RENU PODDAR, JAIPUR V. PRINCIPAL COMMISSIONER OF INCOME TAX-2, JAIPUR

ITA 188/JPR/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5019 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 16-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Principle of natural justice; Set aside; Capital Gains
• Section: 263; 2; 143(3); 54F; 80HHC; 143(2); 72; 13; 92CA

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la- @ITA No. 188/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2017-18 Smt. Renu Poddar 2 KA 9, Jawahar Nagar Jaipur cuke Vs. Principal Commissioner of Income Tax-2 Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ADJPP 5049 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Sh. Rajeev Sogani jktLo dh vksj ls@Revenue by: Sh. Sanjay Dhariwal, CIT lquokbZ dh rkjh[k@Date of Hearing : 06/07/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 21/07/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Principal Commissioner of Income Tax- Jaipur-2 [ Here in after referred as Ld. PCIT ] for the assessment year 2017-18 dated 23.03.2012 which in turn arises from the order passed by the Income Tax Officer, Ward 4(4), Jaipur passed under Section 143(3) of the Income tax Act, 1961 (in short 'the Act') dated 01.08.2019. 2. The fact as culled out from the assessment record is that the assessee submitted her return of income declaring total income of Rs. 2 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 4,52,230/- on 24.01.2018. The case was selected for scrutiny under CASS. Notice u/s 143(2) was issued and sought the information form the assessee from time to time and assessment was completed after considering submission of the assessee. Thus, the assessment was concluded by the ld. AO. 3. Subsequently, the ld. PCIT called for and examined the case record of the assessee wherein he has stated that the following issues were emerged from the records of the assessment: “During the year assessee had sold a plot of land for net consideration of Rs.1,90,11,000/- and had earned capital gain of Rs.1,89,79,851/-. Further, during the year assessee along with four others had bought a residential house for a total consideration of Rs.4,59,73,000/- and the entire capital gain of Rs.1,89,79,851/- was claimed as deduction u/s section 54F of the Act. It was observed that deduction u/s 54F of Rs. 1,14,93,260/- was available to the assessee and excess capital gain of Rs.74,86,601/- was taxable. Therefore, it is factually apparent that the A.O. has not verified the above issues while completing the assessment. Accordingly, it appears that the assessment order passed u/s 143(3) of the I.T. act 1961 for A.Y. 2017-18 on 01.08.2019 is erroneous in so far as it is prejudicial to the interest of the revenue.” 4. Based on the observations, the ld. PCIT exercised an action u/s 263 by issue of notice dated 17.02.2022 asking the assessee to explain as to why the assessment order passed by ITO, Ward 4(4), Jaipur on 01.08.2019 may not be revised u/s 263 and why the order passed may not be treated as erroneous and prejudicial to the interest of Revenue regarding the non- application of the law on the issues as discussed in the show cause notice and as the assessment order was passed mechanically without application of mind for the reason mentioned in the notice issue for proceeding u/s. 3 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 263. The ld. PCIT has thus issued a show cause notice to the assessee, holding that the assessment order was passed mechanically without application of mind. 5. In response to the show cause notice issued by the PCIT, the assessee has filed her reply dated 07.03.2021 which is reproduced herein below. "In regards to notice u/s 263 of Income Tax Act 1961, issued by your good self, it is submitted that the assessee has rightly claim deduction u/s 54F of Income tax Act 1961, which was rightly allowed by the assessing officer. In fact assessee has purchased 50% share in the residence house plot no 269, Gali No 04, Raja Park Jaipur and the cost for the same was Rs. 4,66,97,360.00 therefore assessee has rightly claim the deduction u/s 54 of Rs. 1,89,79,851.00. Your good self has mentioned that deduction w/s 54 F was available to assessee for Rs.11493250.00 is perhaps because of treating the assessee share only 25% in the new property where as the share of assessee in the property was 50%. This fact was brought to the notice of Assessing office at the time of assessment proceeding and the assessing Officer after examine the facts and evidence rightly allowed the deduction claim u/s 54 F therefore, there was no error in the order passed by the Assessing officer and the principle condition of Section 263 of IT Act is not complied with hence the notice issued by your good self is contrary to the provision of law, We pray that the proceeding may kindly be drop. We are submitting the copy of memorandum of understating in between all the parties of the house no 269, Gall No 04 Raja Park Jaipur regarding division of share in the above referred residence house. We are also submitting herewith the statement of affaire of Shri Mohit Poddar for the year ended 31.03.2016 and 31.03.2017 (audited) where he has shown his share in property 12.5% only likewise we are also submitted the of affair of Smt. Pratima Poddar for the year ended 31.03.2016 and 31 03 2017 where she has shown her share in property 12.5%.” 4 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 6. On receipt of reply of the assessee, ld. PCIT observed and stated that while completing the assessment on 01.08.2019, the Assessing Officer has not examined the issues on which case was selected for scrutiny. Thus, the claim of deduction u/s 54F has not been claimed correctly and Assessing Officer has not seen these aspects. The assessee has filed the copy of memorandum of understanding, to prove the share of the assessee upon which the deduction was claimed now and not before the assessing officer. The PCIT hold a view that as it was not on record and it is also executed after purchase deed is registered and thus ld. PCIT hold a view that this evidence is after thought. The ld. PCIT further observed that if the assessee claimed his claim to the extent of 50% deduction u/s 54F, surely, the payment received from sale of plot would have been paid in acquiring the house but the relevant joint bank statement was not available on record by the assessee. 7. Based on the observations, the ld. PCIT finally decided to invoke provisions of section 263 stating that the AO has not applied his mind on any manner. Further, no query has been raised to examine the issue. Even the assessee has not filed the sufficient documents from where it could be deduced that the claim made in the return of income was genuine. The ld. PCIT hold a view that the assessing officer failed carry out necessary inquiry and failed to consider / apply his mind to the information available on record and such the assessment was made without application of mind on the given facts on record. While exercising the provision of section 263 of the Act. The ld. PCIT relied the following judicial ruling also. 5 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur “1. The Hon’ble Supreme Court in the case of Malabar Industrial Limited vs. CIT 243 ITR has held that “An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind". 2. Delhi High Court in Gee Vee Enterprises v Additional Commissioner of Income-tax (1975) 99 ITR 375, has observed that "The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the fact of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income tax Officer to further investigate the facts stated in the return when circumstances should make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 8. Finally with the above observations, ld. PCIT passed the order dated 23.03.2022 of revision of the order passed by the ITO, Ward 4 (4), Jaipur wherein he has set aside the order of the assessment passed by the Assessing Officer. 9. Aggrieved by the said revisionary order passed u/s 263 of the Act. The assessee has marched an appeal before us. The assessee has assailed this appeal on the following grounds. “1. In the facts and circumstances of the case and in law the ld PCIT has erred in exercising the revisionary powers by passing the order u/s 263 of 1.T. Act, 1961 setting aside the order passed u/s 143(3) dated 01.08.2019. The action of the ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order passed u/s 263. 2. In the facts and circumstances of the case and in law the ld. PCIT has erred in holding the order passed u/s 143(3) dated 01.08.2019 as erroneous and prejudicial to the interest of the revenue. The order passed u/s 263 is bad in law 6 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur and therefore, the action of the ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order passed u/s 263 and holding the order passed u/s 143(3) dated 14.08.2019 as not erroneous and prejudicial to the interest of the revenue. 3. The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing.” 10. During the course of hearing, ld. AR of the assessee has filed the following written submission:- “I. The assessee individual, for the year under consideration, filed her return of income on 24 th Jan, 2018 declaring Total Income of Rs. 4,52,230 [PB 112-114]. II. The assessee, on 21 st Dec, 2015 i.e. during immediately preceding year, purchased a residential house, situated at Raja Park, in joint ownership with her family members [PB 33-65]. III. The assessee and her family members, at the time of purchase of the said joint property, had an understanding of the ownership share being as under: Particulars Share in % Mahesh Kumar Poddar 25% Renu Poddar 50% Mohit Poddar 12.5% Pratima Poddar 12.5% IV. The above verbal understanding was reduced in writing vide Memorandum of Understanding dated 15 th Jan, 2016 [PB 6-7]. The fact of verbal understanding was also mentioned in the MOU which is as under: “...Whereas though the share was undefined in the registered sale deed but the understanding in regards to share in the above referred property was mutually decided verbally at time of purchase which is reduced to writing as under...” [PB 6] 7 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur V. The total investment made by all the family members was Rs. 4,66,97,360. Accordingly, the assessee’s share in such property was Rs. 2,33,48,680 (50% of Rs. 4,66,97,360). VI. During the year under consideration, on 14 th Oct, 2016, the assessee sold another immovable property, situated at Taru Chayya Nagar, being plot of land for Rs. 1,90,11,000 [PB 27-32]. The resultant Capital Gains were claimed exempt, on account of purchase of immovable property situated at Raja Park in the immediately preceding year, under section 54F of the IT Act, 1961. VII. Section 54F provides that if any long term capital asset (except residential house property) is sold and the assessee had purchased within one year before the date of sale or two year after the date of sale, a residential house property then the assessee shall be allowed deduction u/s 54F. The purchase made by the assessee was within the period of one year before the date of sale. VIII. Since the assessee was fulfilling all the conditions, as contained in section 54F, the assessee claimed deduction u/s 54F. As on the date of sale assessee was knowing that she had already invested, in residential house property, a sum which was more than the sale proceeds and, therefore, the assessee claimed deduction of the entire amount of capital gain from sale of land. IX. The year in which investment was made i.e. the year A.Y. 2016-17 was selected for scrutiny. After making extensive enquiries with regards to purchase of property and source thereof the returned income was accepted vide order dated 24 th Sept, 2018 [PB 75-77]. X. Thereafter, the case of the assessee, for the year under consideration i.e. A.Y. 2017-18, was selected for limited scrutiny and notice u/s 143(2) was issued on 29 th Sept, 2018 (just after 5 days of completion of assessment of A.Y. 2016- 17). After making extensive enquiries ld. AO completed assessment under section 143(3) vide order dated 1 st Aug, 2019. Returned Income was accepted. XI. Chronology of events is as under: Particulars Date A.Y. PB Purchase of Residential House Property 21 st Dec, 2015 2016- 17 33-65 Execution of Memorandum of Understanding as per which assessee’s share was 50% 15 th Jan, 2016 2016- 17 6-7 Sale of Plot of Land 14 th Oct, 2016 2017- 18 27-32 8 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur Filing of ITR for A.Y. 2016-17 24 th Feb, 2017 76 Issue of notice u/s 143(2) for A.Y. 2016-17 16 th Sept, 2017 109 Date of filing of ITR for A.Y. 2017-18 24 th Jan, 2018 112 Assessment Order u/s 143(3) for A.Y. 2016-17 24 th Sept, 2018 76-77 Issue of notice u/s 143(2) for A.Y. 2017-18 29 th Sept, 2018 72 Assessment Order u/s 143(3) for A.Y. 2016-17 1 st Aug, 2019 XII. The aforementioned assessment order passed under section 143(3) was subjected to revisionary proceedings by invoking the provisions of section 263. The assessment order was held to be erroneous as well as prejudicial to the interest of revenue. In the opinion of ld. PCIT the assessee was allowed higher amount of deduction u/s 54F. Hence, the assessment was set aside to the file of ld. AO. XIII. The assessee is in appeal against the order passed u/s 263 setting aside the assessment order passed u/s 143(3). SUBMISSIONS 1. Ld. PCIT has not disputed the following points: 1.1. The assessee sold a long term capital asset which was not in the nature of residential house property. 1.2. The assessee made investment, within stipulated time, in a residential house property. 1.3. The assessee was fulfilling all the conditions as contained in section 54F. 1.4. The assessee was eligible to claim deduction u/s 54F. 2. The only issue raised by ld. PCIT is with regards to the amount of deduction u/s 54F for which the assessee was eligible. 3. It is submitted that the case of the assessee was selected for limited scrutiny and the issues identified for examination were [PB 72-73]: 3.1. Deduction/ Exemption from Capital Gains 3.2. Investment in Immovable Property 4. Ld. AO was, therefore, expected to examine the 54F in depth. Ld. AO issued specific notice [PB 24 deduction u/s 54F. The assessee submitted relevant details [PB 26 the following for substantiating the amount of deduction u/s 54F: 4.1. Purchase Deed of new property [PB 33 4.2. Bank Statement evidencing direct payments to seller and repayment of EMI [PB 67-71] 4.3. Computation of income which contained the following [PB 114]: 5. It is pertinent to note that assessment of immediately preceding year i.e. A.Y. 2016-17 stood completed and the returned income was accepted dated 24 th Sept, 2018 [PB 75 house property, on 21 on record the following details with regards to the payment for purchase of new property [PB 78-111]: 5.1. The fact that property was majorly financed through housing loan [PB 92]. 5.2. Sanction letter and EMI 104] 5.3. Details of payments made to seller and source thereof [PB 81] 5.4. Bank Statements of all the joint owners evidencing direct payments to seller [PB 78, 80, 82-86] 5.5. Bank Statements of Joint Account evidencing direct and repayment of EMI [PB 87 5.6. ITR of all the joint owners [PB 79] 6. After scrutinizing transaction of purchase, source of making investment and assessee’s ownership to the extent of 50% retuned income was accepted as it is. It is pertinent to note that the assessment of A.Y. 2016 9 Smt. Renu Poddar vs. Pr. CIT, Jaipur Investment in Immovable Property Ld. AO was, therefore, expected to examine the deduction claimed u/s 54F in depth. Ld. AO issued specific notice [PB 24-25] for examining the claim of deduction u/s 54F. The assessee submitted relevant details [PB 26 the following for substantiating the amount of deduction u/s 54F: se Deed of new property [PB 33-65] Bank Statement evidencing direct payments to seller and repayment of Computation of income which contained the following [PB 114]: It is pertinent to note that assessment of immediately preceding year i.e. 17 stood completed and the returned income was accepted Sept, 2018 [PB 75-77]. The assessee made investment in residential house property, on 21 st Dec, 2015, in A.Y. 2016-17 only. The assessee had placed on record the following details with regards to the payment for purchase of new The fact that property was majorly financed through housing loan [PB 92]. Sanction letter and EMI schedule of PNB Housing Finance Ltd [PB 93 Details of payments made to seller and source thereof [PB 81] Bank Statements of all the joint owners evidencing direct payments to 86] Bank Statements of Joint Account evidencing direct and repayment of EMI [PB 87-91] ITR of all the joint owners [PB 79] After scrutinizing transaction of purchase, source of making investment and assessee’s ownership to the extent of 50% retuned income was accepted as it nent to note that the assessment of A.Y. 2016-17 was not subjected to ITA No. 188/JP/2022 Renu Poddar vs. Pr. CIT, Jaipur deduction claimed u/s 25] for examining the claim of deduction u/s 54F. The assessee submitted relevant details [PB 26-71] including the following for substantiating the amount of deduction u/s 54F: Bank Statement evidencing direct payments to seller and repayment of Computation of income which contained the following [PB 114]: It is pertinent to note that assessment of immediately preceding year i.e. 17 stood completed and the returned income was accepted vide order 77]. The assessee made investment in residential 17 only. The assessee had placed on record the following details with regards to the payment for purchase of new The fact that property was majorly financed through housing loan [PB 92]. schedule of PNB Housing Finance Ltd [PB 93- Details of payments made to seller and source thereof [PB 81] Bank Statements of all the joint owners evidencing direct payments to Bank Statements of Joint Account evidencing direct payments to seller After scrutinizing transaction of purchase, source of making investment and assessee’s ownership to the extent of 50% retuned income was accepted as it 17 was not subjected to 10 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur revisionary proceedings u/s 263. Hence, the action of ld. AO was found correct and justified. 7. Ld. AO after appreciating all the facts and evidences, as placed before him in the proceedings for the year under consideration i.e. A.Y. 2017-18 as well as in the proceedings of immediately preceding year i.e. A.Y. 2016-17, found the deduction u/s 54F as claimed by the assessee to be proper and justified. 8. In view of above factual background the fact of ld. AO having conducted detailed enquiry cannot be disputed. The present case cannot be a case of lack of proper enquiry specially for the issue for which the case was selected for limited scrutiny. Only on being satisfied with the elaborate submissions of the assessee, supported by relevant documents, claim of the assessee was allowed. 9. The SCNs issued by ld. PCIT dated 17 th Feb, 2022 [PB 22-23], 1 st Mar, 2022 [PB 20-21] and 8 th Mar, 2022 [PB 1-2] specifically mentioned that since the assessee purchased property along with 3 other persons, excess deduction was allowed u/s 54F. 10. It is pertinent to note that there was no allegation of ld. PCIT about the lack of enquiry on the part of AO while passing assessment order. 11. It is submitted that the provisions of section 263 can be invoked only if the assessment order is found erroneous as well as prejudicial to the interest of revenue. If there was no lack of enquiry, revisionary proceedings could not be resorted merely to re-verify facts and substitute the views of ld. PCIT. Reliance is placed on the decision of Hon’ble ITAT Jaipur Bench in the case of Lata Phulwani – ITA No. 246/JP/20 [CLC 12]. 12. It is further submitted that revisionary jurisdiction is not meant to be assumed for enforcing the assessment again and again for small issues. It is submitted that the work of assessment cannot be completed with surgical precision. Reliance is placed on the judgment of the Jurisdictional Rajasthan High Court in the case of CIT vs Ganpat Ram Bishnoi- 296 ITR 292 (Raj) wherein it was held that jurisdiction u/s 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again [CLC 24]. 13. In view of above legal and factual position it is submitted the provisions of section 263 have been wrongly invoked. 11 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 14. Without prejudice to above, on merits, it is submitted that the deduction claimed by the assessee u/s 54F and allowed by ld. AO was correct and justified. It was categorically submitted before ld. PCIT that assessee although purchased property in joint ownership along with 3 persons, however, was the owner of 50% of the share in the property. 15. It was nowhere mentioned in the Purchase Deed that all the joint owners were sharing the property equally [PB 33-65]. The share of the joint owners was decided mutually and a Memorandum of Understanding was executed which was duly placed before ld. PCIT [PB 5-7]. 16. The law does not provide that in the cases of joint ownership, all the joint owners shall share the property equally. Mutual understanding among the parties, documentation of such understanding and extent of payment are the deciding factors of ownership. Since in the present case all the evidences (including the following) as placed on before ld. PCIT suggested that the assessee was having 50% share in the property the order of ld. AO could not be held as erroneous: 16.1. Memorandum of Understanding evidencing share of assessee to be 50% [PB 6-7] 16.2. Statement of Affair of Mohit Poddar (Joint Owner) for F.Y. 2016-17 [PB 8- 11] and F.Y. 2015-16 [PB 16-19] evidencing his share to be 12.5% 16.3. Statement of Affair of Pratima Poddar (Joint Owner) for F.Y. 2016-17 [PB 12-14] evidencing her share to be 12.5% 17. It is submitted that the property was purchased in F.Y.2015-16 on 19 th Dec, 2015. The following details substantiate the agreed ratio of ownership amongst the family members: 12 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur % Value of Asset as per Registry Liability as per Loan Amortization Schedule Asset as appearing in Financials PB Liability as appeari ng in Financi als PB Total 100 % 4,66,97,360 3,52,26,000 Renu Poddar 50% 2,33,48,680 1,76,13,000 2,33,48,680 15 Mahesh Poddar 25% 1,16,74,340 88,06,500 Mohit Poddar 12.5 % 58,37,170 44,03,250 60,85,456 18 45,88,9 72 17 Pratima Poddar 12.5 % 58,37,170 44,03,250 58,49,264 13,1 4 42,63,2 39 13 18. It is submitted that as per clause (b) of Explanation 1 to section 263, such evidences (as referred in 14.1 to 14.3) furnished for the first time before ld. PCIT, became part of record as the same were available at the time of examination by PCIT. Further, the assessment record of immediately preceding year from which the particulars of purchase were evident was also part of record. Therefore, all such documents were to be considered for deciding whether the order of ld. AO was erroneous or not. Reliance is placed on the following decisions wherein it has been held that “records” relating to any proceedings, against the assessee or others, as well as enquiries under section 263, relevant to the issue, need to be considered for deciding the order to be erroneous and prejudicial to the interest of revenue: 18.1. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC) [CLC 26-32] 18.2. Prakashwati [2005] 144 Taxman 313 (Allahabad) [CLC 33-34] 18.3. Vallabhdas Vithaldas [2005] 56 Taxman 300 (Gujarat) [CLC 35-48] 18.4. Daga Entrade (P) Ltd [2010] 327 ITR 467 (Gauhati) [CLC 49-54] 19. Since all the evidences, from which it was discernible that the claim of the assessee was justified, were before ld. PCIT, the order of ld. AO could not be held erroneous as well as prejudicial to the interest of revenue. 13 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 20. It is further submitted that as per the provisions of section 263(1), the jurisdiction u/s 263 lies only when after enquiry, it is found that the order of AO is erroneous and prejudicial to the interest of revenue. In the present case ld. PCIT not only failed to conduct any enquiry but also failed to point out any defect in the evidences placed before her to substantiate the claim u/s 54F. Therefore, the jurisdiction u/s 263 does not lie and was, thus, wrongly assumed. 21. It is submitted that ld. PCIT further considered the order of ld. AO to be erroneous by observing as under: “..AO has also not enquired about the source of money and payment so made..” (PCIT Page 4) 22. In this regard it is submitted that the asset was purchased by the assessee in immediately preceding year. In such year, during the assessment proceedings, the assessee placed on record details of purchase, details of source of purchase, details of payments made for purchase, etc (refer Para 5 above). After finding that source of assessee’s share to be justified ld. AO accepted the returned income [PB 76-77]. Hence, the observation of ld. PCIT is baseless. 23. Without prejudice to above, without agreeing it is submitted that even if the source of purchase was not examined in the preceding year then also since the purchase was made in the preceding year the source was to be examined in the preceding year only. If ld. AO failed on doing so the case could have been subjected to revisionary proceedings. However, non-verification of source in preceding year cannot be held to be error of the year under consideration. Therefore, the revisionary proceedings are without jurisdiction. In view of above ld. PCIT assumed jurisdiction u/s 263 illegally and, therefore, the order of ld. PCIT deserves to be quashed.” 11. In addition to above written argument, ld. AR of the assessee filed the paper book containing various case laws as listed here in below : • Hon’ble ITAT, Jaipur Bench in the case of Lata Phulwani- ITA No. 246/JP/2020 • Jurisdictional Rajasthan High Court in the case of CIT vs. Ganpat Ram Bishnoi – 296 ITR 292 (Raj.) 14 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur • Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC) • Hon’ble Allahabad High Court in the case of Prakashwati [2005] 144 Taxman 313 • Hon’ble Gujarat High Court in the case of Vallabhdas Vithaldas [2005] 56 Taxman 300 • Hon’ble Gauhati High Court in the case of Daga Entrade (P) Ltd [2010] 327 ITR 467 12. The ld. AR of the assessee submitted that case of the assessee for the previous year was also under scrutiny i.e. Assessment Year 2016-17. The same ld. Assessing Officer has after completion of the assessment for A.Y 2016-17 started the assessment and in fact completed the A.Y 2017- 18. The ld. Assessing Officer was very well aware about all the facts which were placed in both the assessment proceedings and the records includes accumulative records and not records for one year. The assessment was very well completed by the Assessing Officer for both the years. The deduction claimed is the properly enquired against the capital gain by the assessee in the year under consideration and has claimed u/s 54F of the Act. The said deduction amount is under dispute before us merely on the reason as to how much share of investment by the assessee in a joint family-owned investment made in the earlier year in the absence of clear finding in the purchase deed. 13. There is no dispute by both the parties that the assessee has made investment in the property and she is eligible to claim deduction u/s 54F of the Act in the year under consideration against the amount of capital gain that has arisen and chargeable to tax in the year under consideration. The only dispute in this case is share of the assessee in that property acquired jointly by the assessee with her husband, his son and his daughter in law. 15 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur As share of each co-owners not incorporated in the purchase deed the PCIT hold a view that it should be equal. The parties have executed a memorandum of understanding dated 15 th January, 2016 wherein each co- owners share clarified. Also the liability to repay the loan was also incorporated in that MOU, as the property has been acquired by availing the loan and obligations of each party to repay these loans and percentage of share of in the property purchased has been predetermined amongst themselves and this has been recorded in the Memorandum of Understanding wherein each parties have placed their signature with date and said memorandum of understanding was executed before Notary Public. Therefore, the same cannot be said an afterthought which was contended by Pr. CIT in his order and before us. ld. DR also. The ld. Assessing Officer has very well taken into account the assessment for the year under consideration and immediately preceding year. At the time of investment and at the time of allowing exemption u/s 54F of the Act in the year under consideration exempted both the issues at length. Therefore, the order cannot be said to be prejudicial and erroneous in the interest of Revenue. Thus, there is no apparent error as is claimed by the ld. AR of the assessee based on the evidences placed on record. The ld. AR of the assessee further submitted that in the proceedings before Pr. CIT MOU executed between the parties was very well placed on record. The ld. AR of the assessee relied on chorology of events as submitted by him in his submission that the share of the assessee cannot be considered as in dispute and ignoring that MOU. The same cannot be considered at 25% instead of at the time of purchase, it was 50% and the claim was made accordingly by the assessee in her return of income. The assessment was 16 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur very well carried out on the issue selected under CASS and again Pr. CIT has not power to review the order of ld. AO which has been passed by him after verifying the issue of capital gain and its exemption claimed u/s 54F of the Act. Merely, the ld. AO has not recorded his finding in the assessment order or not placed on record the record cannot be considered as erroneous or prejudicial to the interest of revenue. Merely, the AO has not asked the specific question in the assessment proceedings, the assessment was executed by taking and sufficient inquiry cannot be termed as an order prejudicial to the interest of Revenue and therefore, the action of ld. Pr. CIT is bad in law as well as on fact. 14. The ld. AR of the assessee has also submitted that the assessment order of the previous year of one of the joint co-owner Sh. Mohit Poddar wherein the Assessing Officer has also called for the details wherein Mr. Mohit Poddar on 29.09.2018 submitted to the Assessing Officer that his share is 12.5% in that property and these submission is already available on record and the order is passed by Assessing Officer on 01.08.2019 i.e. after 11 month and by this evidence on record. Based on this set of evidence the contention of the PCIT that the MOU is after thought is merely an assumption by PCIT. The ld. AR of the assessee submitted that execution of MOU is not an afterthought that as they have already disclosed fact of each individual share in the property to the department well within time and not when the property is sold in the year under consideration against which the assessee has claimed the investments benefit u/s 54F of the Act. The property purchased in previous year, the ld. AR of the assessee has also prayed to draw to our attention to the 17 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur computation of income filed by the assessee before Assessing Officer and placed in assessee’s paper book at page No. 114 wherein while claiming the exemption u/s 54 of the Act, eligible amount written computation of income is shown at the share at 50% and relevant extract of computation is extracted for sake of convenience STATEMENT OF LONG TERM CAPITAL GAIN Particular Sales Price/Year Indexed Cost/Year Transfer Expenses Indexed Cost of Improvement Exempt Capital Gain PLOT NO TARU CHAYYA 19011000. 00 (14/10/201 6) 31149.00 (02/02/199 2) 0.00 0.00 18979851. 00 0.00 Total 19011000. 00 31149.00 0.00 0.00 18979851. 00 0.00 PLOT NO TARU CHAYYA- Value of property as per stamp valuation authority: 19011000; Cost 5510* (1125/199) = 31149: Exempt U/S 54F : 18979851 [23348680]” 15. So, with this set of argument the ld. AR of the assessee submitted that the only dispute raised that the claim of the assessee made u/s 54F of the Act for which the property acquired in the previous year where in the deed of purchase the share of each co-owner was not disclosed and the same is disclosed in the MOU executed by each parties after the registration of document. The ld. AR further submitted that the relevant to assessment year 2016-17 the assessee has purchased the property and an another property sold in the A.Y 2017-18 and on sale of this property in 18 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur A.Y 2017-18, the assessee has claimed benefit of the investment made under section 54F of the I.T. Act of property which was acquired in A.Y 2016-17 and in the absence of specific percentage of investment not shown in the said purchase deed there cannot be an order which is passed by the Assessing Officer after verifying all the records cannot be termed as prejudicial or erroneous. 16. Per contra, the ld. DR appearing for the revenue, submitted that the Assessing Officer has only raised one query and in respect of substantial amount claimed by the assessee not done the required enquiry while allowing the claim of the assessee. He has drawn our attention to Page Nos. 24 and 25 of the assessee’s paper book from where the notice of the inquiry conducted by the Assessing Officer is placed on record, accordingly he heavily relied upon the findings of the PCIT. 17. Further, the ld. DR vehemently submitted that the Assessing Officer has not asked any query about share of investment made by the assessee in joint property not only that the Joint account from where the payment has been made is not placed on the record. Therefore, considering the amendment made in explanation 2 of section 263. The order is erroneous and prejudicial to the interest of Revenue. Since amendment in section 263 is w.e.f 01.06.2015, it is very well applying to the assessment order in question. The ld. DR relied upon the judgement of Hon’ble High Court of Delhi in the case of Gee Vee Enterprises vs. Additional Commissioner of Income Tax [1975] 99 ITR 375 (Delhi) which reads as under:- “The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved 19 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur by the minimum amount of evidence may be accepted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct.” 18. Further, he has also relied upon the judgment of Hon’ble High Court of Bombay in the case of CIT, Nagpur vs. Ballarpur Industries Ltd. [2017] 85 taxmann. com 10 (Bombay) as under:- “14. The decision of the Apex Court in Max India Ltd. (supra) relied upon by the respondent-assessee to our mind would not come to its rescue for the reason that in the present facts the statement of the case does not indicate that the view taken to allow the claim under Section 80 HHC of the Act was after examination/inquiry. Mere taking of a view by the Assessing Officer without having subjected the claim to examination would not make it a view of the Assessing Officer. A view has necessarily to be preceded by examination of the claim and opting to choose one of the possible results. In the absence of view being taken, merely because the issue itself is debatable, would not absolve the Assessing Officer of applying his mind to the claim made by the assessee and allowing the claim only on satisfaction after verification/enquiry on his part. A view in the absence of examination is no view but only a chance result. Therefore, even the decision of the Andhra Pradesh High Court in Gogineni Tobacco Ltd. (supra) will also have no application.” 19. Relied on the aforesaid judgment and the amendment in the provision of section 263, the ld. DR vehemently argued that the Assessing 20 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur Officer has not made satisfactorily enquiry to the issue on hand. Thus the order of the assessing officer is considered as erroneous and prejudicial to the interest of Revenue. Therefore, the power of Pr.CIT u/s 263 should be read in whole looking to the intention of the legislature. 20. In the rejoinder to the above submission of DR, the assessee submitted that explanation (2) to section 263 cannot over ridden the provision of section 263. He draw our attention to the provision of section 263 which he read and extracted herein below. “263 Revision of orders prejudicial to revenue (1) The [Principal Chief Commissioner or Chief Commissioner or] [Principal Commissioner or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer [or the Transfer Pricing Officer, as the case may be] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, [including,- (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA ; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section.]” 21. The ld. AR from the said provision argued that the ld. Pr.CIT suppose to view the record before him and record does not include the record of this particular year but it also includes the records of earlier years and he has not seen the previous year records. He has also submitted that while replying to the show cause notice u/s. 263 the ld. AR placed on record the fact that the assessment of Mohit Poddar is also completed based on the 21 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur these information and the same is already available on record. The ld. AR for this term record he has relied upon the decision of Hon’ble Gujarat High Court in the case of Vallabhdas Vithaldas [2005] 56 Taxman 300 wherein the Hon’ble Gujarat High Court has extracted the explanation given in the Finance Act, 1988 when the term records has been introduced in the Act and the relevant extract reads as under:- “48...... (a) On the interpretation of the term ‘record’ : it has been held in some cases that the word ‘record’ in Section 263(1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order was passed by the Assessing Officer. Such an interpretation is against the legislative intent and defeats the very objective sought to be achieved by such provisions, since the purpose is to revise the order on the basis of the record as it available to the Commissioner at the time of examination.” 22. Relying on the above judgment of the Hon’ble Gujarat High Court, the ld. AR of the assessee submitted that ld. Pr.CIT has not been seen the record in terms of MOU placed before him, the computation of income, records of the past assessment order of the other co-owners. In the assessment order merely, the AO in the relevant A.Y knowingly and unknowingly not called for particular record which is already available in the department record in the case of Mohit Poddar cannot be considered as afterthought. Their balance sheet and assessment submission spell about MOU, all these records were very well available before passing of an order on the record before him. Therefore, merely, the Assessing Officer has not called for the MOU and joint bank account, PCIT should not have consider the order as erroneous and prejudicial to the interest of the Revenue because the records suggest that it will not make difference, considering 22 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur the material available with the PCIT at the time of undertaking the proceedings under section 263. 23. We have heard the rival contentions, persuaded the submission made before us and order of the lower authorities. In order to consider the view, that whether the order is said to the erroneous and prejudicial to the interest of Revenue, we have perused the record submitted before us. The records were also placed on before the PCIT in the form of computation of income, MOU placed before the ld. Pr.CIT in response to the show cause notice in the submission, details of share in terms of percentage and share of investment in terms of money and consequent upon the relevant loan liability disclosed in the balance of Dr. Mohit and were also submitted in the notice issued u/s 143(2) in the case of Mohit Poddar. Details of another co- owners Pratima Poddar who is daughter-in-law of the assessee were also placed on record. In this case the share of percentage of the other joint co- owners in property has already been clearly appearing in the A.Y 2016-17 i.e. in the year of investment which is one year before the assessment is concluded in the year under consideration. The same has also been discussed and considered in the assessment proceedings for A.Y 2016-17 in that cases and each family share is disclosed before the capital gain arise in the year under consideration in the case of the assessee not only that the assessee has already disclosed her share in the computation of income and the AO satisfied with the disclosure made by the assessee merely AO has not called for certain more information knowingly and unknowingly, the fact of the case did not change and the allowability of the deduction and thereby based on that question only the order cannot be 23 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur considered as erroneous or prejudicial to the interest of revenue. Even otherwise considering the evidence placed on record the PCIT should have considered the records as the ultimate revenue is not affected considering the set of evidences placed on record. As the share of the assessee in the joint property is already reflected in the MOU, computation of income and the other joint holders have already disclosed their share in the property the share of the assessee in that property cannot be under questioned merely the MOU is executed after the purchase deed and the same is not placed on record. As regards the MOU as afterthought we found force in the arguments of the ld. AR that the same is already executed and declared about the share of the each co-owners the same by no means can be considered as afterthought, as MOU is duly signed and witnessed with date and same is executed before Notary public and cannot be termed as made merely to increase the claim in the return of income. Merely based on that assumption and presumptions the order passed by the assessing officer cannot be termed as order erroneous and prejudicial to the interest of revenue. 24. The ld. DR relied upon the case law of CIT Vs. Ballarpur Industries Ltd. reported at 85 Taxmann.com 10 wherein the issue is differently about the claim of the assessee under section 80HHC no evidence of examination of claim was made available whereas in this case the AO has already raised a question about the investment of the property by issue of notice dated 16.05.2019 and therefore, the fact is different and not applicable in this case and as regards the decision relied upon by the PCIT in the case of Gee Vee Enterprise where in also the AO has not made any 24 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur inquiry whereas in this case the AO has asked pointed question on the investment made by the assessee and considering the disclosure made by the assessee the same accepted and thus the case law relied upon are not applicable to the facts of this case. 25. In terms of these observation at this stage, we herein above based on the detailed observation that the ld. AO has already verified the claimed to his satisfaction and merely the claim is not verified with the MOU or other evidence the claim which is based on the evidence already considered cannot be revisited merely in the opinion of the PCIT the claim is not supported by the evidence in the manner desired by him. Therefore, in our considered view the assessment order cannot be said to the prejudicial and erroneous in the interest of Revenue, when all the information were already available on record. Respectfully following the decision of the Hon’ble Gujarat High Court clearly clarifying what is records. The court held that the term record not include the record of one year and one of the assessee but record includes as whole available at the time of making proceeding under section 263. Not only that the ld. AR of the assessee further relied upon the decision of Hon’ble jurisdictional High Court in the case of CIT Vs. Ganpat Ram Bishnoi 152 Taxman 242(Raj) where in the court has observed that “10. From the record of the proceedings, in the present case, no presumption can be drawn that the Assessing Officer had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the Assessing Officer was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction under section 263 of the Income-tax Act. 25 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 11. Undoubtedly, the jurisdiction under section 263 is wide and is meant to ensure that due revenue ought to reach the public treasury and if it does not reach on account of some mistake of law or fact committed by the Assessing Officer, the CIT can cancel that order and require the concerned Assessing Officer to pass a fresh order in accordance with law after holding a detailed enquiry. But when enquiry in fact has been conducted and the Assessing Officer has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings, in the present case, without anything to say how and why the enquiry conducted by the Assessing Officer was not in accordance with law, the invocation of jurisdiction by the CIT was unsustainable. As the exercise of jurisdiction by the CIT is founded on no material, it was liable to be set aside. Jurisdiction under section 263 cannot be invoked for making short enquiries or to go into) the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. 12. The finding of the Tribunal that the ITO had passed assessment order after relevant enquiries and considering the aspects of the matter required by the CIT to be considered by him is a finding of fact and on the basis of which, the jurisdiction assumed by the CIT being non-existent must be held to be not sustainable. 26. Thus, once we have satisfied that the AO has already raised a query and verified the claim of the assessee, considering the relevant material placed before us. The records already speak that the share of the assessee is 50 % therefore, considering the arguments of the ld. AR of the assessee, we found force that though AO seen the issue in the A.Y 2016- 17 may not have called for full details in A.Y 2017-18 merely on these issue in the year it cannot be said that the assessment order passed is erroneous and prejudicial to the interest of Revenue. Based on above arguments and facts on record in our considered view and considering the decision of the jurisdictional high court on the issue we hold that the ld. PCIT has wrongly invoked the provisions of section 263 of the Act and in terms of these observations, we quash the order of Pr.CIT passed u/s 263 of the Act. 26 ITA No. 188/JP/2022 Smt. Renu Poddar vs. Pr. CIT, Jaipur 27. In terms of this observations the grounds of appeal raised by the assessee are allowed. In the result the appeal of the assessee is allowed. Order pronounced in the open court on 21/07/2022. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 21/07/2022 *Ganesh Kr. vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Smt. Renu Poddar, Jaipur 2. izR;FkhZ@ The Respondent- Pr.CIT-2, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 188/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar