Income Tax Appellate Tribunal - Chandigarh
Sh. Daljit Singh Bassi, Ranjit Nagar vs Pr.Cit-1, Chandigarh on 25 March, 2022
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL
D I V I S I O N BE NC H , " A" , CH A ND I G A R H
BEFORE SHRI N.K. SAINI, VICE PRE SIDENT &
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
आयकर अपील सं./ ITA No. 56/C H D / 2 0 2 1
नधारण वष / Assessment Year : 2015-16
Sh. Daljit Singh Bassi, बनाम The PCIT,
House No.1178A, Ranjit nagar, Chandigarh -1
Sector 11,
Punjab
थायी लेखा सं./PAN NO: AFKPB2971C
अपीलाथ /Appellant यथ /Respondent
Hearing though video Conferencing
नधा रती क ओर से/Assessee by : Sh. Parikshit Aggarwal, CA.
राज व क ओर से/ Revenue by : Sh. Vivek Nangia, CIT DR
सुनवाई क तार$ख/Date of Hearing : 27.12.2021
उदघोषणा क तार$ख/Date of Pronouncement : 25.03.2022
आदे श/Order
Per Sudhanshu Srivastava, Judicial Member:
This appeal is preferred by the assessee against the order passed u/s 263 of the Income Tax Act, 1961 (hereinafter called 'the Act') vide order dated 12.03.2021, wherein, the Ld. Principal Commissioner of Income Tax, Chandigarh-1 [hereinafter referred to as 'PCIT'] has held that the assessment order dated 22.11.2017 passed u/s 143(3) of the Act for assessment year 2015-16 was erroneous in so far as being prejudicial to the interest of Revenue as there was failure on the part of ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 2 the Assessing officer(AO) to make inquiries / verification to arrive at the correct and complete facts and apply correct law. The said assessment order was cancelled with a direction to the Assessing officer to pass an order afresh.
2. The brief facts of the case are that the assessee filed return of income declaring taxable income at Rs. 1,65,28,620/-. The return was initially processed u/s 143(1) of the Act and subsequently the case was selected for limited scrutiny under CASS guidelines on the issue of "Deduction claimed under the head Capital Gain ". The limited scrutiny assessment was completed vide 22.11.2017 wherein the returned income was accepted. Subsequently, notice u/s 263 of the Act was issued on 19.2.2020 by the Ld. PCIT Chandigarh, contents of which are being reproduced herein-under for a ready reference.
"Please refer to the return of income for the A.Y. 2015-16 filed on 29.08.2015 declaring income of Rs. 1,65,28,620/- and the assessment order u/s 143(3) of the IT Act passed by the Dy. Commissioner of Income Tax, Circle 6(1), Mohali (the assessing officer concerned in your case) on 22.11.2017 vide which returned income of the assessee was accepted.
2. The case was selected under CASS for rewing issue of "Deduction claimed under the head Capital Gain." As per information documents available on records, it is seen that you have sold urban agriculture land for Rs. 13,09,68,750/- on 14.08.2014 and earned long Term Capital Gain of Rs. 12,55,08,350/-/- claiming deduction of Rs.
ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 3 6,16,31,455/- u/s 54B and Rs. 6,38,76,895/- u/s 54F against Long Term Capital Gain.
3. As per provisions of Section 54F of the IT Act, If the cost of the new house is not less than the net consideration in respect of the capital asset transferred, the entire capital gain arising from the transfer will be exempt from tax. If the cost of the new house is less than the net consideration in respect of the assert transferred, the exemption from long term capital gain will be granted proportionately on the basis of investment of net consideration either for purpose or construction of the residential house". Since the investment made in residential property u/s 54F is Rs. 6,41,94,000/-, which is less than the net consideration in respect of capital asset transferred, therefore, proportionate deduction in terms of provisions of Section 54F of the IT Act, 1961 was to be allowed as per calculation given as under:-
Long Term capital Gain * amount reinvested Net consideration It is further seen that while working out deduction u/s 54F, the effect of investment of Long Term Capital Gain already availed u/s 54B was not given resulting in excess claim u/s 54F
5. Thus from the above, it is sufficiently clear that the allowable deduction u/s 54F has been wrongly worked out and allowed resulting in loss of revenue.
6. In view of the facts stated above, the assessment framed u/s 143(3) on 23.11.2017 for A.Y. 2015-16 is erroneous in so far as prejudicial to the interest of the revenue in terms of provisions of section 263(1) of the Income Tax Act, 1961 read with Explanation 2 of the said section.
ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 4
7. You are, therefore, requested to show cause as to why assessment framed vide assessment order dated 23.11.2017 u/s 143(3) of the Income Tax Act, 1961 for A.Y. 2015-16 should not be cancelled by invoking the provisions of section 263 of :ne Income Tax Act, 1961."
2.1 In response to the above said show cause notice, the assessee raised objections to the proposal of revision u/s 263 of the Act and submitted before the Ld. PCIT that on the facts of the case, no fresh inquiry was required to be made by the Assessing officer and that cancellation of the entire assessment order would be unjustified. However, the Ld. PCIT did not accept the contention of the assessee and he proceeded to cancel the assessment with direction to the Assessing officer to pass a fresh assessment order after inquiring in to the correctness of the assessee's claim of purchase of agricultural land and deposit of balance in capital gain account scheme. 2.2 Against this order of the Ld. PCIT, the assessee has now approached this Tribunal challenging the exercise of revisionary powers by the Ld. PCIT u/s 263 of the Act by raising the following grounds of appeal:-
1. That on law, facts & circumstances of the case, the Worthy Pr. CIT has grossly erred assuming jurisdiction u/s 263 even when:
ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 5 1.1. The original assessment order passed u/s 143(3) did not satisfy the twin conditions of being an 'erroneous order' and 'prejudicial to the interest of revenue'.
1.2. The Worthy Pr. CIT has erred in setting aside the assessment order u/s 143(3) and in directing the AO to make assessment afresh on the ground that AO had not conducted worthwhile enquiries during the assessment proceeding even when the AO had conducted thorough enquiries and also most importantly the Pr. CIT failed to carry our any enquiry himself and also failed to demonstrate which most necessary enquiry the Ld. AO failed to carry out.
1.3. The Worthy Pr. CIT failed to appreciate that inadequate inquiry does not amount to lack of inquiry so as to assume valid jurisdiction u/s 263.
1.4. The Worthy Pr. CIT, vide Para 7.1 of her order, has erred in holding that the assessment order requires to be revised u/s 263 since the Girdawari of agricultural land furnished by the assessee was not signed/ stamped by the competent authority and it was never subjected to verification even when the facts are otherwise.
1.5. The Worthy Pr. CIT has erred in holding the assessment order to be erroneous and prejudicial to the interest of revenue vide her observations in Paras 8 to 11, even when she herself admitted in the / impugned order that those issues pertain to subsequent years.
1.6. The Worthy Pr. CIT has erred in making certain observations in Paras 8 to 11 of the impugned order even when such issues pertain to subsequent years and therefore she has exceeded her jurisdiction in noting such observations in the revisionary order u/s 263 for the year in question ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 6 and hence such observations deserves to be expunged.
1.7. The Worthy Pr. CIT has conducted the impugned proceedings u/s 263 in extreme haste and without affording reasonable opportunity of being heard to the appellant.
2. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
3.0 The Ld. Authorised Representative (AR) submitted that the assessee is an individual who, along with his son Shri Princepreet Jit Singh Bassi, was co-owing certain agricultural land and they had agreed to sell this land to M/s Gilco Developers and Builders Pvt Ltd in the year 2013, wherein, an area of 40 kanals 6 marlas and 6 Sarsai was to be sold. It was further submitted that the capital gains earned and exemption claimed by the assessee were falling in two assessment years i.e. 2015-16 & 2016-17 and the Assessing officer, during the course of assessment proceedings, had required the assessee to explain and justify the assessee's claim of exemption u/s 54 of the Act and the assessee has duly responded by filing the relevant details alongwith documentary evidences in support of accrual of capital gain as well as in support of the assessee's claim of exemption u/s 54 of the Act. It was also submitted that the Assessing officer had, thus, made adequate and proper inquiries during the course of assessment proceedings and had passed the assessment order after due consideration of the facts of the ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 7 case as well as after duly considering the submissions of the assessee in this regard and, therefore, it was wrong on the part of the Ld. PCIT to allege that no proper inquiry had been made by the Assessing officer.
He drew our attention to the voluminous documents filed during the course of assessment proceedings, copies of which have been placed in the paper book filed by the assessee. Our attention was specifically drawn to the purchase deeds, copies of Khasra and Girdawari, copy of certificate of Patwari and sale deeds and it was submitted that these documents were very much before the Assessing officer during the course of assessment proceedings and that the Assessing officer had taken the view of accepting the returned income after due consideration of these documents. He also drew our attention the query letter raised by the Assessing officer during the course of assessment proceedings wherein the Assessing officer had specifically required the assessee to furnish details of large deduction claimed u/s 54B, 54C, 54D, 54G and 54GA of the Act.
3.1 It was further submitted that, therefore, the allegation of the Ld. PCIT that there was a failure on the part of the Assessing officer to have conducted / made inquiries / verification to arrive at the correct and complete facts was not true. It was submitted that the Assessing officer had already inquired into and verified the assessee's claim of purchase of agricultural land and deposit of balance amount in capital gain account scheme and, therefore, cancelling the assessment for the ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 8 purpose of passing an order afresh on the issue was not as per the mandate given to the Ld. PCIT in terms of section 263 of the Act. 3.2. The Ld.AR placed reliance on the numerous judicial precedents in support of his contention that the order passed u/s 263 was bad in law and deserved to be quashed.
4.0 Per contra, the Ld. CIT DR vehemently supported the order of the Ld. PCIT and argued that there have been many lapses on the part of the Assessing officer to conduct proper inquiries into the nature of lands sold and purchased. It was further submitted that the Ld. PCIT had rightly pointed out that the Assessing officer had not inquired into the genuineness of the investment made by the assessee in terms of section 54 of the Act. It was submitted that the assessee's claim of investment in residential house had not been examined properly by the Assessing officer and the Assessing officer had accepted the assessee's contention in a very casual manner. It was reiterated that the Assessing officer had accepted the assessee's claim without any inquiry or evidence what- so-ever and, therefore, the order was erroneous and prejudicial to the interest of Revenue and was liable to be set aside. The Ld. CIT DR also relied on the numerous judicial precedents in support of his contention that the Ld. PCIT has rightly exercised his powers u/s 263 of the Act.
ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 9 5.0 In rejoinder, the Ld. AR submitted that as far as the issue of assessee's claim of exemption relating to investment in residential house was concerned, the same had to be examined by the Assessing officer in the immediately succeeding assessment year 2016-17 because that investment had been made and the claim of exemption was made in assessment year 2016-17 and not in this year as the assessee had only deposited the amount in capital gain account scheme during the assessment year under consideration and, therefore, this was a non- issue in the year under appeal.
6.0 We have heard the rival submissions and have also perused the material on record. We have also gone through the impugned order as well as the show cause notice and the objections of the assessee to the show cause notice. We have also gone through the various documents filed by the assessee before us and we agree with the contention of the Ld. AR that the assessee had filed voluminous evidences in support of his claim of exemption u/s 54 of the Act by filing the copies of the purchase deeds, sale deeds as well as copies of Girdawari and Sarsai. There is also a certificate of 'Patwari' on record and from the said documents, it is very much evident that the lands in question were of agricultural in nature. It is also seen that the assessee has also submitted computation of capital gains as well as computation of exemption, both before the Assessing officer as well as before the Ld. PCIT. It is also seen that the assessee had also submitted these ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 10 documentary evidences again before the Ld. PCIT in response to the show cause notice but the same did not find favour with the Ld. Ld. PCIT and the Ld. Ld. PCIT came to the conclusion that the Assessing officer had failed to conduct proper inquiries / verification. However, what further inquiry, the Assessing officer was required to do has not been outlined by the Ld. PCIT in the impugned order. We also note that the Ld. PCIT himself, on his own part, did not conduct any further inquiries on his own to arrive at the conclusion that the order of the assessment was erroneous and pre judicial to interest of Revenue. 6.1 We have also perused the assessment order as well as the questionnaire issued by the Assessing officer and we note that although the assessment order is very short and cryptic and does not elaborately discuss the issues which were before the Assessing officer, it is not a requirement of law that the assessment order should be written in an elaborate manner. From the perusal of the questionnaire issued by the Assessing officer with respect to the inquiry into assessee's claim u/s 54 of the Act, it is apparent that the Assessing officer was on right track and had made an inquiry on the issue for which the assessee's case had been selected for limited scrutiny. It is also not the case of the Department that the assessee did not give proper response to the query raised by the Assessing officer, as is evidenced by the voluminous documents which have been filed by the assessee in response to the query raised by the Assessing officer. Therefore, by no stretch of ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 11 imagination, it can be said that the Assessing officer had failed to make the required / proper inquiries / verification.
6.2 We also agree with the contention of the Ld. AR that the issue of exemption by claiming investment in residential house property was a subject matter for consideration in assessment year 2016-17 and this fact is also evident from para 11 of the impugned order, wherein, the Ld. PCIT has mentioned the dates between June and August 2017. Therefore, we are of the considered opinion that the Assessing officer had, in fact, made proper inquiry before accepting the assessee's claim of exemption u/s 54 of the Act and there was proper application of mind by the Assessing officer in this regard in so far as the assessment proceedings for assessment year 2015-16 (i.e. captioned assessment year is concerned).
6.3 At this juncture, it would be relevant to make a reference to the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd reported in [2011] 332 ITR 167 (Del.) wherein the Hon'ble Delhi High Court has ruled that one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry' and further if there was any inquiry, even inadequate, that would not by itself give occasion to the Commissioner to pass orders u/s 263 of the Act, merely because he has a different opinion in the matter. It was further held by the Hon'ble Delhi High Court that if any Assessing officer, acting in accordance with law, makes a certain assessment, the ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 12 same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately.
6.4 Similar were the observation of the Hon'ble Delhi High Court in the case of ITO Vs. DG Housing Projects Ltd [2012] 343 ITR 329 (Del). In this case, the Hon'ble Delhi High Court went on to observe that in case where there is in-adequate inquiry but no lack of inquiry, the CIT must give and record a finding that the order/enquiry made is erroneous and that this can happen only if an inquiry and verification is conducted by the CIT. The Hon'ble Delhi High Court in the case of ITO Vs. DG Housing Projects Ltd (supra) also held that in most cases of alleged 'inadequate inquires' it will be difficult to hold that the order of the Assessing officer, who had conducted enquiries and had acted as a Investigator, is erroneous, without the CIT conducting verification /inquiry himself. However, in the present cases, no such inquiry has been carried out by the Ld. PCIT and he has simply directed the Assessing officer to carry out detailed inquires. In our considered opinion, the Ld. PCIT, without making further inquiries on his own account, has simply stated in the impugned orders that the Assessing officer was required to make more inquiries. The Ld. PCIT has not pointed out as to what further inquiries was the Assessing officer required to make and as to how without those inquires the order of the Assessing officer were erroneous in so far as prejudicial to the interest of the Revenue.
ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 13 6.5 Similarly, the Hon'ble Delhi High Court in the case of DIT Vs. Jyoti Foundation [2013] 357 ITR 388 (supra) held as under:
"that inquiries were certainly conducted by the Assessing Officer. It was not a case of no inquiry. The order under section 263 itself recorded that the Director felt that the inquiries were not sufficient and further inquiries or details should have been called for. The inquiry should have been conducted by the Director himself to record the finding that the assessment order was erroneous. He should not have set aside the order and directed the Assessing Officer to conduct the inquiry."
6.6 In the present case also, the A.O. made the requisite enquiries, therefore, it is not a case of no enquiry and if the Ld. Pr. CIT was not satisfied with the enquiries made by the AO, he should have conducted the enquiries himself to record the findings that the assessment order was erroneous and he should not have simply set aside the order passed by the AO directing him to conduct the further enquiries.
6.7 On identical issue, the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s Unique Autofelts (P) Ltd (2009) 30 DTR 231 (P&H) held as under:
"5. From the finding of the Tribunal, it is clear that the assessee had given proper explanation by filing the necessary confirmations. In view of such a finding, the Tribunal rightly held that power under Section 263 of the Act could be exercised where view taken by an Assessing Officer was erroneous. While exercising ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 14 such power, the Commissioner was bound to take into account all relevant facts. If order invoking the said power proceeds on an erroneous assumption, the same could be set aside by the Tribunal. Finding of the Tribunal is not shown to be perverse. No substantial question of law arises."
6.8 Similarly, the Hon'ble Supreme Court in the landmark judgment reported in the case of Malabar Industries vs. CIT (2000) 243 ITR 83 (SC) has held as under:
"A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, if is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 15 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. 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 the 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 treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law."
7.0 In the present case, as we have been observed earlier, the Assessing officer had made due inquiries about the capital gain earned on sale of agricultural land as well as the assessee's claim of exemption u/s 54 of the Act and the assessee too had duly responded by the query raised by the Assessing officer and had submitted details and evidences in support of his claim before the Assessing officer. This was also brought to the notice of the Ld. PCIT in response to the show cause notice issued u/s 263 of the Act but the same did not find favour with the Ld. PCIT. Therefore, on an overall view of the facts of the case, it is our considered opinion, that there was due application of mind on the part of the Assessing officer and that adequate and proper enquiry had been conducted by the Assessing officer in this regard and, therefore, ITA No. 56-Chd-2021 Sh. Daljit Singh Bassi, Ranjit Nagar 16 the impugned order passed u/s 263 of the Act cannot be upheld. Accordingly, we hold that the proceedings u/s 263 of the Act were bad in law and we quash the revisionary proceedings for the reason that the Assessing officer had already made adequate inquiries on the issue raised by the Ld. PCIT and further the Ld. PCIT himself had not raised any independent inquiry on his own before coming to an incorrect concussion that the assessment order was erroneous and prejudicial to the interest of Revenue.
8.0 In the final result, the appeal of the assessee stands allowed.
Order pronounced on 25.03.2022.
Sd/- Sd/- ( N. K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated : 25.03.2022 "आर.के."
आदे शक त+ल,पअ-े,षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु.त/ CIT
4. आयकरआयु.त (अपील)/ The CIT(A)
5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH
6. गाडफाईल/ Guard File आदे शानस ु ार/ By order, सहायकपंजीकार/ Assistant Registrar