TMI Blog2023 (2) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. We set aside the order of the PCIT and restore that of the Assessing Officer framed under section 143(3) - Appeal of assessee allowed. - ITA No. 647/DEL/2022 - - - Dated:- 2-2-2023 - Shri N.K. Billaiya, Accountant Member, And Ms. Astha Chandra, Judicial Member For the Assessee : Shri VedJain, Adv, Shri Aman Garg, CA For the Department : Shri T.P. Kipgen, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the ld. PCIT, Delhi - 10 dated 15.02.2022 pertaining to Assessment Year 2017-18. 2. The sum and substance of the grievance of the assessee is that the ld. PCIT erred in law as well as on facts in assuming jurisdiction u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] and setting aside the assessment order dated 31.12.2019 framed u/s 143(3) of the Act. 3. The representatives of both the sides were heard at length, the case re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase deeds for the property for your claim of deduction under, Sector 54 pf, Rs,2r10,00,375/-. Kindly provide the sources of funds used to purchase the property which is claimed as deduction u/sec 54. 4. Kindly provide the copy of the registered purchase deed of the property for claim of deduction of Rs 3,08,121 on account of cost of acquisition of the property .Kindly provide the sources of fund used for the purchase amt of Rs 3,08,121 /- 5. Kindly provide the bank statement evidencing receipt of the Sale Consideration of Rs 3,48,31,638 /- and payment for purchase of property of Rs 2,10,00,375 /- for claim of deduction under section 54. 6. Please note that as per provisions of Sec 54 of the Income Tax Act to qualify claim deduction under this section, the assessee should not own/purchase/construct more than one residential house, other than the new asset acquired on the date of transfer of the original asset. Please explain with documentary evidence that you have fulfilled all the specified conditions section 54 to claim the deduction under the specified section. 2. Whether you were assessed in any previous year u/s143(3)/148 of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Property received under will (lndexed Cost) 3,08,121 Gross Long Term Capital Gains 3,45,23,517 Less: Cost of Investment u/s 54F 2,10,00,375 Taxable Long Term Capital Gains 1,35,23,142 That I have paid necessary taxes and dues on my taxable income besides deduction of tax at source. Bank Statements: That the copy of my bank statement during the year under consideration with narration of ail debit and credit entries are enclosed herewith this letter for your perusal and records. Others: That the copies of agreement for providing turnkey projects towards building of house in the plot purchased are enclosed herewith this letter evidencing the construction. Also enclosed copy of ownership documents of the plot purchased to claim exemption u/s 54F of the Act. 7. Agreement to sell to DMRC Ltd, which is exhibited at pages 31 to 35 of the Paper Book was also furnished for verification before the Assessing Officer. 8. In her computation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- is disallowed from the deduction under section 54 to cover any leakage of revenue. Therefore an amount of Rs 8,25,000/- {which is 5 % of Rs 1,65,00,000/-} is being added to total income of the assessee under the head long term capital gains to cover any leakage of revenue. Therefore I am of the considered view that an amount of Rs 8,25,000 /- is liable to be added to the assessee's total income under the head long term capital gains for the AY 2017-18. (Addition of Rs 8,25,000/-) 9. The Total Income of the Assessee is computed as under : Total Income as per return filed (to be taxed under normal provisions) Rs. 1,39,35,090/- ADD: Addition under the head long term capital gains (chargeable to tax at a special rate of @ 20 % ) Rs. 8,25,000/- Total Taxable Income Rs.1.47.60.090/- With the above remarks and after discussions, income of the assessee is assessed at a Total Income of Rs 1,47,60,090/- 10. Vide notice dated 13.01,2021, the ld. PCIT assumed jurisdiction u/s 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e building. The AO was failed to record the same and has not passed information to initiate penalty proceedings u/s 271D and 271E of the IT Act, 1961. 5. In view of the above circumstances there is nothing on record which could justify the deduction claimed by the assessee u/s 54 of the IT Act, 1961. In view of the above, I am of the opinion that the order passed by the Assessing Officer u/s 143(3) of the Income Tax Act 1961 is erroneous in so far as it is prejudicial to the interest of the Revenue. You are hereby given an opportunity of being heard and show cause as to why the impugned order be not enhanced/modified or set-aside for fresh assessment u/s 263 of the Act is fixed for hearing on 20.01.2021 at 03:30 PM. 11. A perusal of the aforementioned notice of the PCIT clearly shows that the PCIT wants to examine the same details and same documents which were examined by the Assessing Officer during the course of scrutiny assessment proceedings. 12. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83, has laid down the following ratio: A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Hence the provisions of section 263 of the Act were not applicable to the instant case and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 167 has held as held as under: We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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