TMI Blog2021 (4) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... ule-A attached with this agreement, the rate prescribed was ₹ 180/- per sq.feet. The assessee has placed on record true copy of translation of the alleged banakhat- If we look into this agreement, which is very closure to 1.4.1981 along with working of the registered valuer, then it would reveal that in support of her working in indexation cost, the assessee has evidence. On the contrary, the ld. Commissioner did not refer to any sale instance for directing the AO to adopt ₹ 8/- per sq.ft. as on 1.4.1981 for working the cost of acquisition. Commissioner has observed that the assessee failed to show any documentary evidence about the improvement cost claimed at ₹ 11,22,325/-. The AO has not examined this aspect and allowed the claim. Though the assessee has demonstrated the facts as to how she has claimed the improvement cost, and it was a very old claim, the expenditure was incurred in the year 1993-94. It was duly recognized in the return of income for Asstt. Year 2006-07. AO has called for details regarding working of capital gain/loss. He has also called for investment made during the year. According to the assessee, she has submitted all the details and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the ld. CIT(A) has erred in taking cognizance under section 263 of the Income Tax Act, 1961 and thereby setting aside the assessment order for passing a fresh assessment order. 3. Brief facts of the case are that the assessee has filed her return of income on 25.6.2013 declaring total income at ₹ 6,41,630/-. The case of the assessee was selected for scrutiny assessment, and assessment order was passed on 16.2.2016 under section 143(3) by accepting the returned income of the assessee. The ld. Commissioner took cognizance of assessment record and formed an opinion that the assessment order is erroneous and prejudicial to the interest of the Revenue. Therefore, a show cause notice under section 263 of the Act was issued and served upon the assessee. Though the show cause notice has been reproduced in the impugned order passed under section 263, its copy is also available at page no. 76 to 78 of the paper book. We deem it appropriate to take note of this show cause notice, which reads as under: On verification from the computation of income other details submitted by you during the course of assessment proceedings, it is noticed that you have shown working of capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales in the vicinity of the impugned land. Hence, it has made the order both erroneous and prejudicial to the interest of revenue' 5. You have claimed indexed cost of ₹ 2,26,30,066/- and a valuation report in this regard was submitted, It is to mention here that in subsequent years, the claim of indexation @ ₹ 196/- per sq.ft was disallowed and the value of the land as on 1.4.1981 is was arrived at @₹ 8/- per sq.ft. after taking into consideration of instances of sales in and around the Land situated at Nagarwada which were called for from Sub-Registrar, Baroda. Thus, the indexation cost of ₹ 2,26,30,066/- adopted by you is excessive being regard to the instances of the sales in the vicinity of the impugned land. Hence, this has made the order erroneous and prejudicial to the interest of revenue. 6. From the above, it is clear that the Assessing Officer has failed to carry out enquiries as warranted by the facts and circumstances of the case and assessment has been completed without examining all aspects which were required to be looked into for determining the total income of the assessee, It has been held in number of cases by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in notice dues not warrant any actions u/s. 263 of the Act. It seems that the full facts have not been place before your good self. Kindly permit us to elaborate the same. Your assessee has filed return of income for AY 2013-14 declaring total income of ₹ 6,41,630. Your assessee has declares income of ₹ 2,38,47,609 under long term capital gain and claimed exemption u/s. 54. She has deposited amount of ₹ 2/38,50,000 in capital gain scheme account. Further, we may mention that your assessee has constructed a residential house in April, 2015 within 3 years from amount deposited in scheme. Therefore, your assessee has eligible to claim exemption of ₹ 2,38,47,609 under capital gain. In view of the above, the case of your assessee also selected for scrutiny assessment for the AY 2013-14. In response to the notice CA Chirag Shah and authorised representative attended and submitted requisite detail which is placed in the record. The Assessing officer consider the same and allowed the exemption claimed by assessee is valid. However, the proceedings u/s. 263 has been Initiated by your good office claiming that the order passed by the learned AOu/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above we may mention that your assesses has deposited money into capital gain deposit scheme u/s. 54. Out of that deposited amount your assesses has completed construction of a residential house in April/2015. After construction of the said property your assessee get done the dastavej of the said property in June, 2015. As per section 54 any person can claim exemption under that section if they can purchase ready nade residential house wit,') 2 years and constructed residential house within the limit of 3 years from earning of capital gain. Therefore, your assessee has claimed exemption u/s. 54 is valid because your assessee has constructed residential house within the limit of 3 years from the earning of capital gain. It was explained to learned AO that the building in scrap mode and only plinth was use able. Your assessee has used the same plinth to construct a fresh/new house and submitted all related documents which proves that a house is constructed on the said piece of land. Your assessee already submitted the copy of list of cost incurred alongwith the map, dastavej and capital gain savings account for the whole period from date of deposit up to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 27.02.2018 which reads as under: In continuation of our earlier submission dated 9th February, 2018 submitted to your good office on 21st February, 2018, we further submits further clarification on few issues as below: In view of above, your assessee has provided the following clarifications to prove the issues raised in your above notice is not valid and the assessment completed is correct and not erroneous as the order is passed after making proper enquiries verification. Your assessee has claimed exempt/or, u/s. 54 is valid because your assessee has constructed residential house within the limit of 3 years from the earning of capital gain. It was explained to learned AO that the building in scrap mode and only plinth was use able. Your assessee has used the same plinth to construct a fresh/new house and submitted all related documents which proves that a house is constructed on the said piece of land. Your assessee a/ready submitted the copy of list of cost incurred along with the map, dastavej and capital gain savings account for the whole period from date of deposit up to the date of expenditures/payment. In addition to the same, we herewith submit the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various judgments relevant for judging the action of the CIT taken u/s. 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2006 was filed before the AO along with this letter. She further alleged that on 17.2.2007 there is a family agreement i.e. MOU were executed between Shri Bharat Gupta and the assessee. In that arrangement she got 3266.72 sq.meters. The balance 5190.28 sq.meters was kept in family hotchpotch of Shri Bharat Gupta and others. In 1993 she constructed a residential house on this plot of 3266.72 sq.meters. Thereafter, she entered into an agreement with Aarbigi Nirmal Ltd. dated 19.7.2013. Copy of the agreement was also filed before the ld. CIT. In the letter, the assessee has explained how much share she got by virtue of this agreement and how she has applied for exemption under section 54. Relevant submissions made in this letter read as under: In the Development agreement, on the page no. 3 it is clearly mentioned that ₹ 16,600 per sqr.mtr is given to land owner against the sale of flats. However, the calculation sheet is as under: Particulars Area of sqr.mtr. Remark Total land 3266.72 As per development agreement on page no.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance. On the other hand, he has ignored the report of the registered valuer by observing that registered valuer has not assigned any sale instance for arriving at a value of ₹ 196/- per sq.ft. The report of registered valuer has been placed on record by the assessee and justification for value of 1981 worked out by the registered valuer at page no. 72 reads as under: JUSTIFICATION FOR VALUE OF 1981 I got one sale instance of 1981 mentioning the same area. The sale deed no is 301 dated 27-11-1981. The particular sale deed is for R.S. No. 21-7-208, S. No. 185, B Tikka No. 7/2 as per property card and its 86.08.0 sq.yards and 72.65 sq.mtr, land area. This sale deed was made of ₹ 1,90,000/- including land and construction in 1981 and construction was carried out in 1947. As per my opinion the construction cost assumed to be ₹ 40/- per sq.ft. in 1947. So, the cost of construction = 72.65 x 10.764 x 40 = 31,280/- Assume 75% depreciation as on 1981 = 31,280 x 0.75 = 23,460/- So, Construction cost in 1981 = 31,280 - 23,460/- = 7,820/- Total sale deed for entire building including land and construction is ₹ 1,90,000/-. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... she has purchased the house well within the time limit. According to the assessee she has constructed residential house in April, 2015 and sale deed registered in June, 2015. It was also demonstrated that as per section 54 any person can claim exemption under that section if he has purchased a readymade residential house within two years and constructed residential house within the limit of three years from the earning of capital gain. According to the assessee, she has constructed the residential house within the limit of three years from the capital gain. This aspect has specifically been explained by the assessee to the AO in her letter dated 15.2.2016. The assessee has filed copy of the site plan and other details for demonstrating the fact that she has constructed the house. 9. As far as third reasoning is concerned, the ld. Commissioner has observed that the assessee failed to show any documentary evidence about the improvement cost claimed at ₹ 11,22,325/-. The AO has not examined this aspect and allowed the claim. Though the assessee has demonstrated the facts as to how she has claimed the improvement cost, and it was a very old claim, the expenditure was incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the securities/assets mortgaged furnished for obtaining such loans. 5. Please furnish details regarding house property receipt as shown in P L Account. 6. Please furnish working of capital gain/loss and proof thereof. 7. As regards investment made during- the year, please provide date of purchase, purchase consideration, name of party from whom purchased copy of document as proof of purchases and source of making payment alongwith copy of Bank statement with narrations. Name of party from whom purchased Date of purchase Purchase Consideration Documents furnished as proof Source of payment In this regard you are hereby requested to appear before me alongwith all the details called for as above on 12/08/2015 at 12.00 Noon. This notice is treated as notice u/s. 142(1). 10. A perusal of this notice would indicate that the ld. AO has called for details regarding working of capital gain/loss. He has also called for investment made during the year. According to the assessee, she has submitted all the details and discussed it with the AO. Thereafter, he was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
