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TMI Blog2023 (12) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected to scrutiny assessment to verify 'Large Deduction/Exemption claimed under different provisions of the Act. The AO passed assessment order under Section 143(3) dated 15.11.2019 on being satisfied with the claim so made. 4. The case records pertaining to the aforesaid assessment was reviewed. On examination of records, the Pr.CIT found that the claims made towards deduction under Section 54F is not in accordance with law. 5. The Pr.CIT accordingly issued show cause notice dated 23.07.2021 reproduced as under: NOTICE FOR THE HEARING Mrs/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedings u/s. 263 of the THE INCOME TAX ACT, 1961 - Assessment Year 2017-18. In this regard, a hearing in the matter is fixed on 09/08/2021 at 11:00 AM. You are requested to attend in person or through an authorized representative to submit your representation, if any along with supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. Yo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of revenue. You are hereby once again given the final 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 I.T Act 1961." 6. The assessee contested the show cause notice before the Pr.CIT. The Pr.CIT however did not concur with the justifications advanced by the assessee to drop the proceedings initiated under Section 263 of the Act. The Pr.CIT broadly observed that the Assessing Officer has wrongly accepted the methodology of computation of capital gains and consequent deduction under Section 54F of the Act. The Pr.CIT noted that the assessee had sold one property located at L-13 Kirti Nagar, New Delhi as a plot after demolishing the existing built up structure and claimed relief under Section 54F by making corresponding purchases of two adjoining property located at Kirti Nagar by virtue of two different sale deeds executed with two different parties viz. (i) Smt. Arvinder Sethi and (ii) Smt. Narinderjit Awal & ors. at Rs. 2,25,00,000/- and Rs. 1,26,00,000/- respectively on 11.04.2017. Both the properties were stated to be portion of plot no.H-53A Kirti Nagar, New Delhi. The Pr.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, admeasuring 193.33 sq. yards. Two registries were carried out for acquisition of respective share in one common and conjoint property held by two different persons. The relevant background facts was narrated to submit that this property was initially acquired by one Shri Joginder Singh on 06.08.1960 who got it constructed from its own sources in 1961. On 28.06.2005, Shri Joginder Singh gifted 87 sq. yards in this property to her daughter Smt. Arvinder Sethi. Remaining area admeasuring 106.67 sq. yards was bequeathed in the hands of Smt. Narinderjit Awal and others, through will which was enforced after the demise of Shri Joginder Singh on 03.09.2012. The ld. counsel referred to a copy of Map/layout plan which demarcates the share of two relative groups and it was pointed out that the demarcation results in kitchen falling in one part and consequently without kitchen, the other part cannot be treated as independent residential property. The property was artificially divided only for demarcation purposes but both were part and parcel of one undivided property which has been used as one residential house. It was contended that the property was built 45 years ago and new kitchen ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice has been expanded in the revisional order without opportunity and therefore, the directions on the point is without authority of law. 8.5 The ld. counsel further contended that when a point in issue arises in the revisional proceedings, it was incumbent upon the Pr.CIT to make some minimal inquiry himself to ascertain the veracity of concern arising in the revisional proceedings, before embarking upon giving any directions to the AO for such verification. The Pr.CIT has not done anything of this sort and passed the revisional order without making any such inquiry. The revisional action of the Pr.CIT is this bad in law on this count also. 9. The ld. CIT-DR broadly reiterated the observations made in the revisional order and pointed that the cost of improvement of newly acquired property can be treated as cost of improvement at the time of sale of that property but cannot be merged with the sale consideration. The deduction under Section 54F is not eligible on so called cost of improvement which is neither supported by corroborative evidence nor such additional cost is eligible for integration with purchase consideration. 9.1 The ld. CIT-DR also submitted that the lar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in given facts and circumstances of the case, two views are possible and one view as legally plausible has been adopted by the AO then existence of other possible view alone would not be sufficient to exercise powers under s.263 of the Act by the Pr.CIT /CIT concerned. Hence, there can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the AO. It is only when an order is erroneous and causing prejudice, that the Section will be attracted. An incorrect assumption of facts or incorrect application of law will satisfy the requirements of the order being erroneous. 11.2 In the instant case, it is sought to be demonstrated on behalf of the assessee that necessary inquiries were made towards computation of Long Term Capital Gains and deduction claimed under Section 54F of the Act. It was further pointed out that although two separate agreements have been executed due to demarcation of share in single property to different persons due to gift or bequeath by will, the property remains only one and therefore eligible for deduction under Section 54F of the Act. The assessee has advanced justification for cost of improvement of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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