TMI Blog2021 (12) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. We are of the view that none of the reasons set out by the ld PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the ld PCIT has to be quashed for the reason that order of the Assessing Officer sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the Assessing Officer ought to have made in the given facts and circumstances of the case - Decided in favour of assessee. - ITA No.267/SRT/2018 - - - Dated:- 9-11-2021 - Shri Pawan Singh, JM And Dr. A.L.Saini, AM For the Assessee : Shri Sapnesh Sheth, C.A For the Respondent : Shri Ritesh Mishra, CIT-DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer had called the sale and purchase deeds of the above properties for verification but has not specifically looked into the eligibility of the assessee on the issue of deduction claimed by the assessee u/s 54B of the Act, while finalizing assessment u/s 143(3) of the Act. Hence, ld PCIT observed that said assessment order u/s 143(3) of the Act is erroneous and prejudicial to the interest of the revenue. Therefore, ld PCIT has issued a show cause notice, dated 02.02.2018, to the assessee, to explain the transaction and to prove that assessee is eligible to claim exemption under section 54B of the Act. 4. In response to the show cause notice, assessee submitted written submission before ld PCIT, which is reproduced below: 1. In your above notice, it is observed that assessment order dated 11.03.2016 was passed u/s 143(3) of the I.T Act allowing deduction of ₹ 80,02,500/- u/s 54B of the Act but on examination of case records, it is observed that agricultural land was sold on 28.06.2012 and investment was made in new agricultural land on 20.04.2012, On this basis your honour has alleged that there is incorrect computation of capital gain of the assessee for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if Ld. AO takes a particular view in favour of assessee, the assessment order cannot be treated as erroneous. 5. However, ld PCIT has rejected the contention of the assessee and held that order passed by the assessing officer is not sustainable in the eye of law. The important observations of Ld PCIT are as follows: (i) The assessee in his submission had stated that date of 28/06/2012 referred the date of registration of sale deed whereas actually, the sale deed in writing was executed on 20/03/2012 and stamp papers were also purchased on 16/03/2012. Hence, transfer took place on 20/03/2012 and only registration was done on 28/06/2012. This view of the assessee implies that the transfer took place in the Financial Year 2011-12 relevant to Assessment Year 2012-13 and therefore the assessee should have offered capital gain in the Assessment Year 2012-13 and had claimed deduction under section 54B of the Act in Assessment Year 2012-13 which had not been done by the assessee. The assessee has filed his return of income for the Assessment Year 2013-14 and has offered capital gain and also has claimed deduction u/s 54B of the Act in the same assessment year, therefore it concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the date on which the transfer took place has also not fulfilled in this case because the assessee has not shown any agricultural income in his return of income (ROI) for the Assessment Year 2013-14. 6. Based on the above facts, ld PCIT observed that case laws on which the reliance is placed by the assessee were not applicable to the assessee, as in this case the investment in another agriculture land is made prior to the sale of agriculture land. It is only an afterthought of the assessee that the first property was sold prior to the purchase of second property. Also regarding that Assessing Officer takes a particular view in favour of the assessee is not correct as the Assessing Officer has neither asked any question regarding assessee s eligibility for claim u/s 54B in respect of dates on which purchase and sale took place nor has discussed the same in assessment order. Therefore, ld PCIT held that assessee was not eligible to claim deduction u/s 54B of the Act as the Assessing Officer has not verified the claim of assessee, therefore the order passed by Assessing Officer u/s 143(3) of the Act dated 11.03.2016 was treated as erroneous and prejudicial to the interest of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has asked from the assessee, during the assessment stage, by way of a letter dated 25.02.2016, to submit the details in respect of agricultural land and the exemption claimed by the assessee under section 54B of the Act. The relevant para of letter dated 25.02.2016, of assessing officer ( to the extent useful for our analysis), is reproduced below: 3 The agricultural land should be used by the individual or his parents for agricultural purpose at least for a period of two years immediately preceding the date of transfer.From the submitted details and documents, it is found that you had not shown any agriculture income in last two years i.e.2012-13 2013-14, also not submitted the proof of Agriculture activity or agriculture income from the land bearing R.S. No. Block No. 197 R.S. No. 86/1, Sp. Mtr.12346/ of Olpad, till date to this office. 4. Thus, the amount claimed as exemption in the computation of income for the AY.2013-14 is not offered for the taxation has thereby escaped from the assessment. In this circumstances, you are requested, please show cause as to why the amount of claimed as exemption u/s 54B of the Act should not be treated as unexplaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer had allowed the claim of the assessee. 14. The Assessing Officer has also discussed the issue of agricultural land and exemption under section 54B of the Act in his order, vide para no.4 5 of the assessment order wherein the Assessing Officer after taking into account entire facts of the assessee, framed the assessment under section 143(3) of the Act, dated 11.03.2016, therefore order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. 15. We note that Hon`ble Bombay High Court in the case of Mrs. Parveen P. Bharucha vs 2 Union Of India, WRIT PETITION NO. 10437 OF 2011, dated 27 June, 2012 held that an investment made in Bonds out of advance received for transfer of land before the actual date of transfer would be entitled to the benefit of exemption under Section 54B of the Act. The findings of the Hon`ble Court is as follows: 8 The Tribunal in the case of Ramesh Narhari Jakhdi (supra) while construing Section 54B of the said Act applied the Circular No.359 dated 10.5.1983 to hold that an investment made in Bonds out of advance received for transfer of land before the actual date of transfer would be entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order cannot not incorporate reasons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic tome. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made; and secondly the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with . 10 Further the reasons recorded by Respondent No.1 for reopening the assessment do not state that the deduction under Section 54E was not considered in the assessment proceedings. In fact from the reasons, it appears that all facts were available on record and according to the respondents was only erroneously SNC 16 WP 10437-11(final).doc granted. This is a clear case of review of an order. The application of law or interpretation of a statue leading to a particular conclusion cannot lead to a conclusion that tax has escaped assessment for this would then certainly amount to review of an order which is not permitted unless so specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction to issue a notice under Section 148 to reopen proceedings. In view of what is stated earlier, we do not find any merit in this contention. 16. We note that Coordinate Bench of ITAT Ahmedabad in the case of Rahul G. Patel [2018] 97 taxmann.com598 (Ahd.Trib) held that where assessee invests earnest money or advance received on sale of capital assets in specified assets before date of transfer of asset, amount received will qualify for exemption under section 54EC of the Act. The important findings of the Coordinate Bench is reproduced below: 19. In the next ground of appeal, grievance of the assessee is that the ld.CIT(A) has erred in not granting deduction/exemption under section 54EC of the Act amounting to ₹ 50 lakhs. 20. Brief facts of the case are that after agreement to sell the assessee has received sale consideration from the vendee. He has made investment in NHAI bonds and claimed deduction under section 54EC. The ld.AO has observed that such investments were made before the registration of sale deed, and therefore, he is not entitled for the exemption. The issue is, whether investment made from the advance received on sale of capital asst w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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