Smt Shilpa Desai , Indore V. The Pr CIT -1, Indore

ITA 112/Ind/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9930 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 30-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Cost of acquisition; Assessment record
• Section: 54; 263; 143(3); 54F; 195; 54EC

Judgement Text

Shilpa Desai ITA 112 of 2021 1 अपीलȣय अͬधकरण, इÛदौर Ûयायपीठ, इÛदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER (Virtual hearing) ITA No.112/Ind/2021 Assessment Year: 2015-16 Smt. Shilpa Desai, Indore PAN – ABZPD 4926 A ... Appellant Vs. PCIT-I, Indore ... Respondent Assessee by Shri Pankaj Mogra, CA Revenue by Shri P.K. Mitra, CIT Date of Hearing 23.12.2021 Date of Pronouncement 20.01.2022 O R D E R PER MANISH BORAD, A.M The above captioned appeal filed at the instance of the assessee is directed against the order u/s 263 of the I.T. Act of Ld. Pr. Commissioner of Income Tax-Indore-1 dated 31.3.2021. The assessee has raised the following grounds of appeal: Shilpa Desai ITA 112 of 2021 2 “1. That on the facts and in the circumstances of the case and in law, the Ld. Pr. CIT erred in setting aside the Assessment order as passed by the Ld. A.O. U/s 143(3) of the Act on 21.12.2017and invoking proceedings u/s 263 of the Act even when the said assessment order as passed by the A.O. was neither erroneous nor prejudicial to the interest of revenue. The present order as passed by the Ld. Pr. CIT u/s 263 without properly appreciating the facts of the case and submission made before him is wrong and bad-in-law. It is therefore prayed that the same requires to be quashed. 2. That on the facts and in the circumstances of the case and in law the Ld. Pr. CIT erred in setting aside the Assessment order as passed by Ld. A.O. u/s 143(3) of the Act just to re-verify the exemption as claimed by the assesse u/s 54F even when the entire documents related to the Income earned from Capital Gain on Sale of Shares and Sale of Land and deduction as claimed against the said capital gain earned by her u/s 54F/54EC of the Act were duly filed by her and have duly been verified by Ld. AO during the course of original assessment proceeding after full application of mind. The present order so passed by the Pr. CIT by invoking the provision of section 263 of the Act is therefore illegal and bad-in-law. It is therefore prayed that the same requires to be quashed. 3.1. That on the facts and in the circumstance of the case and in law, the Ld. Pr. CIT erred in setting Aside the original assessment passed by the Ld. A.O. and invoking the provision of section 263 of the Act to verify the transaction related to Deduction as claimed by the assessee u/s 54 F without properly appreciating the facts of the case and submissions made before him. The order as passed by the Ld Pr. CIT u/s 263 is therefore wrong and bad-in-law, the same requires to be quashed. 3.2 That on the facts and in the circumstance of the case and in-law ,the Ld. Pr. CIT erred in passing the Order u/s 263 of the Act by ignoring the on-line submission as filed by the assessee in response to the Show Cause notice as issued by him. The order as passed by the LdPr. CIT without considering the submission of the assesse is wrong and Bad–in-law, the same therefore requires to be quashed. 2. Facts, in brief as culled out from the records are that the assessee an individual and has filed her return of total income for Shilpa Desai ITA 112 of 2021 3 the year under appeal on 04.09.2015 declaring total income at Rs. 3,86,93,910/- which consists Income from Capital gain and Income from Other sources. In the said computation of total income, the assessee offered Income Under the head Income from Capital Gain of Rs. 3,57,50,372/- on sale of two assets and the working of the same is shown as under:- S.No. Particulars Amount Amount 01. Sale of Residential Plot 3,05,00,000 Less Indexed Cost of Acquisition 5120000 Expenses on Sales 2235000 73,55,000 Net Gain 23145000 Less: Amount Invested u/s 54F 30500000 23145000 Net Capital Gain from Plot (A) NIL 02. Sale of Shares in Hari Om Healthcare P. Ltd. 101049864 Less: Indexed Cost of Acquisition 48185700 Expenses on Sales 2000000 50185700 Net Gain 50864164 Less: Amount Invested u/s 54EC 5000000 Amount Invested u/s 54F Rs. 19695000 Restricted to 10113792 Net Capital Gain from Shares (B) 35750372 Total Capital Gain Offered for Tax 35750372 Shilpa Desai ITA 112 of 2021 4 (A +B) 3. The case of the assessee for the year under consideration was selected for limited scrutiny for following reason: S. No Reason for selection of case in scrutiny 1 Large Long Term Capital Gain 2 Large deduction claimed u/s 54B,54C,54D, 54G,54GA 4. An order u/s 143(3) of the Act was passed by the Ld. Assessing Officer on 20.12.2017 assessing the total Income of assessee at Rs. 3,86,93,910/- including the income under the head Long Term Capital Gain of Rs. 3,57,50,372/- and allowing deduction as claimed by the assessee u/s 54F/54EC of Rs. 3,82,58,792/-. Subsequently, a notice under section 263 of the Act was issued by the Ld. Pr. CIT-I, Indore on 19.03.20. Later on, again a fresh show cause notice was issued by the Ld. Pr. CIT, Indore on 15.03.2021 mentioning another reason for which he was of the opinion that the assessment order as passed by the assessing officer was erroneous and prejudicial to the interest of the revenue. Shilpa Desai ITA 112 of 2021 5 Both the show cause notices were duly replied by the assessee explaining that both the issues as mentioned in the above show cause notices were duly examined by the Assessing officer who has called for the necessary details which were duly filed and on the basis of which the Ld. A.O. has concluded the Assessment. However Ld. Pr. CIT did not consider the submissions as filed by the assessee and passed order u/s 263 of the Act on 31.03.21 by holding that the assessment order as passed by the Ld. Assessing officer dt. 21.12.2017 is erroneous in so far it is also prejudicial to the interest of revenue on account of passing the order without making required enquiries / investigations. 5. Against the above finding of Ld. Pr. CIT assessee is in appeal. Before us, the Ld. Counsel for the assessee referred to the written submissions in the light of the relevant judicial pronouncements and submitted that the order passed by the assessing officer can neither be treated as erroneous nor prejudicial to the interest of the revenue since the assessment order was passed by the assessing officer taking one of the possible views and that too after making Shilpa Desai ITA 112 of 2021 6 due inquiries. The assessing officer required the assessee to furnish all the requisite documentary evidences and the assessee complied with the same which proved that deduction as claimed under section 54F/54EC of the Act was acceptable as genuine during the course of assessment proceedings after conducting adequate inquires and hence, the Ld Pr. CIT, Indore was not justified in treating the order passed by the assessing officer as erroneous merely for the want of further inquiry. The view taken by the assessing officer during the course of assessment proceedings was a plausible view which cannot be treated as unsustainable in law. Hence, order passed under section 263 of the Income-Tax Act, 1961 by the Ld Pr. CIT, Indore is bad in law and therefore deserves to be quashed. 6. Per Contra, Ld. CIT (DR) vehemently argued reiterating the findings given by the Ld. Pr. CIT in the impugned order and has placed reliance on the decisions as quoted by the Pr. CIT in his order passed u/s 263. Shilpa Desai ITA 112 of 2021 7 7. We have heard rival contentions and perused the records placed before us and carefully gone through the facts of the case, submission filed and the decisions referred and relied by both sides. Through this appeal the assessee has raised various grounds but the sole grievance is against the finding of Ld. Pr. CIT in the order passed u/s 263 of the Act using his revisionary powers and holding the assessment order dated 20.12.2017 as erroneous and so far as prejudicial to the interest of Revenue. We find that the assessee has shown Income from Long Term Capital Gain of Rs. 7,40,09,164/- in her Income Tax return against which she claimed deduction u/s 54F and 54EC totaling to Rs. 3,82,58,792/- and after claiming said deduction she offered balance Amount of Capital Gain of Rs. 3,57,50,372/- as her Income under the head Income from Capital Gain and duly paid tax thereon. The case of the assessee for the year under consideration was selected in scrutiny and an order u/s 143(3) of the Act was passed by the Assessing Officer on 20.12.2017 assessing the total Income of assessee at Rs. 3,86,93,910/- including the income under the heads Long Term Capital Gain of Rs. 3,57,50,372/- and allowing Shilpa Desai ITA 112 of 2021 8 deduction as claimed u/s 54F/54EC of Rs. 3,82,58,792/-. The Ld. Pr. CIT has invoked the provisions u/s 263 of the Act and issued show cause notices to the assessee on two occasions mentioning the following reasons:- S. No. Date of Show Cause Notice issued u/s 263 Reason mentioned for issuance u/s 263 of Act 01. 19.03.2020 That as per provisions of Sec. 54F the capital gain arisen from Sale of Long Term Capital Asset and investment in the residential house is mandatory condition and deposit on Capital Gain Deposit scheme was not allowable as deduction u/s 54F. So claim made by the Assessee of Rs. 23145000/- u/s 54F is not in order. So the order as passed by the Ld. A.O. is erroneous in so far as prejudicial to the interest of revenue. 02. 15.03.2021 That as per the assessment records the issue related to deduction of Rs. 1,51,13,792/- u/s 54EC/54F were not verified by the A.O. during the Assessment proceedings. So the order as passed by the Ld. A.O. is erroneous in so far as prejudicial to the interest of revenue. 8. So far as the first issue as raised by the Pr. CIT in his notice dt. 19.03.2020 regarding whether an assessee can claim deduction u/s 54F in respect of Capital Gain arising from Sale of Long Term Capital Gain by way of depositing the amount of Capital Gain in the Shilpa Desai ITA 112 of 2021 9 Capital Gain Deposit scheme is allowable or not is concerned, the learned Counsel for the assessee drew our attention to the provision of Sub Clause (4) of Sec. 54F. That Sec 54F (4) of the Act which reads as under:- Sec. 54F(4) “The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset” 9. On reading the above, we find that sub Section (4) of the Shilpa Desai ITA 112 of 2021 10 Section 54 itself allows that an assessee can deposit the amount of the net consideration which is not appropriated by him towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, before furnishing such return in an account in any such bank or institution as may be specified. In the case of assessee, we find the assessee has duly deposited an amount of Rs 5,01,95,000/- in the Capital Gain Account scheme Account maintained with Bank of Baroda A/c No.05000100020462. Details of the same were also produced before the A.O. and were duly verified by A.O. The same were also produced before us. Therefore, we find that Income Tax Act itself allows that an assessee can deposit the amount of Net Sale Consideration in the Capital Gain Deposit Scheme and said issue has duly been examined by the Ld. A.O. himself and in light of provisions of Sec. 54 itself leaves no room for the Pr. CIT to assume jurisdiction u/s 263 of the Act on this issue. 10. Now coming to the issue as raised by the Pr. CIT in his notice Shilpa Desai ITA 112 of 2021 11 dt. 15.03.2021 regarding claim of deduction as taken by the assessee in her income tax return u/s 54EC/54F of Rs. 1,51,13,792/- against the Capital Gain arising from Sale of Assets has not been verified by the A.O. In this respect, learned Counsel for the assessee drew our attention to the questionnaire issued by the Ld. A.O. on 26.09.2016 as placed on 6 and 7 of the paper book filed, submissions filed by assessee during the course of assessment proceedings which are placed on pages 178 to 183 of the paper book, the relevant supporting documents filed during the Assessment proceedings which are available on pages 184 to 195 of the paper book and the Assessment order available on record. Our attention was also drawn by the learned Counsel for the assessee to the fact that the case of the assessee for the year under consideration was selected in limited scrutiny, and reason for which it was taken for scrutiny is listed as under: - S. No. Reason for selection of case in scrutiny 1 Large Long Term Capital Gain 2 Large deduction claimed u/s 54B,54C,54D, 54G,54GA Shilpa Desai ITA 112 of 2021 12 Thus, learned Counsel for the assessee contended that during the course of Assessment proceedings the A.O has duly raised the queries in respect of Long Term Capital Gain as earned by the assessee and the claim for deduction as taken u/s 54F and 54EC of the Act. It was also pointed out to us that assessee has duly complied with the said queries raised by the Ld. A.O. and has filed all the relevant documents explaining the details of capital gain as well as the deduction as claimed by her u/s 54F and 54EC of the Act. We find that the entire details in respect of Capital Gain earned by her and the details related to deduction as claimed by her u/s 54EC and 54F of the Act are also available on record. Copy of REC Bonds towards Investment made u/s 54EC and Copy of amount deposited in Capital Gain Account scheme for claiming the deduction u/s 54F are also duly available on records and copies of the same were also filed before us by the assessee. We find that the assessee in her detailed reply during the course of assessment proceedings itself has duly explained about the amount utilized by her from Capital Gain Deposit Scheme towards the Purchase/Construction of New residential House. We find that the Shilpa Desai ITA 112 of 2021 13 assessee has duly made payment for investment and construction of New Residential house out of the Capital gain A/c with Bank of Baroda A/c No.05000100020462 and the assessee has also filed the details related to construction expenses, Contractor bills, Map Sanctioned by the Municipal Corporation etc. before the Ld. A.O. in the original Assessment proceedings itself which was duly examined by the A.O. The ld. A.O. verified the said details and after getting satisfied with the said details and considering the submission placed before him, the Ld. A.O. has passed the Assessment order for the year. Before us, the learned CIT-DR failed to controvert this fact that these details were very much available before the Assessing officer for examination and are forming part of the assessment records. Thus, we find that the issue related to claim for deduction under section 54EC/54F was very well examined by the Assessing officer and after application of his mind the claim has been allowed by him. It is not a case of no enquiry rather it is a case of complete enquiry by the Ld. Assessing officer who after calling all the necessary documents examined the transaction of Long Term Capital Gain and deduction claimed u/s 54EC/54F under the Shilpa Desai ITA 112 of 2021 14 provisions of law and took one of the view permissible under the law and assed the total income which thus leave no room for the Pr. CIT to assume jurisdiction u/s 263 of the Act. Therefore, the learned PCIT was not justified in exercising revisionary proceedings u/s 263 of the I. Act. Our view is supported by the following judicial pronouncements: The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. 243 ITR 83, The Hon’ble Bombay High Court in the case of Gabriel India Ltd. 203 ITR 108The Hon’ble Supreme Court in the case of Max India Ltd. 295 ITR 282 CIT vs. Nirav Modi, [2016] 71 taxmann.com 272 (Bombay). Hon'ble Gujarat High Court in the case of Shri Prakash Bhagchand Khatri in Tax Appeal No. 177 with Tax Appeal No.178 of 2016 11. We, therefore, considering the facts of the case in totality and in light of the judicial decisions (supra) are of the view that Ld. Pr. CIT was not justified in exercising revisionary powers u/s 263 of the Act as the matter was thoroughly examined by Ld. AO and the ld. AO duly applied his mind taking one of the permissible view under the law. We, therefore, quash the order of Ld. Pr. CIT u/s 263 of the Act dated 31.03.2021 and restore that of the assessing officer dated 20.12.2017 framed u/s 143(3) of the Act. Shilpa Desai ITA 112 of 2021 15 12. In the result, the assessee’s appeal i.e. ITA No.112/Ind/2021 is allowed. Order was pronounced as per Rule 34 of I.T.A.T., Rules 1963 on 20.01.2022. Sd/- (MAHAVIR PRASAD) Sd/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; Ǒदनांक Dated : 20.01.2022 !vyas! Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore