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2023 (2) TMI 1009

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..... ent to mention here that there was as such no allegation of no enquiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. It is the domain of the assessing officer to decide, whether further inquiry is needed or not in a particular case. After getting the documents and information from the assessee, during the assessment proceedings, the assessing officer has examined the documents and evidences and applied his mind. We note that the Ld. Pr. C.I.T. by invoking his jurisdiction u/s 263 of the Act is giving another opportunity to the Assessing Officer to re-examine and to verify again the same documents and evidences, which is not permissible. Hon ble Bombay High Court in the case of Ranka Jewellers vs. Addl. CIT [ 2010 (3) TMI 544 - BOMBAY HIGH COURT ] relying on the decisions of Hon ble Supreme Court in the cases of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] and CIT vs. Max India Ltd. [ 2007 .....

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..... gainst this sale consideration, assessee has shown LTCG of Rs.1,69,49,579/- and after claiming exemption u/s 54F to the extent of Rs.1,20,08,843/- offered LTCG of Rs. 49,40,736/- in return of income (ROI) filed for AY 2014-15. Later on, case-of the assessee was manually selected for scrutiny and assessing officer has passed assessment order on 23.12.2016 and assessed income at Rs.78,44,860/- after treating agriculture income to the tune of Rs.1,25,470/- as income from other sources. 4. Therefore, Ld. PCIT has exercised his jurisdictional power u/s 263 of the Act. On examination of the assessment records, it was noticed by the Ld. PCIT that vide show cause notice dated 16.12.2016, the Assessing Officer had pointed out that assessee was having more than two residential properties during the year and hence exemption u/s 54 to the extent of Rs.1,20,08,843/- was required to be disallowed. In response to the above, vide point No. 2 of the submission dated 22.12.2016, the assessee has stated that he deals in real estate, construction and in course of business, he has purchased the land, open plot, dilapidated properties and after construction/development, sold the same. The residential .....

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..... t inquiry and verification regarding the fact that: i. Whether the property in question was assessee's capital asset or not? ii. Whether the said transaction is part of the assessee's business activity or not? iii. Whether the sale consideration receipt was assessee's business receipt or not? As AO failed to verify these facts, therefore, Ld. PCIT noted that assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue as per Explanation 2(a) of section 263 of the Act. 7. The Ld. PCIT further noted that allowance of exemption u/s 54F can only be claimed if there is transfer of any long term capital asset (not being a residential house). As the Assessing Officer has granted the deduction u/s 54F without verification whether the property in question is a capital asset or stock in trade while the assessee is entitled to deduction u/s 54F only in the case of transfer of the capital asset, the claim has been wrongly allowed by the Assessing Officer without proper and due verification which rendered the order erroneous and prejudicial to the interest of the revenue as per Explanation 2(b) of section 263 of the I.T Act. The ld .....

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..... t, dilapidated properties and other construction / development and sold the same. As per Ld. PCIT, since the residential properties mentioned in the show cause notice dated 16.12.2016 was assessee s stock-intrade in the assessee s balance-sheet. The Assessing Officer was required to take cognizance to the fact that assessee s business to purchase and sale of immovable properties, which was admitted by assessee and this fact also established that assessee has shown immovable as stock-in-trade in assessee s balance-sheet. Therefore, sale of the above land was assessee s business activities and sale consideration received was required to be taxed as business receipt, rather than capital asset. Therefore Ld. PCIT pointed out that the asset sold by the assessee was not the capital asset within the meaning of section 2(14)(i) of the Act. Therefore, the assessment order was considered by ld PCIT as erroneous and prejudicial to the interest of revenue. 10. In this connection, Ld. Counsel pleaded that the property sold by assessee was not part of stock-in-trade and assessee can maintain two portfolio viz: one investment portfolio and second business portfolio. In investment portfolio, .....

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..... therefore, such assessment order is neither erroneous nor prejudicial to the interest of revenue. 11. The Ld. Counsel further stated that in case of co-owner of the land, that is, in case of Shashiben Chandrakant Fudhnawala, the co-owner has filed his return of income showing computation of total income and also shown capital gains in respect of her share, which was accepted by the Department without passing scrutiny assessment u/s 143(3) of the Act. That is, after filing the return of income, the Department did not raise the question about allowability of the capital gains. Therefore, the assessee s co-owner has also claimed deduction u/s 54F of the Act on the same property. Hence assessee should not be treated in different way by the Department. Since co-owner s case although, not selected for scrutiny assessment and there is no scrutiny assessment in case of co-owner, however yet the Department has accepted the return of income. In the asssessee`s case, the long term capital gain has been offered by the assessee therefore exemption u/s 54F of the Act, on the same property, should be allowed, as it has already been allowed in case of co-owner. The assessment has been made u/s .....

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..... issue of verification of unsecured loan and in this case the complete details were filed before the Assessing Officer in respect of loan / unsecured loan and Assessing Officer has examined such unsecured loan with the help of ledger account, copy of acknowledgement of income tax return and the bank statements were filed. Therefore, in this case, the entire details were submitted before the Assessing Officer and the Hon'ble jurisdictional High Court took the view in favour of assessee. However, in the assessee s case under consideration, the assessee has not submitted the entire details and documents during the assessment proceedings before the Assessing Officer. Therefore, the order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue. 14. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In our considered view, it was wholly erroneous on the part of the ld PCIT to exercise the jurisdiction under section 263 of the Act despite of the fact that assessing officer has examined the issue raised by ld PCIT during the assessment stage. As point .....

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