Manoj Singhal, New Delhi V. Pr. cit-5, New DElhi

ITA 1731/DEL/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4347 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Appeal Filed On: 19-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA BISWAS
• Assessee Lawyers: AMIT GOEL
• Keywords: Revision of order; Principle of natural justice; Assessment record
• Section: 263; 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1731/DEL/2020: ASSTT. YEAR: 2015 -16 MANOJ SINGHAL, H. NO. 9-10, ALIPUR ROAD, CIVIL LINES, NEW DELHI-110032 VS PR. CIT-5, NEW DELHI (APPELLANT T (RESPONDENT) PAN NO. A OZPS8161B ASSESSEE BY : SH. AMIT GOEL, ADV. REVENUE BY : MS. PRAMITA BISWAS, CIT DR DATE OF HEAR ING: 2 7 . 0 5 .20 21 DATE OF PRONOUNCEMENT: 28 .0 5 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PCIT-5 DELHI DATED 23.03.2020. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX - 5, N EW DELHI (HEREINAFTER REFERRED TO AS THE LD. PCIT) ERR ED IN INITIATING PROCEEDINGS UNDER SECTION 263 OF COME TA X ACT, 1961 (ACT) BY WRONGLY ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT AND HENCE, THE ORDER PASSED BY THE PCIT UNDER SECTION 263 OF ACT IS WITH OUT JURISDICTION, BAD IN LAW AND VOID AB-INITIO. 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE LD. PCIT ERRED IN SETTING ASIDE THE ASSESSMENT AND HAS ALSO ERRED IN HOLDING THAT THE ORIGINAL ASSESSM ENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION ITA NO. 1731/DEL/2020 MANOJ SINGHAL 2 143(3) OF ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE DIRECTIONS ISSUED BY THE LD. PCIT UNDER SECTION 263 OF ACT ARE ERRONEOUS, VAGUE, AMBIGUOUS AND UNTENABLE AND, THEREFORE THE ORDER U/S 263 OF THE A CT PASSED BY THE LD. PCIT IS LIABLE TO BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY TH E LD. PCIT IS BAD IN LAW AS THE SAME HAS BEEN PASSED WITHOUT APPLICATION OF MIND AND DESERVES TO BE QUASHED. 5. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE LD. PCIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, AND THEREBY DIRECTING THE ASSESSING OFFICER TO MAKE THE DE-NOVO ASSESSMENT. 6. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE ORDER PASSED BY LD. PCIT IN ARBITRARY AND AGAIN ST THE PRINCIPLE OF NATURAL JUSTICE. 3. ALL THE GROUNDS OF APPEAL, IN SUBSTANCE, RELATE TO THE CONTENTION THAT THE PROCEEDING INITIATED AND ORDER PASSED U/S 263 BY LD. PCIT IS LIABLE TO BE QUASHED AS IT IS BA D IN LAW, WITHOUT JURISDICTION AND AGAINST THE PRINCIPLE OF N ATURAL JUSTICE. 4. THE FACTS OF THE CASE ARE THAT THE RETURN OF INC OME FOR THE YEAR CONSIDERATION WAS FILED ON 27.09.2015 DECLARIN G INCOME OF (-RS.3,30,61,960/-). THE CASE OF THE APPELLANT WAS SELECTED FOR LIMITED SCRUTINY. THE ISSUES OF LIMITED SCRUTINY WERE:- I) PURCHASE OF PROPERTY II) DEDUCTION CLAIMED UNDER THE HEAD-CAPITAL GAIN 5. THE LD. PCIT ISSUED NOTICE DATED 16.03.2020 U/S 263 OF THE ACT ASKING THE ASSESSEE TO FURNISH REPLY BY 20.03.2 020. THE ITA NO. 1731/DEL/2020 MANOJ SINGHAL 3 SAID NOTICE IS ENCLOSED IN THE PAPER BOOK AT PAGE N O. 2 TO 4. PARA 2 TO 6 OF THIS NOTICE IS REPRODUCED AS UNDER: 2. PERUSAL OF RECORD REVEALED THAT THE ASSESSMENT OF MR. MANOJ SINGHAL FOR THE ASSESSMENT YEAR 2015- 16 WAS COMPLE TED IN NOVEMBER, 2017 AT INCOME OF RS. 3,30,61,960/- U/S 1 43(3) OF THE INCOME TAX ACT. ON PERUSAL OF THE RECORD, IT IS FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS. 6,12,10,1 00/- U/S 54F OF THE ACT. HOWEVER THE ASSESSEE HAS SOLD EQUIT Y SHARES OF RS. 9,74,40,000/- AND HAS GAINED LTCG AMOUNTING RS. 9,72,95,775/- AFTER INDEXATION. THE ASSESSEE HAS IN VESTED RS. 6,12,10,100/- (INCLUDING INCIDENT EXPENSES) INTO A NEW RESIDENTIAL HOUSE AND HAS CLAIMED DEDUCTION U/S 54F OF THIS WHOLE AMOUNT. HOWEVER, AS PER SECTION 54F OF THE IN COME TAX ACT, 1961 ASSESSEE IS ELIGIBLE FOR DEDUCTION TO THE EXTENT OF PROPORTION TO AMOUNT OF CAPITAL GAIN INVESTED IN NE W RESIDENTIAL HOUSE. THE ELIGIBLE DEDUCTION IN THE CASE OF THE AS SESSEE U/S 54F IS CALCULATED AS UNDER: DEDUCTION U/S 54F = COST OF THE NEW HOUSE X CAPITAL GAIN NET CONSIDER ATION = RS. 6,12,10,100/- X RS. 9,72,95,775/- RS. 9,74,40,000/- = RS. 6,11,19,500/- THUS THE ASSESSEE IS ELIGIBLE FOR DED UCTION OF RS. 6,11,19,500/- U/S 54F OF THE INCOME TAX ACT, 1961 A ND NOT OF RS. 6,12,10,100/-. THE AO OVERLOOKED THIS ISSUE AND THIS RESULTED IN UNDER ASSESSMENT OF RS. 90,600/- (61210 100- 61119500). 3. IT IS FURTHER OBSERVED FROM THE COMPUTATION OF I NCOME, THAT THE ASSESSEE IS RECEIVING RENTAL INCOME FROM AS MAN Y AS SEVEN ITA NO. 1731/DEL/2020 MANOJ SINGHAL 4 PROPERTIES. BUT THE ASSESSEE HAS NOT MENTIONED THE FULL ADDRESS AND DESCRIPTION OF THESE PROPERTIES. THEREFORE, IT CANNOT BE ASCERTAINED FROM THE ASSESSMENT RECORD, WHETHER THE ASSESSEE SATISFIES THE CONDITIONS FOR CLAIMING DEDUCTION U/S 54F OF THE ACT, OR NOT, PARTICULARLY, WHEN THE RECEIPTS ON ACC OUNT OF SALE PROCEEDS OF SHARES ARE SHOWN FROM KOLKATA BASED COM PANY M/S SHREYAN VYAPAR PVT. LTD. FOR SHARES OF M/S SMS IT S OLUTIONS PVT. LTD., AGAIN A KOLKATA BASED COMPANY DOING NO B USINESS. FURTHER, NO EVIDENCE HAS BEEN PLACED ON RECORD TO S UBSTANTIATE THE MARKET VALUE OF THE SAID INVESTMENT. IN VIEW OF THESE FACTS, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 54F OF THE ACT. THE ISSUE INVOLVES A HUGE AMOUNT OF CAPITAL GAIN AN D THE REVENUE LOSS MAY BE RS. 1,38,70,209/- OR MORE. THIS ISSUE HAS NOT BEEN EXAMINED TO DETERMINE CORRECTNESS OF THE C LAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 54F OF THE ACT AND JUSTIFICATION OF INVESTMENT IN PURCHASE OF NEW SPEC IFIED ASSET. 4. IN VIEW OF THE ABOVE, AND THERE IS NO PLAUSIBLE EXPLANATION BY THE ASSESSEE, AND BESIDES, PROPER INQUIRY HAS AL SO NOT BEEN DONE. 5. FROM ANALYSIS OF THE ASSESSMENT RECORDS, IT IS O BVIOUS THAT THE ASSESSMENT ORDER PASSED BY THE THEN ASSESSING O FFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. ITA NO. 1731/DEL/2020 MANOJ SINGHAL 5 6. HEARD THE ARGUMENTS OF BOTH THE PARTIES. 7. THE PRIMARY CONTENTION OF THE LD. AR IS THAT THE CASE OF THE ASSESSEE HAS BEEN SELECTED FOR LIMITED SCRUTINY ON TWO GROUNDS VIZ. VERIFICATION OF PURCHASE OF PROPERTY AND VERIF ICATION OF DEDUCTION CLAIMED UNDER THE HEAD CAPITAL GAIN AND E XPANDING THE SCOPE OF SCRUTINY BY THE WAY OF ORDER U/S 263 I S LEGALLY NOT VALID. 8. ON THE OTHER HAND, THE LD. DR ARGUED THAT THE LD . PCIT HAS GOT WIDER POWERS TO EXAMINE THE ENTIRE CASE TO PLUG THE LOOPHOLES AND LEAKAGE OF REVENUE. 9. WE HAVE GONE THROUGH THE NOTICE ISSUED BY THE RE VENUE DATED 29.07.2016 WHEREIN THE AO MENTIONED THAT TWO ISSUES HAVE BEEN IDENTIFIED FOR EXAMINATION WHICH ARE VERI FICATION I.E. PURCHASE OF PROPERTY AND VERIFICATION OF DEDUCTION CLAIMED UNDER THE HEAD CAPITAL GAIN. 10. FROM THE RECORD, WE FIND THAT THE COMPLETE DETA ILS PERTAINING TO BOTH THE ISSUES HAVE BEEN EXAMINED BY THE AO AND THE REPLIES OF THE ASSESSEE DATED 22.09.2017, 1 6.10.2017, 30.11.2017 ALONG WITH THE DETAILS OF SALE OF SHARES , CONFIRMATION OF THE PARTIES, BANK STATEMENTS, PURCH ASE OF PROPERTY, REGISTRATION DOCUMENT AND DEDUCTION U/S 5 4F CLAIMED. THE ENTIRE DETAILS OF THE SAID TWO TRANSACTIONS WHI CH ARE THE SUBJECT MATTER OF SCRUTINY HAVE BEEN DULY PROVIDED AND EXAMINED BY THE AO AND DULY ACCEPTED AFTER EXAMINAT ION AND VERIFICATION. ITA NO. 1731/DEL/2020 MANOJ SINGHAL 6 11. ON GOING THROUGH THE DETAILS, WE FIND THAT THE DEDUCTION CLAIMED U/S 54F WAS RS.6,12,10,100/- WHEREAS THE DE DUCTION ELIGIBLE WAS RS.6,11,19,500/-. THUS, THERE IS A COM PUTATIONAL DIFFERENCE OF RS.90,600/- IN THE CLAIM OF DEDUCTION U/S 54F WHICH COULD HAVE BEEN RECTIFIED U/S.154. THE PROVIS IONS OF SECTION 263 NEED NOT BE INVOKED FOR COMPUTATIONAL E RROR FOR WHICH OTHER PROVISIONS OF THE ACT ARE FAIRLY SUFFIC IENT. THE DIRECTIONS OF THE LD. PCIT WHICH ARE BEYOND THE SEL ECTION CRITERIA OF SCOPE OF SCRUTINY FOR THE INSTANT YEAR CANNOT BE HELD TO BE LEGALLY VALID. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/05/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER AC COUNTANT MEMBER DATED: 28/05/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR