TMI Blog2023 (7) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981 by the AO. It is evident from the record that the issue of determination of fair market value as on 01.04.1981 was very much subject matter of the appeal before the Ld. CIT(A) and therefore, powers of the Pr. CIT u/s 263(1) as per clause(c) of explanation (1) are extended only to such matter which has not been considered and decided in the appeal. In other words the matter which is subject matter of the appeal before the appellate authority is beyond the powers of the Pr. CIT while invoking the provision of section 263 of the Act. Therefore, when the issue of determination of fair market value of the land in question as on 01.04.1981 was subject matter of the appeal before the Ld. CIT(A) then the Pr. CIT would have no jurisdiction to revise the order of the AO on the same issue. Appeal of assessee allowed. - ITA No. 411/Ind/2022 - - - Dated:- 21-6-2023 - SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI B. M. BIYANI , ACCOUNTANT MEMBER For the Assessee : Shri S. N. Agrawal , AR For the Revenue : Shri P. K. Mishra , CIT - DR ORDER Per Vijay Pal Rao , JM : This appeal by the assessee is directed against the revision order dated 18.02.2022 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Ld Principal Commissioner of Income Tax-1, Indore under section 263 of the Income-Tax Act, 1961 were served only on the E-Mail ID of the appellant and were never served physically at the registered address of the appellant. As stated above, the appellant complied with all the notices issued time-to-time during the course of reassessment proceedings since those notices were in their knowledge as they were served physically. However, show cause notices and order passed by the Ld Principal Commissioner of Income Tax-1, Indore was never served physically to the appellant as a result of which the appellant was totally unaware of the fact that show cause notices had been issued and order had been passed in the case of the appellant under section 263 of the Income-Tax Act, 1961 on 18-02-2022. 1.3 It was only in the month of November end, 2022 that the counsel of the appellant on going through the E-Proceeding tab on the E-Filing Portal of the Income-Tax Department came across that fact that revisionary proceedings under section 263 of the Income-Tax Act, 1961 had been initiated in the case of the appellant and that order under section 263 of the Income-Tax Act, 1961 had been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 7491. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2020 till 28- 2-2022 shall also stand excluded in computing the periods prescribed under sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. 9. Rest of the delay in filing the appeal is explained by the assessee as discussed above and we are satisfied that the assessee was having reasonable cause for not filing the present appeal within the period of limitation. Accordingly, in the facts and circumstances of the case and in the interest of justice we condoned the delay in filing the present appeal. The assessee has raised following grounds: 1. That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income-Tax Act, 1961 by invoking the provisions of section 263 of the Income-tax Act, 1961 merely to give effect t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the valuation report of a registered valuer filed by the assessee determining the Fair Market Value as on 01.04.1981. Though, the AO made a reference to the DVO for determination of fair market value as on 01.04.1981. However, the said reference was bad in law in absence of jurisdiction and enabling provisions prior to the amendment in section 55A of the Act which is not applicable for the year under consideration. Ld. AR has referred to show cause notice issued u/s 142(1) and annexure thereto and submitted that the AO asked the assessee to furnish all the details of cost of acquisition etc. of the land in question which was duly replied by the assessee at page no.18 of the paper book along with valuation report at page 23 to 28 of the paper book. Further the assessee requested the AO to adopt the fair market value as on 01.04.1981 by adopting reverse indexation method which is one of the acceptable method of valuation. He has referred to the letter of the assessee dated 24.12.2019 filed in response to notice u/s 142(1) dated 03.12.2019 placed at page no.29 to 38 of the paper book and submitted that in para 1.8 to 1.8.3. the assessee has given computation of fair market valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ews then the Pr. CIT cannot be permitted to invoke the provisions of section 263 of the Act. The Hon ble Calcutta High Court in the case of Reliance Jute and Industries Ltd. vs. ITO (supra) has held that valuation report after completion of the assessment will not render the assessment order as erroneous for want of inquiry or due to non-application of mind. He has also relied upon the various decision of the Tribunal on this point that AO is not expected to consider valuation report of the DVO after completion of the assessment. 13. He has relied upon the judgment of Hon ble Supreme Court in case of Malabar Industries Co. vs. CIT 243 ITR 83 wherein the Hon ble Supreme Court has held that the provisions of section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer. It is only when an order is erroneous because of incorrect assumption of facts or an incorrect application of law. It will fall in the category of erroneous or so far as prejudicial to the interest of revenue. If the AO has adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO as under: 4.1. In the instant case during the course of assessment proceedings it is found that during FY 2011-12 relevant to A.Y 2012-13 assessee has sold his immovable property situated at Survey No.310/1 and 311, Gram Lasudia Mon admeasuring 0.609 hectares and 5.293 hectares thereby totaling to 5.902 hectares to M/s Shiv Vatika Real Estate Private Ltd for a consideration of Rs. 10,48,09,000/-. Further, in this regard, the assessee submitted that he has realized the consideration during FY.2011-12 to 2015-16 Further, the assessee submitted that during the FY 2011-12 relevant to A.Y.2012-13 the assessee has realized only Rs.2,00,00,000/- against the sale of land and accordingly filed return of income. 4.2 Further, the assessee contended that he has invested the amount as soon as the same was actually received by him and therefore, he was eligible to claim deduction u/s 54B and 54F of the Income Tax Act, 1961. In this context the assessee has furnished year wise details of land purchased by him. I have gone through the submissions furnished by the assessee the same is not acceptable. As in the present case it is found that during the course of assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r : 4.5 Further, with regards to the cost of acquisition of the said property the assessee in his reply dated 11.12.2019 furnished valuation report given by registered valuer who has determined the cost of the said agriculture land 20 lakhs per hectare in his report dated 06.12.2019. Further, in his reply the assessee submitted that While preparing return of total income not claimed the cost/fair market value of land, since the assessee had invested entire amount towards purchase of land. The assessee has considered the amount as received as its sale consideration and after deducting the investment as made towards purchase of new agricultural land, balance amount was considered as cost. 4.6 The assessee has also relied upon some judicial pronouncements for calculation of Fair Market Value of asset as on 01.04.1981. Further, in his reply the assessee submitted that the fair market value of the land as on 01.04.1981 would be between 25 lacs per Hectare to 30 lacs per hectare. In this regard the contention of the assessee is not acceptable. Hence, this office has referred the matter to the Valuation Officer. However, till date the report of the Valuation Officer is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiry on the part of the AO while passing the assessment order and rather this is also not the case of the Pr. CIT that the order of the Assessing Officer is erroneous due to lack of inquiry but the provision of section 263 were invoked by the Pr. CIT only on the basis of the report of the DVO received after completion of the assessment. It is pertinent to note that the report by the DVO is only an opinion on determination of the fair market value of the land which would assist and guide the AO for adopting the fair market value of the land as on 01.04.1981 for the purpose of computing the capital gain. In the case in hand the AO has not accepted the claim of assessee but he himself has determined the fair market value by adopting reverse indexation method which is a one of the acceptable method of determination of fair market value. Hence the Assessing Officer has taken a possible view on the point of determination of fair market value of the land in question as on 01.04.1981. It is settled proposition of law that if the AO has adopted one of the two courses permissible in law and taken one of the possible views then the commissioner is not permitted to invoke the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. There must be some grievous error in the Order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration. In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 9. The phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer erred in reopening the case of the appellant merely on the basis of NMS information and without independent application of mind which is neither legal nor proper. 3. That on the facts and in the circumstances of the case and in law, the Ld Assessing officer erred in re-opened the case by issuing notice under section 148 of the Act even when information. was received during the course of search and notice ought to be issued under section 153C of the Income Tax Act. 4. That on the facts and in the circumstances of the case and in law, the Ld Assessing officer erred in calculating the amount of long-term capital gain on transfer of Agricultural land even. when the land in question was not a capital ass et as per provision of section 2(14) of the Inco me Tax Act 5. That on the facts and in the circumstances of the case and in law the Ld Assessing officer erred in considering the entire sale consideration for calculating the long-term capital gain in one year only more so when the amount was actually received by the appellant in five years. 6. That on the facts and in the circumstances of the case and in law the Ld Assessing officer erred in not allowing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Hon ble Bombay High Court in CIT(Exemption) vs. Slum Rehabilitation Authority 412 ITR 521 as under: 9. This Court in case of Narendrakumari (supra) considered the principle of merger of the order of assessment into that of the order of the Appellate Commissioner. It was held that when the order of assessment merges with the order of the Appellate Commissioner in its entirety, the Commissioner would have no jurisdiction to revise such order of assessment. It was held that the order of Assessing Officer was no longer revisable. 10. In case of Nirma Chemicals Works P Ltd (supra), the Division Bench of Gujarat High Court dealt at some length on the principle of merger. It was a case in which the assessee had claimed deduction under Section 80I of the Act which the Assessing Officer allowed partially. The assessee filed an appeal against the disallowance. The Commissioner (Appeals) allowed the appeal. Subsequently, the Commissioner in exercise of powers under Section 263 of the Act, disallowed the claim under Section 80I of the Act on the ground that the assets used by the assessee in new industrial undertaking had formed part of old plant and machinery and the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions made by the Assessing Officer and the larger additions proposed by the Commissioner in the impugned notice are inextricably inter linked. The Commissioner argues that the entire purchases were bogus. The Assessing Officer accepted the purchases as genuine but added certain amount on the premise that the assesse's profit from such dealings would have been higher than disclosed. The entire issue was at large before the Appellate Commissioner. It is well known that the Commissioner (Appeals) while hearing the assessee's appeal has powers to even enhance the assessment. If he was of the opinion that not only limited additions made by the Assessing Officer but much larger additions were justified, he could have certainly exercised such powers, of course after putting the assessee to notice. In this context, we may refer to clause (c) of Explanation 1 to sub-section (1) of section 263 of the Act. As is well known sub-section (1) of section 263 of the Act empowers the Principal Commissioner or the Commissioner to call for and examine the record of any proceeding and revise the same if he considers that the order passed therein by the Assessing Officer was erroneous insofar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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