TMI Blog2022 (9) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of valuation report, copies of registry of nearby areas and that having considered the same during original assessment proceedings the assessment order was passed and at the same time a request was made that audit objection be considered as settled. AO made a proposal for initiating revision proceedings u/s 263 of the Act by a letter addressed to the Pr. Commission of Income Tax, Delhi-8. Thus, the findings of Ld. CIT(A) that Ld. AO had not considered the application of Section 50C of the Act by proper inquiries or verification is not sustainable. Indeed in the assessment order there is no discussion in respect of Section 50C but what transpires is that the case of assessee was selected for limited scrutiny for examining deduction u/s 54 of the Act and based upon the analysis an addition was made by making a disallowance u/s 54 - Thus, even if there is no specific mention of the examination of case u/s 50C of the Act. The fact that in limited scrutiny assessee s claim of deduction u./s 54 was examined in itself is comprehensive and would cover all other aspects which entitle not only the right to deduction but also quantum of deduction. Merely because the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 021 - - - Dated:- 10-8-2022 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER Assessee by: Dr. Rakesh Gupta, Adv, Shri Somil Agarwal, Adv And Shri Deepesh Garg, Adv Revenue by: Shri H. K. Choudhary, CIT DR ORDER PER ANUBHAV SHARMA, J. M.: 1. The present appeal has been preferred by the Assessee challenging the order dated 30.03.2021 of Ld Pr. CIT-7, Delhi (hereinafter referred as Ld. Revisional authority) passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred as the Act ) in regard to an assessment order for AY 2015-16, dated 25/12/17 under section 143(3) of the Act passed by the Assessing officer, ld. ACIT, Circle-22(2), Delhi (hereinafter referred as the Ld. AO). 2. Facts in brief are that the case of the assessee was taken up for consideration under the provisions of section 263 of the Income-tax Act, 1961 and the assessee was issued a notice u/s 263 of the I.T. Act dated 23.07.2019 allowing him an opportunity of being heard to show-cause as to why the assessment made in his case should not be enhanced, modified or set aside to be made afresh. This show cause is reproduced as under: The assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VO as per Section 50c(2), the assessment Order is erroneous. The income under assessed as a result of circle rate not been adopted is Rs. 9,75,96,000/-(Rs. 16,63,96,000/- Rs. 6,88,00,000/-. Tax on the same @20%comes to Rs. 1,95,19,2000/-. Total loss of revenue including surcharge interest comes to Rs. 3,05,,19,060/- which makes the assessment order prejudicial to the interest of revenue. 5. As per provisions of Section 50C of Income Tax Act, 1961, the Assessing Officer has to make a reference to DVO if the value taken by assessee is less than the stamp value. In the present case, no reference was made by the AO to DVO. 6. In view of aforesaid facts, in my view order of AO is erroneous and prejudicial to the interest of revenue. 7. Furthermore, vide appeal order no. 10459/17-18 dated 17.05.2019 of CIT(A), CIT(A) has given relief to the assessee on the issue of disallowance of deduction claimed u/s 54 of the Act against which appeal to ITAT is filed . Since, the issue of circle rate as fair market value as per Section 500(1) of the Act was not even discussed by AO in his assessment order nor adjudicated by CIT(A), the assessment order dated 27.12.2017 is proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, Ld. Pr.CIT has erred in law and on facts insetting aside the assessment order dated 27-12-2017 without any basis, material and evidences available on record and in violation of principles of natural justice. 4. That having regard to facts circumstances of the case, Ld. Pr.CIT has erred in law and on facts in passing the impugned order u/s 263, more so A) when the assessment order which was sought to be revised, got merged in the order of Ld. CIT(A), B) when the assessment order passed is itself bad in law and hence could not have been revised u/s 263 of Income Tax Act, 1961, C) When the assessment record was not called and examined, D) When the issue was considered in the assessment proceeding a view was taken by the assessing officer, E) When the action under section 263 was initiated completed based on audit objection without application of mind, F) When the order passed u/s 263 is barred by limitation 4. Heard and perused the record. 5. On behalf of the Assessee it was submitted that the effective ground in this appeal is against the assumption of jurisdictional made by Ld. Pr. CIT u/s 263 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 126-139 in the paper book were relied. It was submitted that in fact when audit objections were raised the ld AO defended the assessment order submiting that this aspect has been examined at length during the assessment. In this context it was submitted that the submission before the ld Revisional Authority are available at page No. 187-198 and 199-207 however, same were not duly considered. The ld counsel relied on the judgment of the Hon ble Supreme Court in case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 0083 (SC) to contend that when matter has been examined at length of the ld AO and only because two views are possible and the ITO has taken one view, with which the Commissioner does not agree with, the assessment order cannot be considered to be erroneous order prejudicial to the interest of the revenue. In this context he also relied on the judgment of the CIT Vs. Max India Ltd (2007) 295 ITR 0282 (SC), CIT and anr Vs. M/s. Chemsworth Pvt. Ltd (2020) 275 Taxmann 0408 (Kar), Referring specially to Jatindar Singh Chadha Vs. Pr. CIT (2019) 175 ITD 0032 (Del), he submitted that in this case similar question was involved and as the ld AO was satisfied from valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT, (2005) 95 ITD 0363 (Mum) Saw Pipes Ltd. vs. Addl. CIT, (2005) 94 TTJ 1036 (Del) Sahara India Savings Investment Corporation Ltd. vs. Asstt. CIT, (2004) 90 TTJ 0878 (Lkw) Sahara India Mutual Benefit Co. Ltd. vs. Asstt. CIT, (2002) 74 TTJ 0067 (All) Hooghly Mills Co. Ltd. vs. Asstt. CIT, (1999) 71 ITD 0264 (Cal) Sadhu Ram Sons vs. CIT Anr., (2007) 108 TTJ 0373 (Asr) Marico Industries Ltd. vs. Asstt. CIT, (2008) 115 TTJ 0497 (Mum) 5.5 On the other hand on behalf of Revenue it was contended that there is no illegality in exercise of jurisdiction by Ld. Pr. CIT. Ld. DR primarily relied the basic provisions of the Act and contended that Section 50C is a charging section and that there is no discretion with the AO but to refer the valuation to the DVO. It was contended that Ld. AO had not entered into the question of application of section 50 C therefore requested for exercising revisional jurisdiction. 6. Now, appreciating the matter on record and submissions raised this Bench is of firm view that it needs to enter into the question, as to if Section 50C mandatorily requires a reference from the AO to DVO, only, if that is statuary mandate in Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made . 8. Further, what transpires from the record is that when the Additional Commissioner of Income Tax, Range-22, New Delhi directed the Assessing Officer to examine the facts in entirety and suggest remedial action in regard to audit objection. He observed, as is evident from the letter on record at page no. 294 to 297 of the paper book, that there was on record a reply dated 27.11.2017 of the assessee wherein he had given explanation of the reasons why provisions of Section 50C are not applicable and why the fair market value which is less than the circle rates should be accepted. The assessee has placed these submissions on record on paper book from page no. 76 to 139 along with copies of three registered sale deeds in the area in vicinity where property is situated to justify acceptance of fair market value instead of the circle rates. 9. It can be further observed that the Ld. AO vide communication dated 01.05.2019 informed Pr.CIT-08, New Delhi in regard to audit objections that the assessee had filed reply dated 27.11.2017 along with copies of valuation report, copies of registry of nearby areas and that having considered the same during original assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11.2 Further in Universal Products P. Ltd. vs. CIT ITA No. 2056/Del/2013 relied the Hon ble Delhi High Court Judgment In CIT v. Vikas Polymers 341 ITR 537 where it has held that : This is for the reason that if a query is raised during the course of scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer was reflected in the assessment order, that would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. 11.3 Hon Bombay High court in Income Tax Appeal No. 296 of 2013 (CIT v. Fine Jewellery (India) Ltd. [2015] 372 ITR 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate that the power was exercised on the basis of a finding of the assessment order being erroneous and prejudicial to the Revenue by examining facts and record by the ld. Revisional Authority beyond the audit objections rather it is obvious that in attempt to meet the audit objections and to take them to a reasonable end, the power u/s 263 was exercised and same cannot be sustained. 14. Now taking up the argument of Ld. Counsel for the assessee that powers u/s 263 could not be exercised as all facets of claim of deduction under capital gains on sale of capital assets, got merged in appeal order passed by Ld. CIT(A), as being First Appellate Authority it had power of enhancement on issues which was not considered by Ld. AO in assessment proceedings. It can be appreciated from the copy of order dated 04.04.2019 of ld. CIT(A) in appeal against assessment order available at page no. 178 to 184 of the paper book that assessee had raised following grounds of appeal :- 1. Based on the facts and circumstances of the case, the Appellant respectfully submits that the Ld. AO has erred in law and on facts in making an disallowance of the whole capital gain amounting to Rs. 5,63,74,550 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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