TMI Blog2023 (1) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act 2017 from the A.Y 2018-19 and whereas the current A. 2017-18. Further if any query is raised in the assessement proceedings and it was responded by the assessee, mere fact that it is not dealt with by the A.O. in the order cannot implied that there is no application of mind. Therefore observations of the Pr.CIT cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. Appeal of assessee allowed. - SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHIR PAVAN KUMAR GADALE, JUDICIAL MEMBER For the Appellant : Shri. Subodh Ratnaparkhi.AR For the Respondent : Dr. Mahesh Akhade. CIT DR ORDER PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the Pr. Commissioner of Income Tax (Pr.CIT)-27, Mumbai, passed u/s 143(3) of the Act. The assessee has raised the fallowing grounds of appeal: 1. The learned Pr. CIT erred in holding the order framed by the assessing officer u/s 143(3) of the I. Tax Act on 09.05.2019 to be erroneous and prejudicial to the interest of revenue and accordingly the assumption of jurisdiction by the Pr. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egoing discussion, it is clear that, by computing the value of unsold property @ 8% of the cost of property, which is the amount of closing stock, the deemed rent income that has not been taxed during the year comes to Rs. 6,95,23,301/-. After deduction @ 30% u/s. 24(a) of the Income Tax Act, 1961, the balance amount of Rs. 4,86,66,310/- is required to be brought to tax as income from house property. 4. Whereas, incompliance to the notice, the assessee has filed the reply on 21.03.2022 before the Pr. CIT referred at Para 3 of the order as under: In response to your above referred show cause notice u/s 263 dt. 15.03.2021 we humbly submit as under. 1. We are a partnership firm engaged in the business of Builders and Developers. The return of income was filed on 13.10.2017 declaring total income of Rs. 58,83, 100/-. Copy of ITR-V of retum filed alongwith computation of income and audited financial statements are enclosed at Annexure A Assessment u/s 143(3) of the I.T Act, 1961 exure A . Ass was completed in this case by ACIT, Circle 28(2), Mumbai on 09.05.2019 accepting the retumed income of Rs. 58,83,100 as assessed income, after due verification of financials and det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the decision of hon'ble Delhi HC in n case of Ansal Properties and hon'ble Gujarat HC's decision in case of CIT v. Neha Builders (P.) Ltd. [2007] 164 Taxman 342/[2008] 296 ITR 661 where in it is held that stock in trade can be treated as Income from business and not as Income from house property' The relevant para of the Hon. Pune Tribunals decision is quoted below for your ready reference. The amendment has been carried out we.f. 1-4-2018 and the Memorandum explaining the provisions of the Finance Bill also clearly provides that this year 2018-19 and subsequent years. Obviously, it is a amendment will take effect from 1-4-2018 and accordingly apply in relation to the assessment year 2018-19 and prospective amendment. The effect of this amendment is that stock-intrade of buildings etc. shall be considered for computation of annual value under the head 'Income from house property' after one/two years from the end of the financial year in which the certificate of completion of construction of the property is obtained on and from the A.Y. 2018-19. Instantly, we are concerned with the assessment year 2013-14. As such, the amendment cannot apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2018 and not for the Assessment Year under consideration. Therefore, the twin condition as prescribed under section 263 are not fulfilled in As far as your honours say that the assessment order is deficient and erroneous since no addition is made on the cited issue, it is to be noted that the Id. AO has adopted a possible view of the matter and the view propagated in the show cause is a debatable view. In such circumstances, the asst. order cannot be termed as erroneous. In support, the assessee relies upon the decision of the Hon. Jurisdictional High court in the case of CIT -vs- Gabriel India Ltd., 203 ITR 108, (Bom)(1993), the Hon. High Court held as under 10. The power of suo moto revision under sub-section (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully eligible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 7. In lieu of the above cited facts and the applicable provisions of law, it is humbly submitted that the assessment order passed by the Id. AO u/s 143(3) of the I.T Act, 1961 on 09.05.2016 is not erroneous and therefore not prejudicial to the interest of revenue. Accordingly, it is humbly prayed that the revisionary proceedings u/s. 263 may kindly dropped. 5. The Pr.CIT has considered the facts and submissions and found that as per Sec. 22 the annual value of the property consisting of any buildings or lands appurtenant thereto of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Pr. CIT has erred in set aside the order of the AO which does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. The Ld. AR also submitted that explanation (2) to Sec. 263 of the Act are to be considered only when the AO has not applied his mind and no the facts are verified and no enquiry was conducted. The Ld. AR has contended that the assessee has complied with the statutory notices and filed reply online through ITBA. The AO dealt on the facts of the disputed issue in the proceedings but there are no observations in the assessment order. Further Pr. CIT has erred in overlooking the fact that the assessee has filed the return submissions before the lower authorities and also emphasized that AO having satisfied provisions and accepted the returned income and the action of the Pr. CIT on the debatable issue is not a valid and substantiated the submissions with judicial decisions and factual paper book and prayed for allowing the appeal. Contra, the Ld. DR supported the order of the Pr. CIT and made submissions in respect of applicability of provisions of Sec. 263 and explanation (2) and the AO has overlooked the fact of charging of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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