TMI Blog2022 (8) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... U or other evidence the claim which is based on the evidence already considered cannot be revisited merely in the opinion of the PCIT the claim is not supported by the evidence in the manner desired by him. Therefore, in our considered view the assessment order cannot be said to the prejudicial and erroneous in the interest of Revenue, when all the information were already available on record. Once we have satisfied that the AO has already raised a query and verified the claim of the assessee, considering the relevant material placed before us. The records already speak that the share of the assessee is 50 % therefore, considering the arguments of the ld. AR of the assessee, we found force that though AO seen the issue in the A.Y 201617 may not have called for full details in A.Y 2017-18 merely on these issue in the year it cannot be said that the assessment order passed is erroneous and prejudicial to the interest of Revenue. We hold that the ld. PCIT has wrongly invoked the provisions of section 263 of the Act and in terms of these observations, we quash the order of Pr.CIT passed u/s 263 - Decided in favour of assessee. - ITA No. 188/JP/2022 - - - Dated:- 21-7-2022 - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regarding the nonapplication of the law on the issues as discussed in the show cause notice and as the assessment order was passed mechanically without application of mind for the reason mentioned in the notice issue for proceeding u/s. 263. The ld. PCIT has thus issued a show cause notice to the assessee, holding that the assessment order was passed mechanically without application of mind. 5. In response to the show cause notice issued by the PCIT, the assessee has filed her reply dated 07.03.2021 which is reproduced herein below. In regards to notice u/s 263 of Income Tax Act 1961, issued by your good self, it is submitted that the assessee has rightly claim deduction u/s 54F of Income tax Act 1961, which was rightly allowed by the assessing officer. In fact assessee has purchased 50% share in the residence house plot no 269, Gali No 04, Raja Park Jaipur and the cost for the same was Rs. 4,66,97,360.00 therefore assessee has rightly claim the deduction u/s 54 of Rs. 1,89,79,851.00. Your good self has mentioned that deduction w/s 54 F was available to assessee for Rs.11493250.00 is perhaps because of treating the assessee share only 25% in the new property where as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine. The ld. PCIT hold a view that the assessing officer failed carry out necessary inquiry and failed to consider / apply his mind to the information available on record and such the assessment was made without application of mind on the given facts on record. While exercising the provision of section 263 of the Act. The ld. PCIT relied the following judicial ruling also. 1. The Hon ble Supreme Court in the case of Malabar Industrial Limited vs. CIT 243 ITR has held that An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind . 2. Delhi High Court in Gee Vee Enterprises v Additional Commissioner of Income-tax (1975) 99 ITR 375, has observed that The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the fact of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the said joint property, had an understanding of the ownership share being as under: Particulars Share in % Mahesh Kumar Poddar 25% Renu Poddar 50% Mohit Poddar 12.5% Pratima Poddar 12.5% IV. The above verbal understanding was reduced in writing vide Memorandum of Understanding dated 15th Jan, 2016 [PB 6-7]. The fact of verbal understanding was also mentioned in the MOU which is as under: Whereas though the share was undefined in the registered sale deed but the understanding in regards to share in the above referred property was mutually decided verbally at time of purchase which is reduced to writing as under [PB 6] V. The total investment made by all the family members was Rs. 4,66,97,360. Accordingly, the assessee s share in such property was Rs. 2,33,48,680 (50% of Rs. 4,66,97,360). VI. During the year under consideration, on 14th Oct, 2016, the assessee sold another immovable property, situated at Taru Chayya Nagar, being plot of land for Rs. 1,90,11,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sept, 2017 109 Date of filing of ITR for A.Y. 2017-18 24th Jan, 2018 112 Assessment Order u/s 143(3) for A.Y. 2016-17 24th Sept, 2018 76-77 Issue of notice u/s 143(2) for A.Y. 2017-18 29th Sept, 2018 72 Assessment Order u/s 143(3) for A.Y. 2016-17 1st Aug, 2019 XII. The aforementioned assessment order passed under section 143(3) was subjected to revisionary proceedings by invoking the provisions of section 263. The assessment order was held to be erroneous as well as prejudicial to the interest of revenue. In the opinion of ld. PCIT the assessee was allowed higher amount of deduction u/s 54F. Hence, the assessment was set aside to the file of ld. AO. XIII. The assessee is in appeal against the order passed u/s 263 setting aside the assessment order passed u/s 143(3). SUBMISSIONS 1. Ld. PCIT has not disputed the following points: 1.1. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the action of ld. AO was found correct and justified. 7. Ld. AO after appreciating all the facts and evidences, as placed before him in the proceedings for the year under consideration i.e. A.Y. 2017-18 as well as in the proceedings of immediately preceding year i.e. A.Y. 2016-17, found the deduction u/s 54F as claimed by the assessee to be proper and justified. 8. In view of above factual background the fact of ld. AO having conducted detailed enquiry cannot be disputed. The present case cannot be a case of lack of proper enquiry specially for the issue for which the case was selected for limited scrutiny. Only on being satisfied with the elaborate submissions of the assessee, supported by relevant documents, claim of the assessee was allowed. 9. The SCNs issued by ld. PCIT dated 17th Feb, 2022 [PB 22-23], 1st Mar, 2022 [PB 20-21] and 8th Mar, 2022 [PB 1-2] specifically mentioned that since the assessee purchased property along with 3 other persons, excess deduction was allowed u/s 54F. 10. It is pertinent to note that there was no allegation of ld. PCIT about the lack of enquiry on the part of AO while passing assessment order. 11. It is submitted that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.3. Statement of Affair of Pratima Poddar (Joint Owner) for F.Y. 2016-17 [PB 12-14] evidencing her share to be 12.5% 17. It is submitted that the property was purchased in F.Y.2015-16 on 19th Dec, 2015. The following details substantiate the agreed ratio of ownership amongst the family members: % Value of Asset as per Registry Liability as per Loan Amortization Schedule Asset as appearing in Financials PB Liability as appearing in Financials PB Total 100 % 4,66,97,360 3,52,26,000 Renu Poddar 50% 2,33,48,680 1,76,13,000 2,33,48,680 15 Mahesh Poddar 25% 1,16,74,340 88,06,500 Mohit Poddar 12.5 % 58,37,170 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that the asset was purchased by the assessee in immediately preceding year. In such year, during the assessment proceedings, the assessee placed on record details of purchase, details of source of purchase, details of payments made for purchase, etc (refer Para 5 above). After finding that source of assessee s share to be justified ld. AO accepted the returned income [PB 76-77]. Hence, the observation of ld. PCIT is baseless. 23. Without prejudice to above, without agreeing it is submitted that even if the source of purchase was not examined in the preceding year then also since the purchase was made in the preceding year the source was to be examined in the preceding year only. If ld. AO failed on doing so the case could have been subjected to revisionary proceedings. However, non-verification of source in preceding year cannot be held to be error of the year under consideration. Therefore, the revisionary proceedings are without jurisdiction. In view of above ld. PCIT assumed jurisdiction u/s 263 illegally and, therefore, the order of ld. PCIT deserves to be quashed. 11. In addition to above written argument, ld. AR of the assessee filed the paper book co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese loans and percentage of share of in the property purchased has been predetermined amongst themselves and this has been recorded in the Memorandum of Understanding wherein each parties have placed their signature with date and said memorandum of understanding was executed before Notary Public. Therefore, the same cannot be said an afterthought which was contended by Pr. CIT in his order and before us. ld. DR also. The ld. Assessing Officer has very well taken into account the assessment for the year under consideration and immediately preceding year. At the time of investment and at the time of allowing exemption u/s 54F of the Act in the year under consideration exempted both the issues at length. Therefore, the order cannot be said to be prejudicial and erroneous in the interest of Revenue. Thus, there is no apparent error as is claimed by the ld. AR of the assessee based on the evidences placed on record. The ld. AR of the assessee further submitted that in the proceedings before Pr. CIT MOU executed between the parties was very well placed on record. The ld. AR of the assessee relied on chorology of events as submitted by him in his submission that the share of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular Sales Price/Year Indexed Cost/Year Transfer Expenses Indexed Cost of Improvement Exempt Capital Gain PLOT NO TARU CHAYYA 19011000.00 (14/10/2016) 31149.00 (02/02/1992) 0.00 0.00 18979851.00 0.00 Total 19011000.00 31149.00 0.00 0.00 18979851.00 0.00 PLOT NO TARU CHAYYA- Value of property as per stamp valuation authority: 19011000; Cost 5510* (1125/199) = 31149: Exempt U/S 54F : 18979851 [23348680] 15. So, with this set of argument the ld. AR of the assessee submitted that the only dispute raised that the claim of the assessee made u/s 54F of the Act for which the property acquired in the previous year where in the deed of purchase the share of each co-owner was not disclosed and the same is disclosed in the MOU executed by each parties after the registration of document. The ld. AR further submitted that the relevant to assessment year 2016-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke an inquiry. The meaning to be given to the word erroneous in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 18. Further, he has also relied upon the judgment of Hon ble High Court of Bombay in the case of CIT, Nagpur vs. Ballarpur Industries Ltd. [2017] 85 taxmann. com 10 (Bombay) as under:- 14. The decision of the Apex Court in Max India Ltd. (supra) relied upon by the respondent-assessee to our mind would not come to its rescue for the reason that in the present facts the statement of the case does not indicate that the view taken to allow the claim under Section 80 HHC of the Act was after examination/inquiry. Mere taking of a view by the Assessing Officer without having subjected the claim to examination would not make it a view of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso includes the records of earlier years and he has not seen the previous year records. He has also submitted that while replying to the show cause notice u/s. 263 the ld. AR placed on record the fact that the assessment of Mohit Poddar is also completed based on the these information and the same is already available on record. The ld. AR for this term record he has relied upon the decision of Hon ble Gujarat High Court in the case of Vallabhdas Vithaldas [2005] 56 Taxman 300 wherein the Hon ble Gujarat High Court has extracted the explanation given in the Finance Act, 1988 when the term records has been introduced in the Act and the relevant extract reads as under:- 48 (a) On the interpretation of the term record : it has been held in some cases that the word record in Section 263(1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order was passed by the Assessing Officer. Such an interpretation is against the legislative intent and defeats the very objective sought to be achieved by such provisions, since the purpose is to revise the order on the basis of the record as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee not only that the assessee has already disclosed her share in the computation of income and the AO satisfied with the disclosure made by the assessee merely AO has not called for certain more information knowingly and unknowingly, the fact of the case did not change and the allowability of the deduction and thereby based on that question only the order cannot be considered as erroneous or prejudicial to the interest of revenue. Even otherwise considering the evidence placed on record the PCIT should have considered the records as the ultimate revenue is not affected considering the set of evidences placed on record. As the share of the assessee in the joint property is already reflected in the MOU, computation of income and the other joint holders have already disclosed their share in the property the share of the assessee in that property cannot be under questioned merely the MOU is executed after the purchase deed and the same is not placed on record. As regards the MOU as afterthought we found force in the arguments of the ld. AR that the same is already executed and declared about the share of the each co-owners the same by no means can be considered as afterthought, as M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the Assessing Officer was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction under section 263 of the Income-tax Act. 11. Undoubtedly, the jurisdiction under section 263 is wide and is meant to ensure that due revenue ought to reach the public treasury and if it does not reach on account of some mistake of law or fact committed by the Assessing Officer, the CIT can cancel that order and require the concerned Assessing Officer to pass a fresh order in accordance with law after holding a detailed enquiry. But when enquiry in fact has been conducted and the Assessing Officer has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings, in the present case, without anything to say how and why the enquiry conducted by the Assessing Officer was not i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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