2] That Hon ble Madras High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the revenue that the said land is being used exclusively by his son. In our view, a pure finding of fact has been recorded by the ITAT which does not require any interference in this appeal. 4. No substantial question of law is involved in this appeal.A similar view has been taken by the High Court of Delhi in the case of Commissioner of Income-tax- XII vs. Kamal Wahal, reported in 2013 (30) taxmann.com 34 (Delhi). Paragraph Nos. 8, 9 and 10 of the aforesaid judgment read as under:- oe8. This Court in the decision cited alone also noticed the judgment of the Madras High Court (supra) and agreed with the same, observing that though the Madras case was decided in relation to Section 54 of the Act, that Section was in parimateria with Section 54F. The judgment of the Punjab and Haryana High Court in the case of CIT Vs. Gurnam Singh : (2010) 327 ITR 278/[2008] 170 Taxman 160 in which the same view was taken with reference to Section 54F was also noticed by this Court. 1.9.4] That Hon ble Indore Bench of ITAT in the case of Shri Raja Ram Patidar [ Appeal No ITA No 371/ Ind/ 2015 dt 28-09-2018 for the Asst Year 2010-11] has held that: 28. The above provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , detailed submission was filed by the appellant. The same was duly examined by the assessing officer and claimed of deduction under section 54B of the Act was accepted. 2.3] The Pr CIT-2, Indore by issuing notice under section 263 of the Act setting aside the order as passed by the Assessing officer by holding that the same was erroneous and prejudicial to the interest of revenue. 2.4] The appellant had filed complete details before the assessing officer. The Assessing officer after taking into account, details as filed by the appellant passed an order under section 143(3) of the Act duly accepting the claim of the appellant as legal and proper. Hence, the assessment order as passed by the assessing officer was neither erroneous nor prejudicial to the interests of the revenue. The said order was passed after conducting necessary enquiries and after due application of mind. 2.2] It is pertinent to mention the relevant provisions of Section 263 of the Income Tax Act which provides that thePrincipal Commissioner or 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 Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue and consequential proceedings under section 263 could be initiated. 2.4.1] However, in the facts of the present case, the appellant during the course of assessment proceeding filed ample documents so as to justify claim of the assessee under section 54B of the Income Tax Act. Copy of the sale deed of the agricultural land as sold by the assessee along with the copies of registry as executed by the assessee in respect of agricultural land purchased had been provided during the course of assessment proceedings before the assessing officer. The claim of deduction of the appellant was also duly supported with the decisions of Jurisdicitonal Bench and also of Jurisdictional High Court. 2.4.2] The appellant filed following documents in support of Land as purchased by the assessee in the name of his Son and Daughter in law so as to justify the exemption claimed under section 54B of the Act: S.No. Description of Papers 1 Copy of registry dated 30-06-2014 for sale of land situated Gram BalyaKheda, Indore for consideration of ₹ 1,60,65,000/- 2 Copy of regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of mind. The phrase 'prejudicial 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 the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO 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 ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968167ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) . [ Emphasis Supplied ] 2.6.2] Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 has pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order in a particular manner. The assessment order cannot be termed erroneous as well as prejudicial to the interest of the Revenue on the ground that inquiry was not conducted by the AO. [ Emphasis supplied ] 2.6.4] Hon'ble Mumbai bench of ITAT in the case of Reliance Money Infrastructure Ltd Vs Pr CIT as reported in 51 CCH 0166 has held that :- 26. In view of the foregoing discussions, we note that the AO has passed the assessment order after obtaining and calling for details/clarifications of all the seven issues raised by the Pr CIT in the revisionary proceedings and thereafter framed the assessment whereas the ldPr.CIT has not specified in his order as to how the order of the AO is erroneous so as to prejudicial to the interest of the revenue. The Pr. CIT has even made roving direction that the AO may examine any other issue which may come to his notice in the set aside proceedings. Thus evidently it is not a case of no inquiry or wrong application of law or wrong assumption of facts and therefore the revisionary jurisdiction exercised by the PCIT is not proper and as per the provisions of the section itself. We are of the considered opinion that in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. Vs Commissioner of Income Tax III, Hyderabad as reported in 2013 36 Taxmann.com 348 has held that:- It may be that in the assessment order, the Assessing Officer has not made an elaborate discussion on the issue as to the nature of activity of the assessee i.e. whether it is an investment or whether it is business income and did not refer to his query on the issue to the assessee before passing the order or reply given by the assessee to his query, however, when it is not incumbent on the Assessing Officer to pass a detailed order, merely because the order does not contain reasons as to why he accepted that the assessee is (sic-not) a trading company, his order does not become susceptible for revision. The Assessing Officer while making an assessment had examined the accounts, made inquiries, applied his mind to the facts and circumstances of the case and determined the income of the assessee. Therefore, it is not open to the Commissioner, on the ground that a different view is possible, to reopen the assessment on the ground that the Assessing Officer did not make an elaborate discussion in that regard. [Para 34] 2.6.7] That Hon'ble High Court of Madhya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the copy of bank account No. 85940 for further verification and ultimately the AO noted in the order sheet entry dt. 16th Sept., 2011 that the assessee produced the information and the case was discussed with him. From the abovesaid order sheet entries, copy of which is placed at page Nos. 14 and 15 of the assessee' compilation, it is clear that the AO made the proper enquiry relating to the deposit of the ₹ 15,59,000 and only after being satisfied, the assessment was framed under s. 143(3) of the Act. 10.2 On a similar issue, the Hon'ble Supreme Court in the case of Max India Ltd. (supra) has held as under : The phrase 'prejudicial to the interests of the Revenue' in s. 263 of the IT Act, 1961, has to be read in conjunction with the expression 'erroneous' order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when the AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before exercise of powers two requisites are imperative to be present. In the absence of such foundation exercise of asuo 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 AO 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 realization of lawful revenue either by the State has not been realized or it has gone beyond realization. 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 CIT it is perceptible that the said authority has not kept in view the requirement of s. 263 of the Act inasmuch as the order does not reflect any kind of satisfaction. As is manifest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from the assessee s wife. 10. Having regard to the rule of purposive construction and the object which section 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the revenue. The appeal is accordingly dismissed with no order as to costs. The Tribunal while dismissing the appeal of the Revenue has held that the assessee has purchased the agricultural land and, therefore, the order passed by the Income Tax Appellate Tribunal is just and proper. 5. There is conflicting view of the Hon'ble Rajasthan High Court and the Hon'ble jurisdictional High Court on the issue of deduction u/s 54F of the Act. The Hon'ble jurisdictional High Court after considering the judgment of Hon'ble Punjab and Haryana High Court and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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