Income Tax Appellate Tribunal - Indore
Geeta Ben Parikh, Indore vs Assessee on 21 November, 2011
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IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
AND
SHRI R.C. SHARMA, ACCOUNTANT MEMBER
ITA No.51/Ind/2011
A.Y. 2006-07
Smt. Geeta Ben Parikh, Indore
PAN - AJEPP 1990 K
C/o Anil Kamal & Garg, CAs
1st Floor, Kuber Palace,
35, Jaora Compound, Indore ... Appellant
vs
CIT-II, Indore ... Respondent
Appellant by : Shri Anil Kamal Garg, CA
Respondent by : Shri Keshave Saxena, CIT/DR
Date of Hearing : 21.11.2011
Date of Pronouncement : 21.11.2011
O R D E R
PER JOGINDER SINGH This appeal is by the assessee challenging the order of learned Commissioner of Income Tax dated 29.3.2011 on the following grounds:
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"1. That, the ld. CIT grossly erred, both on facts and in law, in setting aside the assessment order passed by Assessing Officer u/s 143(3) of the I.T. Act, 1961.
2a) That, the ld. CIT grossly erred in invoking the provisions of Section 263 of the I.T. Act, 1961 without considering the material fact that the assessment order passed by the ld. Assessing Officer was neither erroneous nor prejudicial to the interest of the Revenue.
b) That, the ld. CIT grossly erred in assuming the jurisdiction u/s 263 of the Act without considering the material fact that during the course of assessment proceedings, the appellant had brought on record all the materials and evidences relating to the issue and the same were duly verified by the Assessing Officer after application of his mind."
2. During hearing of this appeal, the learned counsel for the assessee contended that the ld. Commissioner grossly erred in invoking the provisions of Section 263, of the Act, without considering the material facts and the assessment order especially when the assessment order is neither erroneous nor prejudicial to the interest of Revenue. It was contended that during assessment proceedings, necessary details were filed 3 by the assessee and the same were duly examined by the Assessing Officer. A plea was also raised that the assessment was framed u/s 143(3) and that too when the necessary details were fully and truly disclosed regarding transfer of plots and the long term capital gain of Rs.45,807/- from transfer of the subject property. Our attention was invited to various pages of the paper book showing the details of computation of long term capital gain (pages 20 & 21 of paper book). A strong plea was raised that description of plots, house transfer, area of plot, constructed area of the house, date and mode of transfer, actual sale consideration received and valuation made for payment of stamp duty were also filed. It was submitted that one of the possible view was taken by the Assessing Officer. On the other hand, the ld. CIT/DR Shri Keshave Saxena strongly defended the impugned order by submitting that the assessment order is erroneous as well as prejudicial to the interest of the Revenue and detailed assessment order has not been framed by the Assessing Officer.
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3. We have considered the rival submissions and perused the material available on file. The facts, in brief, are that the assessee is an individual, declared total income of Rs.1,67,301/- in her return filed on 28.2.2007. The case was selected for scrutiny, therefore, notice u/s 143(2) was issued to which the assessee attended the assessment proceedings from time to time and also filed written submission along with details asked for. The assessee showed income from business, capital gain and also from other sources. Admittedly, the assessee maintains regular books of account. The ld. Assessing Officer asked the assessee to furnish necessary details like, loans, confirmations, details of unsecured loans, details of capital gains, details of returns, details of investment made in movable and immovable properties, details of share income, details of bank statement, details of sale of assets and details of claiming exemption u/s 54EC and 54 of the Act. The assessee was also asked to submit details of commission paid, details of interest, bank details, household expenses and other details which were necessary for framing the assessment. There is a clear finding 5 in the assessment order that the necessary details were filed by the assessee and the same were verified and were kept on record. The relevant portion from the assessment order are reproduced hereunder:
"2. The assessee has shown income from business, capital gain and other source. The assessee maintains regular books of account. The assessee was called for upon to furnish the details of loan confirmations, details of unsecured loans, details of capital gain, details of IT returns, details of investment made in movable and immovable properties, details of share income, details of bank statement, sale of assets, details of claiming exemption u/s 54EC & 54 of the Act, details of commission paid, details of interest, bank details, household expenses etc. and other details from time to time. The relevant details called for have been verified and placed on record.
3. During the assessment proceedings from the books of account noticed that, on account of house hold expenses the assessee has shown withdrawal of Rs.38,000/- only, but assessee has not shown any withdrawal on account of house hold expenses during the year for meeting house hold expenses. The assessee has not submitted details of head wise withdrawals made for expenses incurred on electricity and power, education, water and house etc. The family of the assessee comprises of herself, husband, one son and one daughter. The assessee has not submitted any evidence in support of his claim, hence looking to the family size and keeping in view of house hold expenses, withdrawal made by the assessee is seems to be low. Hence, considering these facts on account of low withdrawal lump-sum amount of Rs.25,000/- is being added to the total income of the assessee."
4. The assessee was given show cause notice, in response to which, the assessee made following submissions before the Department:
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" 3. In response to the show cause notice, Shri Anil Kamal Garg, CA and AR of the assessee attended from time to time and made written submissions. Shri Narendra Patel, President and Shri Mahesh Sahu,Vice President of The Gujrati Cooperative Housing Society ltd. appeared in compliance with summons and filed written reply and photo copies of documents. The proceedings register in which the plots of Smt. Savitaben were transferred in the name of assessee Smt. Geetaben was not produced as the same is said to be not available with the society at present.
4. The assessee has made submissions as under:
"In the Show Cause Notice, under reference, Your Honour stated to have seen from the assessment records that the assessing officer did not make requisite enquiry in relation to income from long term capital gain on sale of land with house situated at 111-112, Vallabh Nagar, Indore shown by the assessee .at Rs.45,807/ - in the computation of total income accompanying the return of income. It has further been observed by Your Honour that the assessee did not furnish adequate/ necessary documents in support of her claim for deduction of the index cost of the capital asset under section 49(l)(ii) read with section 55(2)(v) of the Act. At para 4.0 of the show cause notice, Your Honour further stated that non-furnishing of the requisite details by the assessee has made the assessment order passed under s. 143(3) on 19-12-2008 prejudicial to the interest of the revenue.
3.00 Your Honour would appreciate that the provisions of section 263 would come into operation only if twin conditions manifest in the section are satisfied. Such conditions are that the Order sought to be revised must be erroneous and secondly the Order must be prejudicial to the interest of the revenue. It is a settled law that if either of these two conditions are not met, the provisions of section 263 cannot be invoked. In the instant case, in view of the facts and .. circumstances of the case and our submission elicited in subsequent paras, the subject Assessment Order is neither erroneous nor prejudicial to the interest of the revenue and therefore the provisions of section 263 of the Act, in the instant case, does not deserve to be invoked by Your Honour.7
4.01 The assessee had manually filed her Return of Income, pertaining to the assessment year under consideration, voluntarily under the provisions of s. 139(4} of the Income-Tax Act, 1961, on 28- 02-2007, declaring total income of Rs.l,67,30l/ -'. A xerox copy of the acknowledgement of the Return is being submitted herewith for a ready reference as Annexure A-1.01 [PB Page No.1]. 4.02 Along with the return of total income, the assessee had furnished computation of total income, copy of statement showing computation of long-term capital gain and all other necessary documents as per details given at the bottom of the Page No.2 of the computation-of total income. A copy of all the relevant documents, which were duly submitted by the assessee along with her return of income, are being submitted herewith for kind perusal and ready reference of Your Honour as Annexure A-1.02 to A-1.12 [PB Page No 2 to 64} 4.03 The case of the assessee was selected for scrutiny and the first Notice u./ s. 143(2} was issued to her on 09-07-2007 fixing the date of hearing on. 27-072007. Subsequently, a further Notice dated 14-03~2008 u/ s. 142(1} along with a 'Questionnaire' was also issued by the learned Assessing Officer. A xerox copy of the Notice and Questionnaire are being submitted herewith for kind perusal and ready reference of Your Honour as Annexure A-2.01 & A-2.02 [PB Page No. 65 to 68]. On a perusal of the questionnaire, it would be observed by Your Honour that the learned AO had issued the questionnaire for as many as 28 issues out of which the issues serially numbered 1 to 15 were related to general details and issues serially numbered 16 to 28 were related to business details. 4.04 On a perusal of the questionnaire ( PAPER BOOK Page No. 67), accompanied to the said Notice, it shall be observed by Your Honour that the learned Assessing Officer, inter-alia, vide Question No. 18 very categorically required the assessee to furnish complete details on the subject issue of long term capital gain. For ready complete details on the subject issue of long term capital gain. For ready reference the details required by the Assessing Officer are reproduced as under :
"8. With regard to sale of asset please provide the names and address of the person to whom the asset has been sold and the mode 8 of receipt, the bank etc. in which the money has been deposited. In case of sale of immovable property, give purchase document of the said property. Also produce copy of bank account in which the sale proceeds have been deposited by the company. Please furnish date wise narration of the entries appearing in the bank account. In case of claim of exemption u/ s 54B/ D/ G etc. please justify the claim with evidence and the sections in which the same have been claimed. "
4.05 In compliance of the notice and the accompanied questionnaire, the assessee made a detailed reply on each and every issue containing in the questionnaire vide her counsel's letter dated 26- 11-2008. Such letter was duly acknowledged by the office of the learned AO on 26-11-2008 itself. A xerox copy of the letter is being submitted herewith as Annexure A-3.00 (PB Page No 69 to 72J. On a perusal of the letter, it shall be appreciated by Your Honour that the appellant had made full compliance of each and every query raised by the learned AO in his questionnaire. Since the issues serialized at Point No.16 to 28 of the questionnaire were not applicable in the case of the assessee and, therefore, the assessee very categorically, at serial No.1S of the letter, had stated so. In sum and substance, the assessee had fully complied with the notice under s. 142(1) of the Act. 4.06The assessee had furnished the complete details with documentary evidences on the issue of long term capital gain. Since, the assessee had already furnished certain documents required by the learned AO along with the return of income itself, and, therefore, in order to avoid resubmission of the documents, the assessee made a reference of such documents in her reply. Some of the particulars required by the learned AO as regard to sale of the assets were also furnished by the assessee along with the return of income in form of a separate statement and, therefore, for avoiding duplication, she requested the learned AO to make a reference of such statement. For a ready reference, the reply of the assessee on the subject issue is .being reproduced as under:
8A). DETAILS OF SALE OF ASSETS In this context, it is submitted that during the year under review, the assessee has sold her residential house and adjoining Plot situated respectively at Plot No.111 and 112, Vallabh Nagar, Indore to four / 9 persons namely, Shri Ashok, Kumar S/o ShriSamrathmal Chordia smt.
Manju Wlo Shri Ashok Kumar Chordia, Shri Ritesh Sio Shri Ashok Kumar Chordia and Smt. Divya Wlo Shri Ritesh Chordia, all residents of 103147, New Agrawal Nagar, Indore, under a Sale Deed duly executed on 19-07-2005 for a consideration of Rs. 42,11,0001 -'. A copy of the Registered Sale Deed has already been furnished by the assessee along with the Return of Total Income.
Besides, the assessee has also submitted all the necessary particulars as regard to sale, acquisition and capital gain arising on sale of such property in a separate statement filed along_with. the Return of Total Income. The entire sale proceeds were received by the assessee through account payee cheques only and such cheques were duly deposited by the assessee in her Savings Bank Account bearing No. 10965 maintained with Vijaya Bank, Siyaganj Branch, Indore. A copy of Bank Passbook of such account along with the details thereof are being enclosed herewith as Annexure A-2.01 to A-2.03. 8B). CLAIM OF EXEMPTION UNDER SECTIONS 54EC & 54 OF THE INCOME-TAX ACT, 1961 Out of capital gain of Rs.1 9,52,7071 - as worked out in the Statement of Capital Gain referred to above, the assessee has claimed exemption under s. 54EC of the Act of a sum of Rs.1 0,00,0001 - on account of investment in Bonds of Rural Electrification Corporation Limited made by her on 19-01-2006 i. e. within a period of 6 months from the date of transfer of subject property. A copy of the certificate evidencing such investment has already been submitted along with the Return of Total Income.
Besides, the assessee has also claimed deduction under section 54 of the Act in respect of amount deposited by her in Capital Gain Account Scheme, 1988 at Rs.6,50,OOOI - as also for making investment in Construction of a Residential House at Rs.2,56,9001- as per details given in the above referred Statement of Computation of Capital Gain. All the necessary evidences in support of such claim have already been furnished by the assessee along with her Return of Total Income.
4.07 The learned AO, after placing on record the aforesaid written submission and other documents, as referred to in the written 10 submission, made a detailed verification on the issue and, after applying his min and satisfying himself with the details and correctness of the documents, formed an opinion that the income shown by the assessee from sale of the asset is correct and complete and, it was therefore) he did not choose to draw any adverse inference in. respect of the income shown by the assessee in her return of income. Such fact is apparent from the second paragraph of the body of the assessment order itself. For a ready reference, the factual statement of the learned AO is reproduced as below:
2.the assessee has shown income from business, capital gain and other source. The assessee maintains regular books of accounts. The assessee was called for upon to furnish the details of loan confirmations) details of unsecured loans, details of capital gains, details of IT returns) details of investment made in movable and immovable properties) details of share income) details of bank statement, sale of assets) details of claiming exemption u/ s. 54EC & 54 of the IT Act, details of commission paid, details of interest) Bank details, household expenses etc. and other details from time to time, The relevant details called for have been verified and placed on record." [Emphasis supplied} 4.08In view of the above stated facts and circumstances of the case, it is very respectfully submitted that the finding given by Your Honour in paragraph 4.0 of the impugned notice to the effect that the assessing officer did not make requisite enquiry in relation to the capital gain is not correct. .It shall be appreciated by Your Honour that the assessee had furnished all the required details and documents in connection with long term capital gain along with the return of income itself. The assessee had also furnished other details as regard to full description of the property sold, complete names and addresses of the purchasers, mode of transfer, details of documents through which the transfer took place, the date of transfer) consideration for transfer, the mode of receipt of consideration) number of cheque through which the consideration was received) the details of saving bank account in which the sales consideration was deposited) details and evidences regarding claim of exemption under s. 54EC and finally details and evidences regarding claim of deduction under s. 54 along with her submission letter dated 26-11-2008 [PB Page No. 71] submitted before the learned AO. The receipts of all such details and documents by the learned AO is clearly discernible from the 11 paragraph :2 of the body of the assessment order. Further, the verification of all such details and documents by the learned AO, after applying his mind, is also beyond any doubt as is apparent from the above stated paragraph 2 of the assessment order.
4.09 It is a settled law that if an assessing officer form a particular opinion on any- issue, after making detailed enquiry and after applying his mind, then such opinion of the AO cannot be reviewed by any higher authority under the garb of revisionary powers conferred under section 263 of the Act. In such cases, the order of the assessing officer cannot be said to be erroneous.
Reliance is placed on the following judicial pronouncements:
i) CIT vs. Ratlam Coal Ash Co. (1988) 171 ITR 141 (MP)
ii) Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) iii} CIT vs. Arvind Jewellers (2003) 259 ITR 502 (Guj) iv} Paul Mathews & Sons vs. CIT (2003) 263 ITR 101 (Ker)
5.01 Your Honour, having demonstrated above that the order passed by the learned AO is not erroneous, now it is submitted that the assessment order passed by the learned AO is also not prejudicial to the interest of the revenue for the reason that the assessee had rightly claimed indexed cost of acquisition and had also rightly claimed deductions under s. 54EC/54 of the Act. Since the assessee had correctly made claim for all deductions and, therefore, the resulted long term capital gain shown in the return of income also got computed and assessed in accordance with the law. In such circumstances, the order of the assessing officer cannot be said to be prejudicial to the interest of the revenue.
5.02 Your Honour, as regard eligibility of the assessee to compute indexed cost of acquisition in respect of the subject assets in accordance with provisions of section 49(1) and section 55(2) of the Act, it is submitted that the assessee has rightly invoked such provisions. Your Honour, Sub-Section (1) of section 49, consisting of five clauses from cl. (i) to (iv) contemplates cost with reference to certain modes of acquisition. Clause (ii) contemplates the situation of acquisition of capital asset under a gift or Will. Under the said sub- section, it has been provided that the cost of acquisition of the asset acquired in the modes referred to in clauses (i) to (iv) shall be deemed to 12 be the cost for which the previous owner of the property acquired it. Sub- Section (2) of section 55 of the Act provides for the computation of cost of acquisition for the purpose of sections 48 and 49 of the Act. Such sub- section (2) is divided into four clauses viz. cl. (a), (aa), (ab) and (b). The first three clauses are applicable in respect of intangible assets are shares and, therefore, the same are not subject matter here. Clause (b) relates to other assets which are not covered under other three clauses. Clause (b) of section 55(2) is again divided into five sub-clauses. Under sub-clause
(ii) of clause (b) where the capital assets became the property of an assessee by any of the modes specified in sub-section (1) of section 49 and the capital asset became the property of the previous owner before the 1 st day of April, 1981, the cost of acquisition means the cost of the capital asset to the previous owner or the fair market value of the asset on the 1 st day of April, 1981, at the option of the assessee. After having a look at the relevant provisions of the Act, now it is submitted that the case of the assessee clearly falls under the provisions of section 49(1} read with section 55(2)(b)(ii) of the Act. It shall be appreciated by Your Honour that the assessee had received the property under a Will Deed dated 03-081992 executed by her mother-in-law namely Late Smt. Savitaben Wlo Shri Sumanlal Chudgar who passed away on 29-08-1992. A copy of the Will Deed and Death Certificate of Late Savitaben Chudgar, as placed on the record of the learned AO, are placed at PB Page No. 36 & 37 and Page No. 38 respectively, which is now being submitted before Your Honour. It shall be worthwhile to note that since the deceased Smt. Savitaben was intended to make a Will in respect of the subject plots in favour of the assessee and, therefore, during her life time only, she made two separate applications both dated 06-08-1991 to the President of the concerning Society i.e. Shri Vallabh Nagar Gujarati Housing Co-op. Ltd. and made request for transfer of the plots standing in her name in the society's records to the name of the assessee. Smt. Savitaben, the deceased, had also paid prescribed transfer fees to the society. In other words, the condition specified in the clause (ii) of sub-section (1) of section 49 stand satisfied in the instant case. It would not be out of place to mention here that all such facts were duly mentioned by the assessee in the statement showing computation of long-term capital gain as filed along with the return of income. In other words, the relevant facts with documentary evidences were duly placed on the record of the learned 13 AO. The fact regarding acquisition of the capital asset by the previous owner i.e. Late Smt. Savitaben Sumanlal Chudgar before 01-04-1981 is evidenced from the copy of two separate Lease Deeds executed by Shri Gujarati Co-operative Housing Society Ltd. on 01-04-1960 in favour of the above named lady. The copies of such Lease Deeds are placed at Pa.ges No. 34 & 35 of the Paper Book. The fact regarding inheritance of the property by the assessee from the above named lady has already stood established vide submission in the preceding para. In such circumstances, it shall be appreciated by Your Honour that the assessee was legally entitled to opt for the fair market value of the assets as on 01-04-1981 as contemplated under the provisions of section S5(2)(b)(ii) of the Act. It shall further be appreciated by Your Honour that all the documents establishing the claim of the assessee were duly placed on record of the learned AG. Although) the fair market valuation of the property as on 01-04-1981 is not a subject matter of dispute and the same is not a reason ci.ted by Your Honour in the impugned show cause notice, still it is submitted that in order to establish the fair market value of the property transferred, the assessee had submitted a copy of the valuation report obtained by her from a registered valuer, namely, Shri Pramod SaraJ, duly approved under the provisions of the Income-Tax Act, 1961. A copy of such Valuation Report was also submitted by the assessee along with her return of income and the same is also being placed at Page No. 39 to 52 of the Paper Book.
5.03 As regard furnishing of the necessary evidences in support of the completion of the construction of the house within the statutorily prescribed time limit of three years, it is submitted that the subject transfer of the asset took place on 19-07-2005 under a registered sale- deed and the assessee filed her return of income just within 1 9 months of such transfer and) therefore, there was neither any requirement nor any occasion for the assessee to furnish such evidences. However) under the provisions of section 54(2) of the Act, the assessee was required to make a deposit of the un-appropriated amount in a separate account in accordance with the Capital Gain Account Scheme, 1988, registered with the Office of the Sub-Registrar vide Registered Entry No. 1A/936 & 1A/937 on 14-06-1960. After obtaining the plots on lease basis, Smt. Savitaben had got a three storied residential house constructed on the said Plots. All such facts are evidenced from the para (1) (Internal Page No. 4J of the Sale Deed duly executed by the assessee in favour of 14 the purchasers of the subject property on 19-07-2005. A xerox copy of the Sale Deed is already placed on record of Your Honour, at Pages No.6 to 32 of our previous compilation.
2.NECESSITY FOR BEQUEATHING THE SUBJECT PROPERTY THROUGH WILL DATED 03-08-1992 During the course of the hearing, Your Honour had also required the assessee to explain that under what circumstances the deceased previous owner, Smt. Savitaben Chudgar bequeathed the subject plot and house thereon in her Will executed on 03-08-1992 in the name of the assessee when she had already transferred the same property during her life time i.e. on 0608-1991, in favour of the assessee by way of getting her name muted in the record of the Housing Society in which the said plots falls.
In this context, it is submitted as under:
i)It is an undisputed fact that the deceased Smt. Savitaben Chudgar was the absolute and registered owner (Lessee) of the subject plots.
She had obtained the lease as per the descriptions given in the preceding para from Gujarati Co-operative Housing Society Limited. It shall be pertinent to note that the 'Vallabh Nagar Colony' in which the subject plots are located has been developed by the above said Society only and the deceased was one of the members of the Society.
ii) After taking the Plots, on long-term lease basis, the name of Smt. Savitaben Chudgar was entered in the register of the concerning Sub Registrar of the property under the Indian Stamps Act, as owners/ lessee of the Plots. The name of Smt. Savitaben Chudgar was also entered in the records of the above named Housing society granted the lease to her.
v)That, since the transfer of the plots from the deceased to the assessee had not taken place in accordance with the provisions of the Transfer of Property Act, 1882 and therefore, in order to make the assessee as the perfect legal owner, Late Smt. Savitaben Chudgar in her Will executed on 03-08-1992 bequeathed the subject property in favour of the assessee. Merely because the deceased did not mention the facts regarding transfer of the plots in the name of the assessee in the society's record would not make her Will unbelievable which has been acted upon and remained unchallenged by all the legal heirs and _ 15 successors of the deceased. It shall not be out of place to mention here that a copy of the Will Deed was duly furnished by the legal heir of the deceased along with the first Return of Income i.e. for A. Y. 1993-94, filed after the death of the deceased with the Income-Tax OjJicer-2(3), Indore on 19-01-1994 vide Ack. No. 3994".
5. The ld. Commissioner on appraisal of aforesaid submissions and explanation of the assessee held as under:
"5.0 I have gone through the assessment records and submissions of the assessee.
5.1 From the copies of lease deed issued by the society, it is seen that plot Nos. 111 and 112 were allotted by the society to Smt. Savitaben vide lease deeds dtd. 01-04-60. As per condition No.4 of the lease deed, construction of the house was to be started within six months from date of block certificate or from the date of grant of lease i.e. 01-04-60. However, from the copy of valuation report dtd. 04-01-2006 obtained from Shri Pramod Saraf, registered valuer, it is claimed by the assessee that the house was constructed in the year 1957.Thus; the year of construction precedes the date of block certificate or grant of lease i.e. 01-04-60. In still other words, the assessee claims(i) that even though her mother in law had acquired the plots on 01-04-60; (ii) even though the said plots were transferred to the assessee by her mother in law on 06-08-1991; but: still, (iii) the assessee claimed that a three storeyed house was constructed on the said plots in the year 1957 with estimated life of 18 years only [copy of such report is enclosed with this order as Annexure "A"]. The contradictions in the dates exposes the manipulations in the story cooked up by the assessee This fact also exposes the falsities about the date or dates of acquisition of the property as briefed by the assessee to the said valuer Shri Pramod Saraf. This is more so because had the valuer Shri Saraf mistaken himself about the dates or year of construction of the three storeyed. Savitaben, what was the need of taking consent of her husband Chandrakant Parikh. This fact itself 16 proves that the assessee herself had full knowledge of real facts about the so called will of late Savitaben. She had to take consent of Chandrakant Parikh being the son and the legal heir of first category of late Savitaben in order to avoid any challenge by her husband to the so called will. 5.4 So far as the question of execution of the will is concerned it is claimed that the same has been acted upon and has remained unchallenged by all the legal heirs and successors of the deceased but no evidence in this behalf has been placed on record. Such contention in addition to non- production of original will vitiates the genuineness of the will.
5.5 From the details furnished by the assessee, it is seen that there is no mention of facts about investment in the construction of house on the plot numbers 111 and 112 sold by her vide sale deed dated 19-07-05. Such omission on her part makes the disclosure of facts more secretive and obscure calling for deeper probe and through investigations. The glaring discrepancy noted in the dates and year of construction shown by the assessee and given by the registered valuer Shri Pramod Saraf further aggravates the problem and exposes the assessee to have indulged in prodUCing the fabricated documents with a avowed purpose of evading the payment of correct tax on capital gains arising from the sale of the subject capital asset Le, the house built on plot numbers 111 and 112 of Vallabhnagar.
5.6 Considering the above facts and keeping in mind the ultimate motive of the assessee to evade payment of correct tax on capital gains by resorting to production of fabricated documents the order passed u/s 143(3) dtd. 19-12-2008 by the Income Tax Officer, 4(1), Indore is found to be both erroneous for making de novo assessment after giving a reasonable opportunity to the assessee. The Assessing Officer is directed to make proper enquiries on the following specific points while making de novo assessment :
(i) Correct date of acquisition of plot numbers 111 and 112 by late savitaben be as ascertained from the original records of the society.
(ii) Correct year of construction of house on the said plots be ascertained from municipal records. If the period of construction falls within the limits of section 149, appropriate action may be considered for examining the sources investment made therein.17
(iii) Original documents claimed to have been handed over by the assessee to the purchase of house may be called for by issue of summons and examined.
(iv) Original will be late Savitaben he obtained.
(v) Correct names and addresses of the two witnesses of the Will of late Savitaben be obtained and the witnesses examined u/ s 131.
(vi) Veracity of brokerage payment on sale of house be examined u/s 131.
In addition to above, the Assessing officer may make further enquiries as he deems fit keeping in view all the facts and circumstances of the case.
6. Accordingly the assessment order passed u/s 143(3) dated 19-12-2008 is being set aside being erroneous and prejudicial to the interest of revenue in view of detailed observation and findings recorded above and AO is directed to make fresh assessment in accordance with law denovo
3. after giving proper opportunities to assessee."
6. In the light of the above, we are supposed to examine what types of inquiries were made by the ld. Assessing Officer and the papers, documents and other details submitted by the assessee. The assessee filed its return u/s 139 of the Act on 28.2.2007 (paper book pages 17 to 21) and the assessment was framed u/s 143(3) of the Act vide order dated 19.12.2008 assessing the income at Rs.1,92,301/- against the returned income of Rs.1,67,301/-, meaning thereby, addition of Rs.25,000/- was made on account of low house hold withdrawals. The assessee in its return disclosed full 18 information including details regarding accrual of long term capital gain from transfer of plot with house situated at 111-112, Vallabh Nagar, Indore. If the computation of income (paper book page 18) is analysed, it is observed that the assessee duly declared the capital gain of Rs.45,807/- and the details of such long term capital gain was very much submitted along with the return of income itself which is available at pages 20 & 21 of the paper book. It is further observed that the details like description of plots, area of plots, constructed area of the house, date and mode of transfer, actual sale consideration received by the assessee and sale consideration adopted by the valuation authorities for stamp duty purposes, expenses incurred by the assessee for getting the transfer of the property, mode and year of the acquisition, fair market value of the property as on 1.4.1998, deemed cost of acquisition in the hands of the assessee, cost inflation index, indexed cost acquisition, details of investment along with its date and claim of deduction u/s 54EC, details of deposit in capital gain account scheme and details of investment in plots meant for residential 19 house for making deduction u/s 54 of the Act etc. were duly submitted before the Assessing Officer. It is pertinent to mention here that the assessee in its return for assessment year 2006-07 duly annexed the computation of income (pages 17 to 21 of paper book) duly mentioning the income from the long term capital gain on sale of land with house situated at 111-112, Vallabh Nagar, Indore showing the gain of Rs.45,807/- along with documents containing such details. These details are not being reproduced here, being matter of record. Even otherwise, the Assessing Officer made specific inquiry on the issue of sale of asset and vide special question no.8 in the questionnaire specifically asked the assessee to furnish the complete details of long term capital gain. For ready reference, the details, required by the Assessing Officer are reproduced hereunder:
"8. With regard to sale of asset please provide the names and address of the person to whom the asset has been sold and the mode of receipt, the bank etc. in which the money has been deposited.
In case of sale of immovable property, give purchase document of the said property. Also produce copy of bank account in which the sale proceeds have been deposited by the company. Please furnish date wise narration of the entries appearing in the bank account.20
In case of claim of exemption u/s 54B/D/G etc. please justify the claim with evidence and the sections in which the same have been claimed."
Pursuant to the aforesaid inquiry, the assessee filed detailed reply on each and every issue vide letter dated 26.11.2008 which was duly acknowledged by the Assessing Officer. The copy of the same is available at pages 83 to 86 of the paper book filed by the assessee. The details of construction of the house are available at pages 87 & 88 of the paper book.
7. In the light of the above, now question arises whether one of the possible views was taken by the Assessing Officer and if yes, whether it can be reviewed by invoking revisionary powers u/s 263 by the ld. Commissioner. The landmark decision on this issue is from Hon'ble Apex Court in Malabar Ind. Co. Ltd. vs CIT; 243 ITR 83 (SC) wherein it was claery held that the condition precedent for invoking the jurisdiction u/s 263 of the Act is that the order should be erroneous and prejudicial to the interest of the Revenue and "prejudicial to the Revenue" must be read in conjunction with an erroneous order, meaning thereby, the ld. Commissioner has to be satisfied of these twin 21 conditions. While coming to this conclusion, the Hon'ble Apex Court affirmed the decision of Hon'ble Kerla High Court passed in 198 ITR 611 (Ker) and also considered the following decisions:
CIT vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom); CIT vs. Minalben S. Parikh (Smt.) (1995) 215 ITR 81 (Guj); CIT vs. Narayana Pai (T.) (1975) 98 ITR 422 (Kar); CIT vs. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC). Dawjee Dadabhoy and Co. vs. S.p. Jain (1957) 31 ITR 872 (Cal); Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC); Tara Devi Aggarwal (Smt.) vs. CIT (1973) 88 ITR 323 (SC).
The Hon'ble jurisdictional High Court in the case of CIT vs. Ratlam Coal S. Company; 171 ITR 141 (MP) also held identically. The decision from Hon'ble Gujarat High Court wherein the Assessing Officer considered the material on record and framed the assessment. It was held that the ld.
Commissioner is not justified in invoking the jurisdiction u/s 263 of the Act. While coming to this conclusion, the Hon'ble Court applied the decision from Hon'ble Apex Court in Malabar Ind.
Co. Ltd. vs. CIT (supra) and also considered CIT vs. Shri Manju 22 Natheshware Packing Products and Camphor Works (231 ITR
53) (SC). Identical ratio was laid down by Hon'ble Kerala High Court in Paul Mathews & Sons vs. CIT (263 ITR 101) (Ker).
8. Now question arises whether the assessment order is prejudicial to the interest of the Revenue, we find that the long term capital gain of Rs.45,807/-, shown by the assessee in her computation of income, is based upon supporting documents and not based on presumption as the provisions of Section 45 and determination of consideration is in accordance with Section 48 r.w.s. 50-C of the Act. For computing capital gain u/s 45 of the Act, broadly, the following factors are to be considered:
a) Existence of a capital asset and its transfer during the relevant previous year.
b) Determination of consideration for the transfer in accordance with Section 48 read with Section 50C of the Act.
c) Determination of the expenditure under Section 48 of the Act.
d) Ascertainment of the mode of acquisition and the proof thereof if the capital asset is acquired by an assessee by way of Will as contemplated under Section 49(1)(ii) of the Act.
e) Establishment of the fact, relating to the acquisition of the capital asset by the previous owner before 1.4.1981 for the purpose of computing cost of acquisition u/s 55(2)(b)(ii) of the Act.
f) Ascertainment of the fair market value, as on1.4.1981, of the capital asset under transfer, where the capital asset became the property of the assessee 23 under Will and the previous owner acquired the capital asset before 1.4.1981, in accordance with Section 55(2)(b)(ii) of the Act.
g) Determination of indexed cost of acquisition under the second proviso to Section 48 of the Act read with Explanation (iii) to Section 48.
h) Determination of long term capital gain subject to grant of deductions conferred under s. 54, 54B, 54EC, 54F etc.
i) Determination of deduction under s. 54EC on the basis of investment in the specified assets.
j) Determination of deduction under s. 54F on the basis of deposit in the capital gain account scheme or utilization for the specific purpose."
In the light of the above, it can be said that the necessary details were duly filed by the assessee along with its return, and thereafter when the Assessing Officer made enquiries and questionnaire was also issued to the assessee, the sale deed executed on 19.7.2005 (paper book pages 22 to 29) evidencing the existence of capital asset and the name of the assessee is clearly mentioned in the sale deed in the capacity of the seller during the previous year relevant to assessment year 2005-06. So far as determination of consideration for transfer in accordance with Section 48 r.w.s. 50C of the Act is concerned, it is observed that the amount of the sale consideration (paper book pages 20 & 21), received by the assessee, from the sale of property at Rs.42,11,000/- is corroborative by para 7 (internal 24 page 10) of the sale deed (paper book page 31), meaning thereby, the assessee suo moto offered the amount of consideration. The valuation of the property at Rs.42,36,500/- by the concerned authorities for stamp duty purposes is further evidenced by receipt (paper book page 23) issued by such authority. The consideration of the expenditure is available at page 39 of the paper book along with the expenses on registration (paper book pages 22 & 23). Likewise, the payment of brokerage of Rs.84,000/- and other expenses were also filed by the assessee. The copy of the lease deed (page 51 & 52 of paper book) relating to acquisition of capital asset by the previous owner for the purposes of computing cost of acquisition u/s 55 (2) (b) (ii) of the Act are also available on record to the effect that the subject property was acquired by the previous owner namely, Smt. Savita Ben Chudgar before 1.4.1981, although the lease deeds were executed on 1.4.1960. During hearing, it was claimed by the learned counsel for the assessee that Smt. Savita Ben started construction on the subjected plots for which our attention was invited to pages 25 93 to 97 of additional paper book as the previous owner got the site approved on 19.10.1957 (additional paper book page 91) and obtained permission for construction from Indore Municipal Corporation on 13.11.1957 (page 92 of additional paper book), the previous owner constructed the house in the year 1959 and made a request for issuance of completion certificate vide letter dated 19.5.1959 (additional paper book page 98), and finally the Indore Municipal Corporation issued completion certificate in favour of previous owner on 9.7.1959 (additional paper book page 99), therefore, it is clear that the previous owner constructed the property before 1.4.1981, consequently, the observation of the ld. Commissioner contained in para 5.1 of the impugned order is of no relevance.
9. Once it is established that the assessee acquired the property from previous owner even on 6.8.1991 (date of transfer in society record) or on 29.7.1992, the only question remains whether the indexed cost of acquisition is as per proviso to section 48 of the Act read with Explanation. It is seen that after taking the cost of alcquisition at Rs. 800300/-, 26 the assessee applied the cost of inflation index for the financial year 1992-93 in which she has bequeathed the property and also for the financial year 2005-06 in which the property was transferred, therefore, the index cost of acquisition was rightly computed. Smt. Savita Ben Chudgar (previous owner) passed away on 29.7.1992 and the subject property got vested with the assessee on 29.7.1992 (FY 1992-93) as claimed by the assessee or on 6.8.1991 as observed by the Assessing Officer, meaning thereby, the cost inflation index, applied by the assessee for later FY cannot be said to be prejudicial to the interest of the Revenue for the reason that the assessee applied cost inflation index of FY 1991-92. Out of the capital gain of Rs.19,52,707/-, the assessee claimed deduction u/s 54EC of the Act in respect of investment of Rs.10 lacs made in specified asset i.e. bonds of Rural Electrification Corporation Limited as the copy of such bonds was annexed with the return of income and even has not been doubted by the ld.
Commissioner. Out of the remaining capital gain, the assessee deposited Rs.6,50,000/- with Vijaya Bank in accordance with 27 "capital gain account scheme 1988" for the purpose of constructing the residential house on a plot purchased on 29.7.2006 (before the due date of filing the return i.e. 31.7.2006). The copy of the purchase deed of the plot was also annexed with the return (pages 70 to 78 of the paper book). In view of these facts, the decision from Hon'ble Bombay High Court in Gabriel India Ltd. (203 ITR 101) (Bom) and Hon'ble Jurisdictional High Court in Associated Food Products P. Ltd. (2006) 5 ITJ 299 clearly held that before invoking the jurisdiction u/s 263, the ld. Commissioner is have to be satisfied about the twin conditions. So far as the argument of the ld. CIT/DR that the assessment order is too short, we are not agreeing with this assertion because the only requirement for framing the assessment or passing the order is that whether due inquiry has been made and the relevant documents/necessary details are considered or not. As discussed above, since the assessment was framed after making due inquiries and appreciation of details and also application of mind, therefore, it is not necessary that always a 28 lengthy order is only to be passed. It is not the case that the assessment was passed in slip shot manner. The ld. Assessing Officer, while framing the assessment also performs the judicial functions. The ld. Commissioner while invoking jurisdiction u/s 263 also has its own limitation and the order can be interfered with only when it is erroneous and prejudicial to the interest of the Revenue. The powers in terms of Section 263(1) of the Act is in the nature of supervisory jurisdiction and same can be exercised only if the twin conditions are fulfilled. An order of assessment, passed by ITO, therefore, should not be interfered with only because another view is possible. Our view is fortified by the decision from Hon'ble Apex Court in CIT vs. Green World Corporation (2009) 181 Taxman 111/314 ITR 81 (SC). The expression "prejudicial to interest of revenue" must be regarded as involving a conception of facts or orders which are subversive to the administration of the Revenue and there must be grievous error in the order, which might set a bad trend or pattern for similar assessment. The scope of interference u/s 263 is not to set aside merely unfavourable orders and bring to 29 tax some more money into the treasury. Our view is further fortified by the decision from Hon'ble Madras High Court in Venketakrishana Rice Company (163 ITR 129) (Mad). Admittedly, the assessee framed in undue haste or without inquiry are prejudicial to the interest of Revenue as was held in Thalibai F. Jain vs. ITO (101 ITR 1) (Kar) and the ratio laid down in CIT vs. Pushpa Devi (164 ITR 639) (Pat) and Gee Vee Enterprises vs. Addl. CIT (99 ITR 375) (Del). However, the assessment was framed after making due inquires and on appreciation of various documents, therefore, it can be said that ld. Commissioner erred in assuming revisional jurisdiction as the assessment order is neither erroneous nor prejudicial to the interest of Revenue especially when one of the possible view was taken that too, on consideration/examination of material filed by the assessee. Therefore, the impugned order is reversed.
Finally, this appeal of the assessee is allowed. 30 Order was pronounced in the open in the presence of learned representatives from both the sides at the conclusion of the hearing.
Sd sd (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 21.11.2011
Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File !vys!