BILQUIS MOHD HUSSAIN KHAN, MUMBAI V. PR. CIT-17, MUMBAI

ITA 202/MUM/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5415 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 01-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VP AND SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No.202/Mum/2022 (निर्धारण वर्ा / Assessment Years: 2016-17) Bilquis Mohd Hussain Khan A-11, Plot No. 143, Indra Sukh CHSL 4, Bunglows, ESIC Nagar, Andheri (W), Mumbai-400053. बिधम/ Vs. PCIT-17 Room No.120, 1 st Floor, Kautilya Bhavan, C-41 to C-43, G Block, Bandra Kurla Complex Bandra (E), Mumbai-400051. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AKBPK5983D (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 28/06/2022 घोषणा की तारीख /Date of Pronouncement: 20/07/2022 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Principal Commissioner of Income Tax-17 [hereinafter referred to as the “PCIT”], Mumbai dated 27.03.2021 for assessment year 2016-17 passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. The main grievance of the assessee is against the action of the Ld. PCIT invoking jurisdiction u/s 263 of the Act without satisfying the essential conditions precedents i.e. without validly holding that the AO’s order is erroneous as well as prejudicial to the revenue. So, the impugned action of Ld PCIT was without jurisdiction. Assessee by: Shri B. N. Rao Revenue by: Dr. Mahesh Akhade (DR) ITA No.202/Mum/2022 A.Y. 2016-17 Bilquis Mohd. Hussain Khan 2 3. Brief facts are that the assessee had filed return of income declaring total income of Rs.5,19,029/-. Later, the case of the assessee was selected for limited scrutiny under CASS, for the following two (2) reasons (i) Capital gain/loss correctly shown in the return of income. (ii) Value of consideration for computation of capital gains has been correctly shown in the return of income. The AO notes in his assessment order that the assessee has declared income from salary and income from other sources. And further that the assessee has claimed carry forward losses of current year amounting to Rs.75,29,094/- which was on account of long term capital loss of (Rs.75,29,094/-) suffered due to sale of immovable property. In view of this, the AO asked the assessee to give details of the same; and pursuant to that the assessee furnished the copy of sale agreement as well as the purchase agreement (of immovable property); and as per the details submitted, the AO noted and that assesse had purchased the immovable property in question at Eco Residency at Rs.66,92,500/- on 24.02.2014 and had claimed to have incurred expenditure of Rs.33.85 lacs to make it habitable. Later, due to some financial constraints she had to sell the flat on 23.10.2015 to Shri Neerav Singh and Madhulika Ray for a consideration of Rs.1,08,00,000/-. And the AO notes that it was brought to his notice there was certain mistake in the computation of short term capital gain in the return of income, so she filed revised computation of income and offered to tax short term capital gain of Rs.1,49,925/-. The AO noted from the details submitted before him that the cost of expenditure on furniture and fixture was to the tune of ITA No.202/Mum/2022 A.Y. 2016-17 Bilquis Mohd. Hussain Khan 3 Rs.34,00,000/- and to substantiate the expenses the assessee had filed the invoices of Architect Yogesh Shelke. However, the AO was not satisfied as to the expenses claimed in respect of furniture and fixture. So he issued show cause notice to the assessee as to why the expenses should not be denied. Pursuant to the same, the assessee filed copies of invoices received from the brokers for purchase and sale of flat and also invoice received from Shri Yogesh Shelke. After considering the same, the AO was of the opinion that the expenses to the tune of Rs.8,14,750/- was not essential expenses for making the flat habitable and after spelling out the same in chart form, he restricted the expenditure on account of furniture and fixture at Rs.25,70,175/- and then computed the short term capital gain on sale of flat at Eco Residency at Rs.10,64,675/- which was added to the income of the assessee. This action/assessment order of the AO dated 29.12.2018 has been interdicted by impugned order passed by the Ld. PCIT on 27.03.2021 which has been challenged before us. 4. According to the Ld. PCIT, the AO while framing the assessment order has not made necessary inquiries and verification on the issue of expenditure claimed in respect of furniture and fixture. Therefore, according to him, the order of AO is erroneous as well as prejudicial to the revenue. For coming to such conclusion the Ld. PCIT alleged that the invoices filed by assessee to substantiate the expenses on furniture and fixture did not have proper Service Tax/VAT registration; and moreover he alleged that payments were made to architect in cash. Therefore, according to him, on this issue the AO ITA No.202/Mum/2022 A.Y. 2016-17 Bilquis Mohd. Hussain Khan 4 have not inquired before allowing it as per the Act. According to Ld. PCIT, he gave show cause notice to the assessee on 20.03.2021 and fixed the date of hearing on 25.03.2021 and since assessee failed to respond, he passed the impugned order on 27.03.2021 (one opportunity only given and impugned order is an ex-parte order). On both the aforesaid issues, according to the Ld. PCIT, the AO has not conducted proper inquiry. Therefore, according to him, the order of the AO was erroneous as well as prejudicial to the revenue. Therefore, he set aside the assessment order dated 29.12.2018 and directed the AO to frame afresh order de nova. This impugned action of Ld. PCIT has been challenged before us by the assessee. 5. Assailing the action of Ld PCIT, the Ld AR submitted that the Ld. PCIT has erroneously presumed that AO had not inquired into the issue whereas it can be seen that AO had restricted the expenditure to Rs.25,70,175/- and thereby has disallowed the expenditure to the tune of Rs.8,14,750/- after inquiry into the claim of expenditure on furniture and fixture. So according to assessee, the Ld. PCIT could not have invoked the revisional jurisdiction on this issue which has been inquired into by the AO. So the impugned action of Ld. PCIT is without jurisdiction. Per contra, the Ld CIT DR supported the action of Ld PCIT and does not want us to interfere with the impugned order. 6. We note that the assessee had claimed long term capital loss of Rs.75,29,094/- on sale of immovable property. And later when the assessee was confronted by the AO during assessment proceedings, the assessee brought to his notice that her Chartered Accountant has ITA No.202/Mum/2022 A.Y. 2016-17 Bilquis Mohd. Hussain Khan 5 wrongly made the computation of capital gain based on wrong inputs of some other clients. Thereafter, the assessee furnished revised computation of short term capital gain and revised computation of income and offered to tax short term capital gain of Rs.1,49,925/-. We note from perusal of the assessment order that the AO had inquired into the expenses claimed by the assessee in respect of furniture and fixture to the tune of Rs. 33,84,925/-. The AO had called for the supporting invoices of the architect and after going through the details of expenditure has restricted the expense for furniture and fixture at Rs.25,70,175/- and disallowed Rs.8,14,750/-. This action of the AO according to the Ld. PCIT is erroneous for lack of enquiry because the bills/invoices were not showing the details of registration VAT/Service tax and certain payments were made in cash. On this issue on which the Ld. PCIT found fault with by the AO for lack of proper inquiry, we find that the AO has made inquiries into same, i.e, in respect of the expenses claimed by assessee which assessee claimed to have incurred for furniture and fixture while AO was scrutinizing the claim of loss/gain on sale of immovable property as discussed (supra). In this regard, we note that the assessee had filed the details along with supporting documents regarding furniture and fixture which have been mentioned by the AO in his assessment order dated 29.12.2018. After applying his mind and after verification of relevant documents, the AO has disallowed Rs.8,14,750/- and allowed only Rs.25,70,175/- in respect of assessee’s claim of expenditure on this issue to the tune of Rs.33,84,925/-. Therefore, per-se the action of the AO cannot be called ITA No.202/Mum/2022 A.Y. 2016-17 Bilquis Mohd. Hussain Khan 6 as a case of “no inquiry”. According to us, AO while passing the assessment order on an issue had conducted inquiry and has taken a plausible view, and still if the Ld. PCIT wants to invoke jurisdiction u/s 263 of the Act, then in such an event, he himself should conduct inquiry and arrive at a conclusion which would show that AO’s view on the issue was “unsustainable in law”, then the Ld PCIT can be said to have validly invoked the revisional jurisdiction. Since we find in the present case that the AO had carried out inquiry on the issue which the Ld. PCIT holds erroneous for lack of inquiry, [alleging that the enquiry was not properly carried out], then in such an event, the Ld. PCIT himself had to conduct inquiry in respect of the issue and return a finding which could go on to show that AO’s view/action was “unsustainable in law”. Since such an exercise was not carried out by the Ld PCIT, the Ld PCIT ought not to have interdicted the assessment order. And therefore, we hold the impugned action of the Ld. PCIT to be without jurisdiction, therefore, we are inclined to quash it. 7. In the result, the appeal of the assessee is hereby allowed. Order pronounced in the open court on this 20/07/2022. Sd/- Sd/- (PRAMOD KUMAR) (ABY T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER Mumbai; Dated 20/07/2022. Vijay Pal Singh, (Sr. PS) ITA No.202/Mum/2022 A.Y. 2016-17 Bilquis Mohd. Hussain Khan 7 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यावपत प्रवत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai