Income Tax Appellate Tribunal - Chandigarh
Sh. Gurmail Singh, Jagraon vs Assessee on 28 February, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'A' CHANDIGARH
BEFORE SHR I D.K.SRIVASTAVA, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No.235 /Chd/2011
Assessment Year: 2006-07
Sh.Gurmail Singh, Vs. The D.C.I.T.,
S/o Sawan Singh, Circle Moga,
175, Mohalla Hargobindpura, Moga.
Jagraon.
PAN No. AIMPS1331C
ITA No.236 /Chd/2011
Assessment Year: 2006-07
Sh.Kulwant Singh, Vs. The D.C.I.T.,
S/o Sawan Singh, Circle Moga,
Mohalla Hargobindpura, Moga.
Jagraon.
PAN No. ADLPS1643P
ITA No.300 /Chd/2011
Assessment Year: 2006-07
Sh.Bhupinder Singh, Vs. The Income-tax Officer-III,
S/o Gurmel Singh, Moga HQ,
C/o Smile Dental Care, Jagraon.
Lajpat Road, Jagraon.
PAN No. ADHPS4145K
ITA No.301 /Chd/2011
Assessment Year: 2006-07
Sh.Ramandeep Singh, Vs. The D.C.I.T.,
S/o Kulwant Singh, Circle Moga,
218, Mohalla Hargobindpura, Moga.
Jagraon.
PAN No. ADNPS1329J
ITA No.302 /Chd/2011
Assessment Year: 2006-07
Sh.Harcharan Singh, Vs. The D.C.I.T.,
S/o Sawan Singh, Circle Moga,
174-175, Mohalla Hargobindpura, Moga.
Jagraon.
PAN No. ADNPS1330D
2
ITA No.303 /Chd/2011
Assessment Year: 2006-07
Sh.Satpal Singh, Vs. The Income-tax Officer-IV,
S/o Gurdev Singh, Moga HQ,
C/o Harcharan Singh & Bros., Jagraon.
Jagraon.
PAN No. ADNPS1328K
ITA No.304 /Chd/2011
Assessment Year: 2006-07
Sh.Gurpreet Singh, Vs. The D.C.I.T.,
S/o Gurdev Singh, Circle Moga,
Through G.P.A. Satpal Singh, Moga.
C/o Sardar Cloth House,
Jagraon.
PAN No. BNXPS3720A
ITA No.305 /Chd/2011
Assessment Year: 2006-07
Sh.Sukhpal Singh, Vs. The D.C.I.T.,
S/o Harcharan Singh, Circle Moga,
174-175, Mohalla Hargobindpura, Moga.
Jagraon.
PAN No. ADNPS1327G
ITA No.306 /Chd/2011
Assessment Year: 2006-07
Smt.Narinder Kaur, Vs. The D.C.I.T.,
W/o Kulwant Singh, Circle Moga,
238, Mohalla Hargobindpura, Moga.
Jagraon.
PAN No. ABYPK0536A
(Appellant) (Respondent)
Appellant by : S/Shri Subhash Aggarwal/Ashish Aggarwal
Respondent by: Shri Binod Kumar, CIT DR
O R D E R
PER BENCH The nine appeals filed by different assessees are against the order/s of the Commissioner of Income-tax, dated 28.02.2011, relating to 3 a s s e s s m e n t ye a r s 2 0 0 6 - 0 7 a g a i n s t t h e o r d e r p a s s e d u n d e r s e c t i o n 2 6 3 o f the I.T. Act, 1961.
2. Common Grounds of Appeal have been raised in all the appeals which read as under :
i) That the initiation of proceedings u/s 263 by CIT-III are against the facts and bad in law.
ii) That the ld. CIT-III has failed to point out how the order passed by the DCIT is erroneous in as much as prejudicial to the interest of the revenue.
iii) That it has been ignored that the DCIT passed the order after due application of mind.
iv) That the ld. CIT failed to get the structure and the amount spent on the structure verified inspite of the specific request made to the CIT(A) and further erred in computing the long term capital gains without giving any credit for the amount spent on the construction as per the Inspector's report filed on the directions of the AO and duly verified by the AO.
v) That the CIT-III has erred in enhancing the LTCG by a sum ofRs.1,04,628/- and has further erred in directing the AO to recomputed the tax and interest payable by the assessee on the enhanced income.
vi) That the ld. CIT-III has erred in initiating the proceedings u/s 271(1)(c) of the Income-tax Act,1961.
3. The present nine appeals involving same issue were heard together and are being disposed of by this consolidated order for the sake of convenience.
4. The issue raised in the appeals is against the invoking of jurisdiction u/s 263 of the Income-tax Act. A reference is made to the 4 facts arising in ITA NO.235/Chd/2011 in order to adjudicate the issue raised before us.
5. The brief facts in ITA NO.235/Chd/2011 are that the assessee had shown income from long term capital gain on sale of land in the return of income filed on 26.09.2006. The assessment was completed u/s 143(3) of the Income-tax Act vide order dated 29.09.2008 in which the long term capital gain was assessed after rejecting the claim of the assessee u/s 54F of the Income-tax Act. The C IT on the perusal of the assessment records noted that the AO had passed the order accepting the cost of acquisition of the land sold by it, without making proper enquiry. The show cause notice was issued to the assessee u/s 263(1) of the Income-tax Act in which it was requisitioned by the CIT as under :
"The DCIT Circle Moga passed order in this case for A.Y. 2006-07 u/s 143(3) of the IT Act on 29.9.2008. In this case the assessee had shown long term capital gain on sale of land. The cost of land purchased in February 1978 was shown at Rs.13,570/- and the amount spent on raising the level of land, construction of boundary wall, building a room and putting a gate etc. in the financial year 1980-81 was taken at Rs.2,00,000/-. His share of improvement of land out of Rs.2,00,000/- was taken by the assessee at Rs.30,700/-. Thus the cost of the land including improvement was taken by the assessee at Rs.56670/-. The indexed cost was taken by the assessee at Rs.276,680/- (55670x497/100). The AO vide letter dated 26.8.2008 had asked the assessee to furnish the basis of indexed cost calculated at Rs.276680/- with documentary evidence like purchase deed indicating cost, date of purchase and ownership alongwith ratio of his share in the property. The assessee vide letter dated 6.9.2008 furnished the calculation of the indexed cost, the gist of which is given above. It is also noticed that vide order sheet noting dated 13.8.08 the assessee was asked to give the basis of indexed cost with documentary evidence."5
6. The C IT vide para 2 of the said notice referred to the report submitted by the Inspector of Income Tax during assessment proceedings, which is reproduced at page 2 of the order u/s 263 of the Act and noted that except for the report, there was nothing on record to show on what basis and on basis of which documents, the Inspector had calculated the cost of construction at Rs.200,850/-. As per the CIT, the report of the Inspector was without any verifiable basis and the AO had accepted the said report without appl ying his own mind. The C IT further observed that "The AO failed to examine and enquire the basis of cost of improvement taken by the assessee at Rs.2,00,000/-." The CIT also noted the assessee to have failed to furnish any evidence of improvement of land and supporting evidence for the expenses incurred and even the Sale Deed was found not to have mentioned about the alleged improvement on the land and the sale price also did not refer to the boundary wall, gate room/structure on the land. The C IT was of the view that the AO had passed the order in a perfunctory manner and was erroneous in accepting the claim of the assessee, where the assessee had no evidence to furnish in respect of cost. Thus, the impugned order passed by the AO, as per the CIT, was erroneous and prejudicial to the interests of the revenue and an opportunit y was afforded to the assessee to show cause as to why the impugned order be not enhanced/modified/cancelled or set aside for fresh assessment u/s 263 of the Act. The said notice is reproduced by the C IT at pages 1 to 3 of his order passed u/s 263 of the Act.
7. The assessee vide his repl y dated 19.1.2011 pointed out that detailed enquiries were made by the AO in regard to the various aspects of the case as was evident from the order-sheet entries of the AO. A reference was made to a specific query raised by the AO during the assessment proceedings vide notice dated 26.06.2008 in which the nature of land sold and also the basis of indexed cost including the documentary evidence like purchase deed was 6 asked for. The assessee had filed a reply dated 6.9.2008 in which the cost of the propert y alongwith cost of construction of boundary wall/gate etc. year- wise was explained. The total cost of land purchased in Feb.,1978 was Rs.18240/-. The amount spent on the additional construction was Rs.2,00,000/- in the financial year 1980-81 and the share of the assessee in the said Rs.2,00,000/- was 97/684/- i.e. Rs.28,363/-. The said cost was further indexed to compute the long term capital gain on the sale of asset. The ld. AR further pointed out that it was not denied as the abovesaid items like boundary wall/room/gate etc. existed even at the time when the assessment proceedings were taken up. The AO had deputed the Inspector to verify the above facts and also to make estimate of the expenditure incurred and after due verification, the AO framed the assessment. The assessee, thus pointed out that such assessment was made after enquiry and due application of mind, it cannot be said that the order passed by the AO was erroneous and prejudicial to the interests of revenue. In a subsequent communication filed before the CIT, it was pointed out that in addition to the AO, the full facts were in the knowledge of Addl.CIT, Moga Range, Moga who was monitoring the cases and had issued directions u/s 144A of the Act. The C IT held that though queries were made by the AO with regard to the indexed cost including the cost of improvement, but assessee had not furnished any evidence of incurring any financial cost over the cost of improvement claimed and onus was not discharged by the assessee. Further there was nothing on record that the AO had made any detailed enquiry and verification on the aspect of cost of improvement except for the copy of report of the Inspector, there was no evidence that the boundary wall, gate existed on the plot. The C IT thus held that the order passed by the AO was erroneous and prejudicial to the interests of revenue and the income from long term capital gain was under assessed. Accordingl y, the CIT held that there was no basis for deduction of cost indexed on account of improvement of Rs.152579/- and the income from long 7 term capital gain was enhanced by the said amount. The assessee was directed to take the income from long term capital gain at the enhanced figure while re- computing the total income of the assessee, while giving effect to the order passed u/s 263 of the Act. The AO was directed to re-compute the tax and interest payable by the assessee on the enhanced income and also penalt y proceedings were initiated u/s 271(1)(c) of the Act.
8. The ld. AR for the assessee made a reference to the assessment order passed u/s 143(3) of the Act and pointed out that the proceedings were conducted by the AO on various dates of hearing under which queries were raised and replies were furnished before the AO. A reference was made to the notice issued by the AO placed at page 7 of the Paper Book and the replies furnished at pages 8-9 and thereafter at page 11 of the Paper Book. The ld. AR for the assessee also referred to the directions issued u/s 144A of the Act by the Addl.C IT, Moga placed at pages 12-14 of the Paper Book. The assessee has also annexed with the Paper Book photo copy of the order-sheet entries at pages 17-20 of the Paper Book. Further a reference was made to the report of the Inspector submitted during the assessment proceedings in which it was reported that the boundary wall existed on the date of his visit which was after the date of sale of the said propert y. Ld. AR for the assessee placed reliance on the various case laws as under:
1. CIT V Munjal Castings (2008) 303 ITR 23 (P&H)
2. Mrs. Khatiza Oomerbhoy v ITO (2006) 100 ITD 173 (Mum)
9. The Ld. DR for the Revenue placed reliance on the order of the CIT passed u/s 263 of the Act.
10. We have heard the rival contentions and perused the record. The C IT under s ect i on 263 o f t he Act i s em pow ered t o r evi s e s uch order pas s ed b y t he As s es s i ng O ffi c er whi ch a re e rrone ous and prej udi ci al t o t he i nt eres t of 8 R evenue. The t wi n condi t i ons of t he order bei n g er roneous and prej udi ci al t o t he i nt eres t of Revenue a re t o be s at i s fi ed s i m ul t aneous ly for t he C IT t o ex erci s e hi s powers u/ s 263 of t he Act . If ei t her of t h e co ndi t i ons are not s at i s fi ed, t hen t he C IT cannot t ak e re co urs e t o s ect i on 263 of t he Act .
11. The Hon 'bl e S uprem e C ourt i n M al aba r Indus t ri es C om pan y Lt d v C IT [ 243 ITR 83 (S C )] hel d as under: -
" T her e can be no doubt t hat t he provi s i on cannot be i nvoked t o cor r ect each and ever y t ype of mi s t ake or er r or commi t t ed by t he As s es s i ng Of f i ce r , i t i s onl y w hen an or der i s er r oneous t hat t he s ect i on w i l l be at t r act ed. An i ncor r ect as s umpt i on of f act s or an i ncor r e ct appl i cat i on of l aw w i l l s at i s f y t he requi r ement of t he or der bei ng er r oneous . In t he s ame cat egor y f al l or der s pas s ed w i t hout applyi ng t he pr i nci pl es of nat ur al j us t i ce or w i t hout appl i cat ion of mi nd.
T he phr as e " pr ej udi ci al t o t he i nt er es t s of t he Re venue"
i s not an expr es s i on of ar t and i s not def i ned i n t he Act . Under s t ood i n i t s or di nar y meani ng i t i s of w i de i mpor t and i s not conf i ned t o l os s of t ax. The Hi gh C our t of C al cut t a i n Daw j ee Dadabhoy and C o. v. S. P. Jai n [ 1957] 31 IT R 872, t he Hi gh C our t of K ar nat aka i n C IT v. T . N ar ayana Pai [ 1975] 98 IT R 422, t he Hi gh C our t of Bombay i n C IT v. Gabr i el Indi a L t d. [ 1993] 203 IT R 108 and t he Hi gh C our t of Guj ar at i n C IT v. Smt . Mi nal ben S. Par i kh [ 1995] 215 IT R 81 t r eat ed l os s of t ax as pr ej udi ci al t o t he i nt er es t s of t he Reven ue.
Mr . Abr aham r el i ed on t he j udgment of t he Di vi s i on Bench of t he Hi gh C our t of Madr as i n Venkat akr i s hna Ri ce C ompany v. C IT [ 1987] 163 IT R 129 i nt er pr et i ng " pr ej udi ci al t o t he i nt er es t s of t he R e venue." T he Hi gh C our t hel d (page 138) : " In t hi s co nt ext , i t mus t b e r egar ded as i nvol v i ng a concept i on of act s or or der s w hi ch ar e s ubver s i ve of t he admi ni s t rat i on of r evenue. T her e mus t be s ome gr i evous er r or i n t he or der pas s ed b y t he Incom e-t ax Of f i cer , w hi ch mi ght s et a bad t r end or pat t er n f or s i mi l ar as s es s ment s , w hi ch on a br oad r eckoni ng, t he C ommi s s i oner mi gh t t hi nk t o be pr ej udi ci al t o t he int er es t s of Revenue admi ni s t r at i on." In our vi ew , t hi s int er pr et at i on i s t oo nar r ow t o mer i t accept anc e. T he s ch eme of t he Act i s t o l evy and col l ect t ax i n accor danc e w i t h t he pr ovi s i ons of t he Act and t hi s t as k i s ent r us t ed t o t he R evenu e. If du e t o an er r oneous or der of t he Income -t ax Of f i cer , t he Re venue i s l os i ng t ax l aw f ul l y payabl e by a per s on, i t w i l l cer t ai nl y be pr ej udi ci al t o t he i nt er es t s of t he Reven ue" .
9T he phr as e " pr ej udi ci al t o t he i nt er es t s of t he Re venue"
has t o be r ead i n conj unct i on w i t h an er r oneous or der pas s ed by t he As s es s i ng Of f i cer . Ever y l os s of r evenue as a cons equ ence of an or der of t h e As s es s i ng Of f i cer cannot be t r eat ed as pr ej udi ci al t o t he i nt er es t s of t he Revenu e. For exa mpl e, w hen an I ncome-t ax Of f i ce r adopt ed one of t he cour s es per mi s s i bl e i n l aw and i t has r es ul t ed i n l os s of Revenue ; or w her e t w o vi ew s ar e pos s i bl e and t he Income-t ax Of f i cer h as t aken one vi ew w i t h w hi ch t he C ommi s s i oner does not agr ee, i t cannot be t r eat ed as an er r oneous or der pr ej udi c i al t o t he i nt er es t s of t he Rev enue, unl es s t he vi ew t aken by t he Incom e-t ax Of f i cer i s uns us t ai nabl e i n l aw ."
12. Furt h er, t he Hon'bl e S uprem e C ourt i n M ax Indi a Lt d [ 295 ITR 28 2 (S C ) ] uphel d t he j udgm ent of t he Hon 'bl e P unj ab & H ar yana Hi gh C ourt i n t he s ai d cas e, wh ere i n i t was hel d t hat i f t he vi ew ex pres s ed b y t he As s es s i n g Offi ce r was a pos s i bl e vi ew, t he C IT w oul d have no j uri s di ct i on t o i nt erfer e b y wi t h s uch a vi e w ex erci s i ng t he po wer u/ s 263 of t he Act . The Hon 'bl e S uprem e C ourt i n the s ai d cas e furt he r cl ari fi ed t hat whe re t wo vi ews are pos s i bl e and t he As s es s i ng Of fi cer h as t aken one vi ew wi t h whi ch t he C IT does not agr ee, t he order of t he As s es s i ng Of fi cer can not be t reat ed as erroneous and p rej u di ci al t o t he i nt er es t of R evenu e, unl es s t he vi ew t aken b y t he As s es s i ng Of fi cer w as uns us t ai na bl e. The C ourt hel d as under :
"The phrase "prejudicial to the interests of the Revenue" in Section 263 of the Income-tax Act,1961, has to be read in conjunction with the expression "erroneous" order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when the AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law."
13. Similar view has been expressed by the Hon'ble Punjab & Haryana High Court in CIT V Munjal Castings, 303 ITR 23 (P&H).
10
14. The Hon'ble Delhi High Court in the CIT Vs. Honda Siel Power Products Ltd. reported in [(2010) 41 DTR (Del) 353] had exercised his jurisdiction u/s 263 of the Act in respect of deduction claimed u/s 80HHC of the Act in respect of the profits of business on which deduction was already allowed u/s 80IB of the Act. The Hon'ble Court referred to the ratio laid down by the Hon'ble Supreme Court in CIT v Max India Ltd (supra), Hari Iron & Trading Company [ 263 ITR 437 (P&H)] and the ratio propounded by Hon'ble Bombay High Court in Godrej Agrovet Ltd v ACIT [290 ITR 252 (Bom)] and held as under:-
18. From the aforesaid discussion, it is apparent that the expression prejudicial to the interest of revenue appearing in Section 263 has to be read in conjunction with the expression "erroneous" and that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. In cases where the Assessing Officer adopts one of the courses permissible in law or where two views are possible and the Income-tax Officer has taken one view, the Commissioner of Income-tax cannot exercise his powers under Section 263 to differ with the view of the Assessing Officer even if there has been a loss of revenue. Of course, if the Assessing Officer takes a view which is patently unsustainable in law, the Commissioner of Income-tax can exercise his powers under Section 263 where a loss of revenue results as a consequence of the view adopted by the Assessing Officer. It is also clear that while passing an order under Section 263, the Commissioner of Income-tax has to examine not only the assessment order, but the entire record of the profits. Since the assessee has no control over the way an assessment order is drafted and since, generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only those points are taken note of on which the assessee's explanations are rejected and additions / disallowances are made, the mere absence of the discussion of the provisions of Section 80IB(13) read with Section 80IA(9) would not mean that the Assessing Officer had not applied his mind to the said provisions. As pointed out in Kelvinator of India (supra), when a regular assessment is made under Section 143(3), a presumption can be raised that the order has been passed upon an application of mind. No doubt, this presumption is rebuttable, but there must be some material to indicate that the Assessing Officer had not applied his mind.
(underline provided by us)
15. The Hon'ble Court further held as under:-
22. From the decisions cited by the learned counsel for the revenue, it is apparent that failure to make an enquiry on the part of the 11 Assessing Officer would be a ground for invoking the powers under Section 263. The Supreme Court in Malabar Industrial Company Ltd (supra) also noted that the cases which fell in the category of non-
application of the principles of natural justice or non-application of mind would also satisfy the requirement of the order being erroneous and would, therefore, be amenable to correction under the revisional jurisdiction of Section 263 of the said Act. In the case of Gee Vee Enterprises [99 ITR 375 (Del), the Assessing Officer s order was held to be erroneous because the relevant enquiry was not made. Again, in Malabar Industrial Company Ltd (supra), the Assessing Officer s order was held to be erroneous because it had been made without application of mind and the Assessing Officer had merely accepted the entries in the statement of accounts filed by the assessee in the absence of any supporting material and without making any enquiry. Similarly, in Deepak Kumar Garg [299 ITR 435 (MP)] (supra), the Assessing Officer accepted the version of the assessee and for want of time did not conduct any proper enquiry. On these facts, it was found that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue.
23. In the facts of the present case, we find that there is no material to indicate that the Assessing Officer had not applied his mind to the provisions of Section 80IB(13) read with Section 80IA(9). The presumption that the assessment orders passed under Section 143(3) passed by the Assessing Officer had been passed upon an application of mind, has not been rebutted by the revenue. No additional facts were necessary before the Assessing Officer for the purpose of construing the provisions of Section 80IB(13) read with Section 80IA(9). It was only a legal consideration as to whether the deduction under Section 80HHC was to be computed after reducing the amount of deduction under Section 80IB from the profits and gains. There is no doubt that the Assessing Officer had allowed the deduction under Section 80HHC without reducing the amount of deduction allowed under Section 80IB from the profits and gains. He did not say so in so many words, but that was the end result of his assessment order. Since he was holding in favour of the assessee, as has been observed in Hari Iron Trading Company (supra) and Eicher Limited (supra), generally, the issues which are accepted by the Assessing Officer, do not find mention in the assessment order, it cannot be said that the Assessing Officer had not applied his mind. It cannot also be said that the Assessing Officer had failed to make any enquiry because no further enquiry was necessary and all the facts were before the Assessing Officer. Consequently, we are of the view that the decisions cited by the learned counsel for the revenue, wherein assessment orders wer e found to be erroneous for want of an enquiry or proper enquiry, would have no application to the present appeals.
It is also true that the validity of an order under Section 263 has to be tested with regard to the position of law as it exists on the date on which such an order is made by the Commissioner of Income-tax. From the narration of facts in the Tribunals order, it is clear that on the date when the Commissioner of Income-tax passed his orders under Section 263, the view taken by the Assessing Officer was in consonance with the views taken by several benches of the Income- 12
tax Appellate Tribunal. Therefore, the conclusion of the Tribunal that the Commissioner of Income-tax could not have invoked his jurisdiction under Section 263 of the said Act was correct. As a result, we answer the question against the revenue and in favour of the assessee by holding that the Income-tax Appellate Tribunal was correct in law in cancelling the order passed by the Commissioner of Income-tax under Section 263 and in restoring the order of the Assessing Officer by holding that the Assessing Officer had taken a possible view at the relevant point of time. The appeals are accordingly dismissed"
(Underline provided by us)
16. In the facts of the present case before us, the original assessment was completed u/s 143(3) of the Act. The issue considered by the AO was the income from long term capital gain declared by the assessee on the sale of its plot of land. The AO during the assessment proceedings had raised queries in respect of the said transaction including the cost of improvement. Further queries were raised by the AO in respect of the deduction claimed by the assessee u/s 54F of the act. The assessee jointl y owned the said propert y alongwith 8 other co-owners. The capital gains was computed after indexing the cost of land purchased in Feb.,1978 at Rs.18,240/- and further cost of construction totaling Rs.2,00,000/- spent in the financial year 1980-81. The share of the assessee in the said propert y was 97/684 and his share in the cost of construction was Rs.28,363. The additional cost of construction claimed by the assessee was on account of boundary wall/room and gate erected on the said plot of land. The AO, during the course of assessment proceedings deputed an inspector to verify the stand of the assessee and also to make estimate of the expenditure incurred. The inspector vide its report stated that the said items i.e. boundary wall/room/gate were existing on the said plot of land and he reported as under :
"As directed I visited the site of plot owned by S/Shri Harcharan Singhm Kulwant Singh, Gurmail Singh, Narinder Kaur, Ramandeep singh, Satpal Singh, gurpreet Singh, Bhupinder Singh and Sukhpal Singh (9 persons) all residents of Mohalla 13 Hargobindpura, Jagraon. The plot measuring 684 marlas sold by all the above persons is situated at Jagraon-Moga GT road at a distance of about 3 Kms from Jagraon on left side of the road. The plot has been covered with a boundary wall and one constructed with gate fitted at the front side of the road. One hand pump was also installed alongwith electric connection. At present there is no iron gate, hand pump and electric connection in the boundary wall of the plot. The boundary wall was erected during the year 1980 and other equipment such as hand pump and electric connection were also installed in the same year.
17. Thereafter, an estimate was made by the inspector viz-a-viz the cost of the boundary wall/gate etc. The AO, after making enquiries in the case accepted the stand of the assessee and computed the income from long term capital gain in the hands of the assessee, though the assessee was not allowed the benefit of deduction claimed u/s 54F of the Income-tax Act. In the entiret y of facts and circumstances of the case, where the AO after conducting enquiries, as referred in the assessment order, had adopted one of the view possible in the case and had come to a conclusion for computing the income in the hands of the assessee , we find no merit in the order of the C IT invoking jurisdiction u/s 263 of the Act. The CIT while issuing show cause notice had elaboratel y referred to the factual aspects considered by the AO during the course of the assessment proceedings viz-a-viz cost of land and the amount spent on cost of construction. In view of the ratios laid down by the Hon'ble Supreme Court and the Hon'ble Punjab & Haryana High Court as referred b y us in the paras herein above, we find no merit in the order passed by the C IT in holding the assessment order to be erroneous and prejudicial to the interests of revenue. The view taken by the AO in one of the possible view and cannot be held to be erroneous and further prejudicial to the interests of the revenue. Accordingl y, we cancel the order passed by C IT u/s 263 of the Income-tax 14 Act. The Grounds of Appeal raised by the assessee in ITA NO.235/Chd/2011 are thus allowed.
17. It is an admitted position that the facts in ITA Nos. 236, 300 to 306/Chd/2011 are similar to the facts in ITA No.235/Chd/2011. Therefore, the decision in ITA 235/Chd/2011 applies mutatis mutandis in ITA Nos. 236, 300 to 306/Chd/2011 also as all the abovesaid assessees are co-owners of the same piece of land.
18. In the result, appeal of the assessees in ITA Nos.235/Chd/2011 & ITA 236,300 to 306/Chd/2011 are allowed.
Order pronounced in the Open Court on 21 s t June 2011.
Sd/- Sd/-
( D.K.SRIVASTAVA) (SUSHMA CHOWLA)
JUDICIAL MEMBER JUDICIAL MEMBER
Dated : 21 s t June,2011
Poonam
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
By Order
Assistant Registrar, ITAT, Chandigarh