TMI Blog2023 (10) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... RR Act, accordingly, the contentions raised by the Ld. AR, are found to be justifiable, having material substance, which constitutes that the acquisition of land in the case of assessee was under RFCTLARR Act, and is not covered by any of the enactments as prescribed under Fourth Schedule of the RFCTLARR Act, which is further substantiated by the department itself, when the same issue in the case of co-owner of the land Mr. Mahendra Lodha, who has received 1/3 share of the impugned compensation a/w the assessee, which is disputed in the present case, wherein the exemption from income tax has been allowed, without any adverse inference, considering that the receipt of compensation was exempt u/s 96 of RFCTLARR Act. We are of the considered opinion that the order of the Ld. AO, though found to be erroneous but could not be established by any supporting material that the same is also prejudicial to the interest of revenue. The prejudice from the order of Ld. AO was only an anticipation / presumption of the Ld. PCIT, which can not be the basis for initiation of proceedings u/s 263, therefore, the same is not sustainable in the eyes of law. Much less, when the same issue in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby on the basis of certain discrepancies revealed in the order of Ld. AO, which was considered as erroneous so far as prejudicial to the interest of revenue, Ld. PCIT invoked the powers conferred upon him by virtue of section 263 of the Act. Notice u/s 263 dated 16/08/2021 was issued, following with another notice for hearing dated 17/08/2021. Issues pertaining to receipt of secured loan of Rs. 15 Crore from Kotak Mahindra Bank, receipt of unsecured loan and its verification in light of provision of section 68 of the Act and issue regarding compensation of Rs. 71,75,902/- claimed as exemption u/s 96 of the RFCTLARR Act, were queried and compliance/ explanations were sought from the assessee. Necessary response was furnished by the assessee. However, on perusal of the response of the assessee on the queries raised, Ld. PCIT has observed that the assessee has taken huge unsecured loans from various parties. But the AO failed to verify the purpose of such huge unsecured loans and its utilization with the help of Bank Statement of the assessee, specifically when it is the claim of the assessee that he is not engaged in any business or having any income from business, also the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 22/11/2021 27/12/2021, on the various aspects on which the revisionary proceedings u/s 263 were initiated by the Ld. PCIT. 5. Ld. PCIT at para 9 of the order u/s 263 has accepted the response of the assessee pertaining to the issue of secured loan received from the bank and unsecured loans of Rs. 30 Lakh from M/s Arihant Complex Pvt. Ltd. With regard to collateral securities offered towards loan from Kotak Mahindra bank, wherein the assessee was a co-borrower, and the other borrowers are his wife and son. Since, the collateral securities were purchased by the assessee in FY 2010-11, therefore, source of funds used for purchasing of such properties were not found to be relevant for the enquiries for the transactions relevant to AY 2017-18, therefore, no adverse inference was drawn. Further, the issue pertaining to loans received from Kolkata based shell companies was also considered as a relevant since such loans were received in the years prior to AY 2017-18. 6. Ld. PCIT, however, not accepted the contention of the assessee with respect to compensation received under the provisions of RFCTLARR Act, 2013. Ld. PCIT has opined that the onus is on the assessee to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited to my bank account. I am enclosing herewith following documents in this regard: - a) Agreement and compensation memo issued by competent authority for compulsory acquisition of above land (page no. 13 14) b) Extracts of bank statement showing receipt of the compensation (page no. 15). c) Form 26AS for verification of TDS amount (page no. 16 17). The above compensation receipt was exempt u/s 96 of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 , I place reliance on Circular No. 36/2016 (F. No. 225/88/2016-ITA.II) dated 25th October 2016 issued by CBDT in this regard. Kindly allow some time to furnish further justification in above matter. 10. Ld. AR Further drew our attention to page no. 35 of the assessee s PB showing that the acquisition was made under RFCTLARR Act, 2013. Ld. AR also furnished the copy of award u/s 23 of RFCTLARR Act, dated 12/02/2016 showing khasra No. 418/3 of the land of the assessee. Copy of notice u/s 37(2) of the RFCTLARR Act dated 18/03/2016 is extracted here under: 11. On the basis of aforesaid submission, Ld. AR argued that since the issue has already been ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by any such enactment. It is also submitted that the OM referred to deals with acquisitions other than the acquisitions under RFCTLARR Act, 2013 and in context of Section 105(1) and (3) of the RFCTLARR Act, 2013 which deals with Fourth schedule enactments, whereas the acquisition in the case of assessee was under the RFCTLARR Act, 2013 and the same is not covered by any such enactment. 14. Ld. AR also furnished before us the assessment order u/s 143(3) r.w.s. 263, r.w.s. 144B of the I.T. Act. Dated 24/02/2023, in the case of Shri Mahendra Kumar Lodha, who is the co-owner in the said property for which the compensation was jointly received by the assessee and the other to co-owners, who are also brothers of the assessee. Extract of the finding in the case of Shri Mahendra Kumar Lodha is extracted as under: From the perusal of the reply, it has been observed that the compulsory acquisition of land was made for construction of railway crossing bridge and land was owned jointly by the assessee and his two brothers holding equal shares. As per section 96 of RFCTLARR Act income tax shall not be levied on any award agreement made under the Act except as provided u/s 46 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the onus is on the assessee to state with supporting documents that acquisition of land has not taken by any of the Acts mentioned in Fourth Schedule of RFCTLARR Act. It was the observation of Ld. PCIT that the Ld. AO was unable to make necessary enquiries which were mandatory under the provisions of RFCTLARR Act, as well as CBDT s OM dated 06/06/2019, such observation of the PCIT are found to be correct and justified on perusal of the queries raised by Ld. AO, reply by the assessee and thereafter no further enquiries by the Ld. AO on the aspects pointed out by the Ld. PCIT, thus proceedings initiated assuming the powers conferred upon the Ld PCIT in terms of explanation 2 to section 263 of the I.T. Act, we, therefore, do not observe any substance in the contention raised by the Ld. AR in this respect that enquiries were conducted by the Ld. AO and the issue was examined, therefore once the issue is examined by the AO the same is not available for invoking the revisionary proceedings. Accordingly, the first limb of the conditions required for reopening u/s 263 that the order of the AO should be erroneous has been satisfied in the present case. 18. However, whether the order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not covered by any of the enactments as prescribed under Fourth Schedule of the RFCTLARR Act, which is further substantiated by the department itself, when the same issue in the case of co-owner of the land Mr. Mahendra Lodha, who has received 1/3 share of the impugned compensation a/w the assessee, which is disputed in the present case, wherein the exemption from income tax has been allowed, without any adverse inference, considering that the receipt of compensation was exempt u/s 96 of RFCTLARR Act. 21. In terms of aforesaid discussions, deliberations and observations, we are of the considered opinion that the order of the Ld. AO, though found to be erroneous but could not be established by any supporting material that the same is also prejudicial to the interest of revenue. The prejudice from the order of Ld. AO was only an anticipation / presumption of the Ld. PCIT, which can not be the basis for initiation of proceedings u/s 263, therefore, the same is not sustainable in the eyes of law. Much less, when the same issue in the case of Co-owner, who had shared the compensation with the assessee, has already been decided in favour of the assessee by the revenue, stating tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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