SMT. LATA PHULWANI, JAIPUR V. PR. CIT-2, JAIPUR

ITA 246/JPR/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5464 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 18-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRISH BEDI
• Keywords: Revision of order; Principle of natural justice; Question of law; Cost of acquisition; Difference of opinion; Corroborative evidences; Valuation report; Assessment record; Prejudicial to interest; Change of opinion; Set aside; Capital Gains
• Section: 54; 263; 143(3); 54F; 142(1); 143(2); 13; 22; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH VC A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 246/JP/2020 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 SMT. LATA PHULWANI C/O RAMANAND GOYAL & CO., 801, SIGNATURE TOWER, DC-2, LAL KOTHI, BEHIND APEX BANK, TONK ROAD, JAIPUR. CUKE VS. THE PRINCIPAL CIT-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AQUPP 3217 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI HIMANSHU GOYAL (CA), MS. PREETI LOHIYA (CA) MS. PRANETI AGARWAL (CA) & SHRI NARENDRA MULCHANDANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI AMRISH BEDI (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24.09.2020. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 06/10/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E REVISION ORDER DATED 21 ST JANUARY, 2020 PASSED BY LD. PCIT UNDER SECTION 263 OF THE IT ACT FOR THE ASSESSMENT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-2, JAIPUR (PCIT-2) UNDER SECTION 263 OF THE IT ACT IS BAD BOT H IN THE EYE OF LAW AND ON FACTS. 2 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. PCIT GROSSLY ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE IT ACT, 1961 IN THE ASSESSEES CASE WITHOUT CONSIDERING THE MATERIAL FACT THAT NEITHER THE ASSESSMENT ORDER PASSED BY TH E LD. AO WAS ERRONEOUS NOR THE SAME WAS PREJUDICIAL TO THE I NTEREST OF THE REVENUE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE P ROCEEDINGS INITIATED UNDER SECTION 263 OF THE ACT ARE BAD IN L AW AND ON THE FACTS OF THE CASE. A. THAT THE LD. AO HAS CONDUCTED ASSESSMENT PROCEEDING S PROPERLY AND GRANTED THE RELIEF U/S 54F AFTER MAKIN G PROPER INQUIRY AND AFTER CONSIDERING ALL RELEVANT DETAILS PROVIDED BY THE ASSESSEE WITH RESPECT TO THE CLAIM MADE BY HER. B. THAT THE LD. PCIT HAS FAILED TO APPRECIATE THE FACT THAT AO HAS ADOPTED ONE OF THE POSSIBLE VIEWS OF THE MATTER AND THE JURISDICTION UNDER SECTION 263 OF THE ACT CANNOT BE EXERCISED MERELY TO SUBSTITUTE THE VIEW TAKEN BY THE AO. C. THAT THE ACTION OF THE LD. PCIT IS IN NEGATION OF O VERRIDING PRINCIPLES OF NATURAL JUSTICE WHICH WERE EXPLICITLY REQUIRED TO BE FOLLOWED WHILE EXERCISING THE POWER UNDER SECTIO N 263 OF THE ACT. D. THAT LD. PCT GROSSLY ERRED IN INVOKING PROVISIONS O F SECTION 263 BASED MERELY ON CHANGE OF OPINION. E. THAT THE LD. PCIT GROSSLY HAS ERRED BOTH ON FACTS A ND IN LAW, IN ASSUMING THE JURISDICTION U/S 263 OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING THE MATERIAL FACT THAT DUR ING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD BROUGHT ON RECORD ALL THE MATERIALS AND EVIDENCES R ELATING TO THE CONCERNING ISSUE AND THE SAME WERE DULY VERIFIE D BY THE AO BEFORE PASSING THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE. 4. THAT LD. PCIT HAS ERRED IN PROPOSING TO DISALLOW THE DEDUCTION OF RS. 9,67,47,645/- CLAIMED BY THE ASSESSEE U/S 54 F OF THE ACT IGNORING THE FACT THAT THE ASSESSEE PURCHASED THE A GRICULTURE LAND AND CONSTRUCTED A RESIDENTIAL HOUSE ON THE SAM E AND THE SAME IS ELIGIBLE TO CLAIM THE DEDUCTION U/S 54F OF THE ACT. 5. THAT THE LD. PCIT HAS ERRED IN PROPOSING TO DISA LLOW THE INDEXED COST OF CONSTRUCTION EXPENSES OF RS. 18,18,483/- MA DE BY THE ASSESSEE IN THE F.Y. 2007-08 IGNORING THE FACT THAT ASSESSEE HAS PROVIDED THE ALL RELEVANT DETAILS TO PROVE THE SAID TRANSACTION GENUINE. 3 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. 6. THAT THE LD. PCIT HAS ERRED IN PROPOSING TO DISA LLOW THE INDEXED COST OF CONSTRUCTION EXPENSES OF RS. 13,46,834/- MA DE BY THE ASSESSEE IN THE F.Y. 2010-11 IGNORING THE FACT THAT ASSESSEE HAS PROVIDED THE ALL RELEVANT DETAILS TO PROVE THE SAID TRANSACTION GENUINE. 7. THAT THE LD. PCIT HAS ERRED IN LAW AND ON FACTS IN IGNORING THE PRINCIPAL OF LAW THAT THE BENEFICIAL PROVISIONS MUS T BE CONSIDERED LIBERALLY. 8. THAT THE LD. PCIT HAS ERRED IN PROPOSING THE DIS ALLOWANCE IGNORING THE FACT THAT THE APPELLANT HAS INVESTED T HE ENTIRE CONSIDERATION RECEIVED BY HER IN PURCHASE RESIDENTI AL HOUSE AND HAS RIGHTLY CLAIMED DEDUCTION UNDER SECTION 54F. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AN D/OR AMEND ANY GROUND OF APPEAL AS AND WHEN CONSIDERED NECESSARY. THE HEARING OF THE APPEAL IS CONCLUDED THROUGH VIDE O CONFERENCE DUE TO PREVAILING CONDITION OF COVID 19 PANDEMIC. 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED HER RETU RN OF INCOME ON 30 TH MARCH, 2016 DECLARING TOTAL INCOME OF RS. 1,50,41,430/-. T HE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NOTICE UNDER SECTION 143 (2) WAS ISSUED BY THE AO ON 19.09.2016. THEREAFTER, THE AO ALSO ISSUED NOTICE UNDER SECTION 142(1) ALONG WITH THE QUESTIONNAIRE ON 14.07.2017. IN RESPONSE TO TH E SAID NOTICE, THE ASSESSEE FILED THE REQUISITE DETAILS AND DOCUMENTS AS WELL AS PROD UCED BOOKS OF ACCOUNT FOR EXAMINATION AND VERIFICATION OF THE AO. THE AO PAS SED THE ASSESSMENT ORDER UNDER SECTION 143(3) ON 18.12.2017 AT THE RETURNED INCOME OF THE ASSESSEE. THEREAFTER, THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX (PCIT) ON PERUSAL OF THE ASSESSMENT RECORD NOTICED THAT THE DEDUCTION UNDER SECTION 54F HAS BEEN ALLOWED BY THE AO IN 4 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. RESPECT OF PURCHASE OF AGRICULTURAL LAND AND CONSTR UCTION OF HOUSE WHICH IS NOT ADMISSIBLE. ACCORDINGLY, THE LD. PCIT HAS ISSUED A SHOW CAUSE NOTICE DATED 4 TH FEBRUARY, 2019 UNDER SECTION 263 OF THE IT ACT WHER EBY PROPOSED TO MODIFY THE ORDER OF THE AO ON THE ISSUE OF ALLOWING THE DEDUCT ION UNDER SECTION 54F OF THE ACT. THE ASSESSEE FILED HER REPLY TO THE SHOW CAUSE NOTI CE AND CONTENDED BEFORE THE LD. PCIT THAT THIS LIMITED SCRUTINY WAS TAKEN UP BY THE AO ONLY IN RESPECT OF THE LARGE INVESTMENT IN THE PROPERTY AND DEDUCTION CLAIMED UN DER SECTION 54F OF THE IT ACT. THE ASSESSEE PRODUCED ALL THE RELEVANT DETAILS, DOC UMENTS AS WELL AS BOOKS OF ACCOUNT IN SUPPORT OF THE CLAIM OF DEDUCTION UNDER SECTION 54F WHICH WAS DULY EXAMINED AND VERIFIED BY THE AO AND ONLY WHEN THE A O WAS SATISFIED WITH THE CLAIM OF ASSESSEE, THE ASSESSMENT ORDER WAS PASSED ACCEPT ING THE RETURNED INCOME. THUS THE ASSESSEE CONTENDED BEFORE THE LD. PCIT THAT IT IS NOT A MERE PURCHASE OF AGRICULTURAL LAND BUT A RESIDENTIAL HOUSE WAS CONST RUCTED ON THE SAID LAND AND, THEREFORE, THE DEDUCTION IS AVAILABLE UNDER SECTION 54F OF THE ACT. THE AO HAS CONDUCTED ADEQUATE ENQUIRY ON THIS ISSUE AND AFTER SATISFYING HIMSELF HAS ALLOWED THE CLAIM. THEREFORE, THE ASSESSEE OBJECTED TO THE INVOKING OF THE PROVISIONS OF SECTION 263 BY THE LD. PCIT. THE LD. PCIT DID NOT ACCEPT THE REPLY OF THE ASSESSEE AND ALSO CONDUCTED A FURTHER ENQUIRY IN THE MATTER THROUGH THE AO AND THEREAFTER PASSED THE IMPUGNED ORDER WHEREBY THE ASSESSMENT OR DER WAS SET ASIDE BEING ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND REMITTED BACK THE MATTER TO THE AO WITH THE DIRECTION TO PASS THE FRE SH ORDER AFTER TAKING INTO ACCOUNT ALL NECESSARY FACTS AND DETAILS CONNECTED WITH THE CLAIM OF DEDUCTION UNDER SECTION 5 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. 54F OF THE IT ACT. AGGRIEVED BY THE IMPUGNED ORDER , THE ASSESSEE HAS FILED THE PRESENT APPEAL. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE LD. PCIT HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 263 OF TH E IT ACT AS THE MATTER WAS DULY EXAMINED BY THE AO DURING THE SCRUTINY ASSESSMENT A ND PARTICULARLY WHEN THE CASE WAS SELECTED FOR LIMITED SCRUTINY ON THE VERY ISSUE OF INVESTMENT MADE IN THE PROPERTY AS WELL AS DEDUCTION CLAIMED UNDER SECTION 54F OF THE ACT. THUS THE LD. A/R OF THE ASSESSEE HAS CONTENDED THAT THE AO CALLED FO R THE RELEVANT DETAILS, DOCUMENTS AS WELL AS BOOKS OF ACCOUNT WHICH WERE DULY PRODUCE D BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE AO HAS TAKEN INTO CONS IDERATION ALL THE MATERIAL PLACED BEFORE HIM AND AFTER DUE APPLICATION OF LAW AND CONSIDERATION OF FACTS, HE REACHED AT THE CONCLUSION WHILE PASSING THE ASSESSM ENT ORDER UNDER SECTION 143(3) ALLOWING THE DEDUCTION UNDER SECTION 54F OF THE ACT . THE LD. A/R HAS FURTHER CONTENDED THAT IT WAS NOT A CASE OF NO ENQUIRY COND UCTED BY THE AO WHILE COMPLETING THE ASSESSMENT, RATHER THE AO HAS CONDUC TED NECESSARY AND PROPER ENQUIRY BEFORE REACHING AT THE CONCLUSION. THUS TH E ORDER PASSED BY THE AO UNDER SECTION 143(3) OF THE ACT WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE HAS ASSERTED THAT RECOURSE TO SECT ION 263 CANNOT BE TAKEN IF THE IMPUGNED ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE OR IF IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE B UT NOT ERRONEOUS. BOTH THE CONDITIONS ARE REQUIRED TO BE SATISFIED FOR INVOKIN G THE REVISIONARY POWERS UNDER SECTION 263 OF THE ACT. SINCE THE AO CONDUCTED A P ROPER ENQUIRY AND EXAMINED ALL THE RELEVANT EVIDENCES, DETAILS AS WELL AS BOOKS OF ACCOUNT, IT CANNOT BE SAID THAT THE 6 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. ORDER IS ERRONEOUS FOR WANT OF ENQUIRY OR APPLICATI ON OF MIND BY THE AO. HENCE, THE ACTION UNDER SECTION 263 WAS NOT VALID AND LIABLE T O BE QUASHED. THE LD. A/R HAS RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL DATED 11.09.2020 IN CASE OF SHRI RAJENDRA KUMAR SHARMA VS. JCIT IN I TA NO. 358/JP/2015 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT A DEDUCTI ON UNDER SECTION 54F CANNOT BE DENIED ON THE GROUND THAT THE ASSESSEE GOT CONSTRUC TED A RESIDENTIAL HOUSE ON THE AGRICULTURAL LAND. THE TRIBUNAL HAS CONSIDERED VAR IOUS DECISIONS ON THIS POINT AND FINALLY COME TO THE CONCLUSION THAT THE DEDUCTION U NDER SECTION 54F IS ALLOWABLE IN RESPECT OF THE AMOUNT INVESTED IN CONSTRUCTION OF R ESIDENTIAL HOUSE. THEREFORE, THE COST OF ACQUISITION OF THE PLOT TOGETHER WITH COST OF CONSTRUCTION OF THE HOUSE WILL BE CONSIDERED AS COST OF NEW ASSET FOR THE PURPOSE OF ALLOWING DEDUCTION UNDER SECTION 54F. THUS THE AO HAS TAKEN A POSSIBLE VIEW ON THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F IN RESPECT OF THE INVESTMENT MADE IN CONSTRUCTION OF RESIDENTIAL HOUSE ON AGRICULTURAL LAND. ONCE THE AO HAS TAKEN A POSSIBLE VIEW, THE LD. PCIT IS NOT ALLOWED TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT MERELY BECAUSE HE DOES NOT AGREE WITH THE VIEW TAKEN BY THE AO. IN S UPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISIONS :- M/S. MALABAR INDUSTRIAL CO. VS. CIT, KERALA. (2000) 243 ITR 83 (SC) SMT. RAJNEET SANDHU VS. DCIT (2011) 16 TAXMANN.COM 210 (CHANDIGARH) M/S. HARI OM STONES C/O SH. OM PRAKASH SHARMA VS. PCIT, ALWAR (2018) (4) TMI 393- ITAT JAIPUR. 7 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. THUS THE LD. A/R HAS SUBMITTED THAT ONCE THE AO HAS CONDUCTED A PROPER ENQUIRY AND EXAMINED ALL THE DETAILS AND EVIDENCES CONNECTE D WITH THE CLAIM OF DEDUCTION UNDER SECTION 54F AND ALLOWED THE CLAIM, THEN THE I NVOKING OF PROVISIONS OF SECTION 263 AND PASSING THE IMPUGNED ORDER BY THE LD. PCIT IS INVALID AND LIABLE TO BE SET ASIDE. 4. ON THE OTHER HAND, THE LD. CIT D/R HAS SUBMITTED THAT IT IS A CLEAR CASE OF NON APPLICATION OF MIND BY THE AO WHILE PASSING THE ASS ESSMENT ORDER. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS CLAIMED THE DEDUCTI ON UNDER SECTION 54F IN RESPECT OF THE INVESTMENT MADE IN THE PURCHASE OF AGRICULTU RAL LAND AND A SMALL CONSTRUCTION WAS MADE BY THE ASSESSEE ON THE SAID LAND WHICH CAN NOT BE SAID TO BE A RESIDENTIAL HOUSE. HE HAS REFERRED TO THE IMPUGNED ORDER OF THE LD. PCIT AND SUBMITTED THAT DURING THE REVISION PROCEEDINGS, THE LD. PCIT HAS C ONDUCTED AN ENQUIRY AND FOUND THAT THE CONSTRUCTION ON THE AGRICULTURAL LAND WAS NOT A RESIDENTIAL HOUSE AS IT IS NOT INHABITABLE IN THE ABSENCE OF THE BASIC AMENITIES. THUS THE ORDER OF THE AO IS ERRONEOUS FOR WANT OF AN ENQUIRY AS WELL AS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE AS IMPERMISSIBLE DEDUCTION UNDER SECTION 54 F WAS ALLOWED BY THE AO. THE LD. D/R HAS SUBMITTED THAT THE VALUATION IN RESPECT OF COST OF CONSTRUCTION OF THE STRUCTURE ON THE AGRICULTURAL LAND IS VERY NEGLIGIB LE IN COMPARISON TO THE COST OF THE LAND. THEREFORE, ONLY TO CLAIM THE DEDUCTION UNDER SECTION 54F, THE ASSESSEE HAS CONSTRUCTED A SMALL STRUCTURE WHICH CANNOT BE SAID TO BE A RESIDENTIAL HOUSE. HE HAS RELIED UPON THE IMPUGNED ORDER OF THE LD. PCIT AS W ELL AS THE DECISION OF CUTTACK BENCH OF THE TRIBUNAL IN THE CASE OF CUTTACK DEVELO PMENT AUTHORITY VS. CIT DATED 5 TH MARCH, 2018 IN ITA NO. 361/CTK/2014. 8 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE HAVE CAREFULLY PERUSED THE ASSESSMENT O RDER PASSED BY THE AO UNDER SECTION 143(3), SHOW CAUSE NOTICE ISSUED BY THE LD. PCIT UNDER SECTION 263 OF THE ACT AS WELL AS THE IMPUGNED ORDER PASSED UNDER SECT ION 263. IT IS MANIFEST FROM THE RECORD THAT THE CASE OF THE ASSESSEE WAS TAKEN UP F OR LIMITED SCRUTINY AS PER THE NOTICE ISSUED UNDER SECTION 143(2) DATED 19.09.2016 , THE RELEVANT PART OF THE SAID NOTICE LISTING THE ISSUES IDENTIFIED FOR EXAMINATIO N ARE AS UNDER :- THIS IS FOR YOUR KIND INFORMATION THAT THE RETUR N OF INCOME FOR ASSESSMENT YEAR 2015-16 FILED VIDE ACK. NO. 1348311 80300316 ON 30/03/2016 HAS BEEN SELECTED FOR SCRUTINY. FOLLOWI NG ISSUES HAVE BEEN IDENTIFIED FOR EXAMINATION :- I. PURCHASE OF PROPERTY II. DEDUCTION CLAIMED UNDER THE HEAD CAPITAL GAINS 2. IN VIEW OF THE ABOVE, WE WOULD LIKE TO GIVE YOU AN OPPORTUNITY TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE W HICH YOU FEEL IS NECESSARY IN SUPPORT OF THE SAID RETURN OF INCOM E ON 26/09/2016 AT 11:00 AM IN THE OFFICE OF THE UNDERSIGNED. THUS IT IS CLEAR THAT THE CASE WAS SELECTED FOR LIM ITED SCRUTINY ON THE ISSUE OF PURCHASE OF PROPERTY AND DEDUCTION CLAIMED UNDER TH E HEAD CAPITAL GAINS. BOTH THESE ISSUES ARE INTER-CONNECTED AS THE DEDUCTION U NDER SECTION 54F WAS CLAIMED BY THE ASSESSEE IN RESPECT OF PURCHASE OF PROPERTY AND CONSTRUCTION OF RESIDENTIAL HOUSE ON THE SAID LAND. THE AO, THEREAFTER ISSUED NOTICE UNDER SECTION 142(1) DATED 14.07.2017 ALONG WITH A QUESTIONNAIRE. THESE FACTS ARE ALSO EVIDENT FROM THE ASSESSMENT ORDER IN PARA 1 AND 2 AS UNDER :- 9 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. THEREAFTER, THE CASE WAS TRANSFERRED TO THE OFFIC E OF THE UNDERSIGNED FROM THE ITO WARD 4(1) JAIPUR ON 26.05.2017 AND DUE TO CHANGE OF INCUMBENT OF CHARGES, NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE ISSUED ON 14.07.2017 FIXING THE CASE OF HEARING ON 20.07.2017 WHICH WAS DULY SERVED UPON THE ASSESSEE ON 15.07.2017. IN RESPONSE THERETO, THE CA/AR OF THE ASSESSEE SH. AJAY JAIN AT TENDED THE PROCEEDINGS FROM TIME TO TIME AND FURNISHED REQUIRE D DETAILS/DOCUMENTS AND ALSO PRODUCED BOOKS OF ACCOUN TS, WHICH WERE EXAMINED ON TEST CHECK BASIS. THE CASE WAS DISCUSSE D WITH HIM. 2. THE ASSESSEE EARNED INCOME FROM CAPITAL GAIN AND INTEREST. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WRITTEN SUBMISSIONS WERE FILED PLACED ON FILE AND OTHER DETAILS WERE PRODUCE D WHICH WERE EXAMINED ON TEST CHECK BASIS. AFTER DISCUSSION WIT H THE A/R OF THE ASSESSEE, THE RETURNED INCOME IS ACCEPTED. THUS IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 142(1), THE ASSESSEE ATTENDED THE PROCEEDINGS THROUGH HER A/R AND ALSO FURNISHED THE REQUIRED DETAILS/DOCUMENTS AS WELL AS BOOKS OF ACCOUNT WHICH WERE EXAMINED BY THE AO. THERE IS NO DISPUTE THAT THE AO HAS CONDUCTED THE ENQUIRY ON THE ISSUE FOR WHICH THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SATISFYING HIMSELF THE AO FI NALLY CONCLUDED THAT THE ASSESSEE EARNED THE INCOME FROM CAPITAL GAIN AND INTEREST. THE DETAILS AND RECORDS PRODUCED BEFORE HIM WERE EXAMINED AND THEREAFTER THE RETURNE D INCOME IS ACCEPTED. THUS IT IS NOT A CASE OF LACK OF ENQUIRY ON THE PART OF THE AO. THOUGH THE AO HAS NOT DISCUSSED THE ISSUE IN ELABORATE MANNER, BUT ONCE H E WAS SATISFIED WITH THE SUPPORTING EVIDENCES PRODUCED BY THE ASSESSEE HE HA S ACCEPTED THE CLAIM. THE LD. PCIT HAS INVOKED THE PROVISIONS OF SECTION 263 BY I SSUING THE SHOW CAUSE NOTICE DATED 4 TH FEBRUARY, 2019 AT PAGES 16 & 17 OF THE PAPER BOOK AS UNDER :- 10 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. 11 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. THUS IT IS CLEAR FROM THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 THAT THE LD. PCIT HAS INVOKED THE PROVISIONS OF SECTION 263 ONLY ON THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F IN RESPECT OF THE INVES TMENT MADE BY THE ASSESSEE TOWARDS COST OF AGRICULTURAL LAND AND CONSTRUCTION OF HOUSE. THE SOLE GROUND FOR INITIATING THE PROCEEDINGS UNDER SECTION 263 BY THE LD. PCIT IS THAT IN HIS VIEW THE CLAIM OF DEDUCTION IN RESPECT OF AGRICULTURAL LAND IS NOT ADMISSIBLE. AS APPARENT FROM THE SHOW CAUSE NOTICE THAT THE SCOPE OF PROCEEDINGS UNDER SECTION 263 WAS LIMITED 12 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. ONLY ON THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDE R SECTION 54F IN RESPECT OF THE AGRICULTURAL LAND ACQUIRED BY THE ASSESSEE AND USED FOR CONSTRUCTION OF HOUSE. THERE WAS NO ALLEGATION BY THE LD. PCIT ABOUT THE L ACK OF ENQUIRY ON THE PART OF THE AO WHILE PASSING THE ASSESSMENT ORDER. EVEN OTHERWI SE, IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE CASE WAS SELECTED FOR LIM ITED SCRUTINY ONLY ON THE ISSUE OF INVESTMENT MADE IN THE AGRICULTURAL LAND AND DEDUCT ION UNDER SECTION 54F OF THE IT ACT. THEREFORE, THE QUESTION OF LACK OF ENQUIRY DO ES NOT ARISE WHEN THE AO HAS TAKEN UP THE SCRUTINY AND ISSUED THE NOTICE UNDER S ECTION 142(1) ALONG WITH A QUESTIONNAIRE CALLING FOR ALL THE DETAILS RELEVANT TO THE ACQUISITION OF THE LAND AS WELL AS OF CONSTRUCTION OF HOUSE. IT IS ALSO NOT IN DI SPUTE THAT THE ASSESSEE PRODUCED THE RELEVANT DETAILS AND EVIDENCES AND SPECIFICALLY THE PURCHASE DOCUMENTS FOR ACQUIRING THE AGRICULTURAL LAND AS WELL AS THE VALUATION REPO RT TOWARDS THE COST OF CONSTRUCTION. THE LD. PCIT HAS ALSO NOT DOUBTED THE FACTS AS BROU GHT ON RECORD BY THE ASSESSEE AND CONSIDERED BY THE AO WHILE PASSING THE ASSESSME NT ORDER. THE PROVISIONS OF SECTION 263 WERE INVOKED BY THE LD. PCIT DUE TO THE REASON THAT HE HAS A DIFFERENT VIEW REGARDING THE ALLOWABILITY OF DEDUCTION UNDER SECTION 54F IN RESPECT OF THE INVESTMENT MADE FOR PURCHASE OF AGRICULTURAL LAND A ND CONSTRUCTION OF HOUSE. THERE IS NO QUARREL ON THE POINT THAT LACK OF ENQUI RY RENDERS THE ORDER OF THE AO AS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HOWEVER, WHEN THERE IS NO ALLEGATION AND EVEN OTHERWISE IT IS MANIFEST FROM THE RECORD THAT THIS IS NOT A CASE OF LACK OF ENQUIRY ON THE PART OF THE AO BUT T HE AO AFTER SATISFYING HIMSELF ABOUT THE CLAIM OF DEDUCTION UNDER SECTION 54F CONS EQUENT UPON THE EXAMINATION AND VERIFICATION OF THE CONCERNED DETAILS, EVIDENCE S AND BOOKS OF ACCOUNT PRODUCED 13 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. BY THE ASSESSEE, ALLOWED THE CLAIM OF THE ASSESSEE. FURTHER, THOUGH THE LD. PCIT HAS NOT ALLEGED THAT THERE IS INADEQUATE ENQUIRY ON THE PART OF THE AO, HOWEVER, EVEN IN CASE THERE IS INADEQUATE ENQUIRY ON THE PAR T OF THE AO, THE LD. PCIT CAN GIVE A CONCLUDING FINDING WHILE PASSING THE REVISION ORD ER AFTER CONSIDERING THE COMPLETE RECORD AS WELL AS CONDUCTING A NECESSARY ENQUIRY. IN THIS CASE THE ASSESSEE HAS CONTENDED BEFORE THE LD. PCIT THAT THE CLAIM OF DED UCTION UNDER SECTION 54F IS ELIGIBLE EVEN IF THE RESIDENTIAL HOUSE IS CONSTRUCT ED ON THE AGRICULTURAL LAND. THE CRUX OF THE ARGUMENT OF THE ASSESSEE HAS BEEN REPRODUCED BY THE LD. PCIT IN PARA 5 OF THE IMPUGNED ORDER. THUS THE ASSESSEE HAS CITED VA RIOUS DECISIONS IN SUPPORT OF HER CLAIM. THE LD. PCIT HAS TURNED DOWN THE CONTENTION S OF THE ASSESSEE AND HAS GONE FURTHER TO VERIFY THE FACTS BY CONDUCTING AN ENQUIR Y. THIS EXERCISE OF THE LD. PCIT IN CONDUCTING THE ENQUIRY TO FIND THE FACTS IS BEYOND THE SCOPE OF THE PROCEEDINGS INITIATED UNDER SECTION 263 BY ISSUING THE SHOW CAU SE NOTICE DATED 4 TH FEBRUARY, 2019. IN THE SAID SHOW CAUSE NOTICE, THE LD. PCIT HAS RAISED ONLY ONE ISSUE I.E. PURELY A VIEW REGARDING THE ALLOWABILITY OF THE DED UCTION UNDER SECTION 54F IN RESPECT OF THE INVESTMENT MADE FOR CONSTRUCTION OF HOUSE ON AGRICULTURAL LAND. WHEREAS IN THE PROCEEDINGS UNDER SECTION 263 THE LD . PCIT HAS TRAVELLED BEYOND THE SCOPE OF PROCEEDINGS AS INITIATED VIDE SHOW CAUSE N OTICE DATED 4 TH FEBRUARY, 2019. THEREFORE, THE PROCEEDINGS WHICH ARE BEYOND THE SCO PE OF THE REVISIONAL PROCEEDINGS, ARE NOT PERMISSIBLE AS NOT AN ISSUE IN VOLVED IN THE SHOW CAUSE NOTICE. 6. FURTHER, ONCE IT IS NOT A CASE OF LACK OF ENQUIR Y OR INADEQUATE ENQUIRY AS PER THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF T HE ACT, THEN CONDUCTING A FURTHER ENQUIRY ON THE FACTUAL ASPECTS OF THE INVESTMENT MA DE IN PURCHASE OF AGRICULTURAL 14 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. LAND AND CONSTRUCTION OF THE HOUSE IS BEYOND THE JU RISDICTION OF THE LD. PCIT AS ASSUMED BY ISSUING SHOW CAUSE NOTICE UNDER SECTION 263. THE FINDING OF THE LD. PCIT IN THE REVISION ORDER OUGHT TO HAVE BEEN CONFI NED ON THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F. SINCE THE LD. PCIT WA S NOT AGREEING WITH THE VIEW OF THE AO REGARDING THE CLAIM OF DEDUCTION UNDER SECTI ON 54F, AT THE OUTSET, HE WAS REQUIRED TO GIVE A CONCLUDING FINDING ON THE ISSUE. ON THE CONTRARY, THE LD. PCIT HAS REMITTED THE ISSUE TO THE AO IN PARA 7 AS UNDER :- 7. IN VIEW OF THE ABOVE I HOLD THAT THE ORDER PAS SED BY THE AO IN THIS CASE FOR THE A.Y. 2015-16 ON 18.12.2017 IS ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. THE ORDER DATED 18.12.2017 PASSED U/S 143(3) OF THE ACT DESERVES TO BE SET-ASI DE. AO WILL PASS THE ORDER AFTER TAKING INTO ACCOUNT ALL NECESSARY F ACTS AND DETAILS CONNECTED WITH THE CLAIM OF DEDUCTION U/S 54F OF TH E ACT AND THE CLAIM OF INDEXED COST OF CONSTRUCTION/IMPROVEMENTS ON THE LAND SOLD BY THE ASSESSEE AMOUNTING TO RS. 18,18,483/- (PERTAINING T O F.Y. 2007-08) AND OF RS. 13,46,834/- (PERTAINING TO F.Y. 2010-11) . THUS WHILE PASSING THE REVISION ORDER, THE LD. PCIT HIMSELF WAS NOT SURE ABOUT THE CORRECTNESS OF THE CLAIM AND HAS REMANDED THE MATTE R TO THE RECORD OF THE AO FOR PASSING A FRESH ORDER. HENCE HE HAS NOT GIVEN A CON CLUDING FINDING WHETHER THE ORDER OF THE AO ALLOWING THE CLAIM OF DEDUCTION UND ER SECTION 54F AFTER CONDUCTING AN ENQUIRY IS ABSOLUTELY AGAINST THE PROVISIONS OF LAW. ONCE IT IS NOT A CASE OF LACK OF ENQUIRY ON THE PART OF THE AO, THE SAID ORDER CANNO T BE HELD TO BE ERRONEOUS UNLESS THE LD. PCIT HOLDS AND RECORDS THE REASON WHY IT IS ERRONEOUS. THE PRE-CONDITION 15 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. FOR INVOKING THE JURISDICTION UNDER SECTION 263 IS THAT THE LD. PCIT MUST COME TO THE CONCLUSION THAT THE ORDER OF THE AO IS ERRONEOUS AN D IS UNSUSTAINABLE IN LAW. WHEN THE ORDER PASSED BY THE AO IS NOT ERRONEOUS FOR WAN T OF AN ENQUIRY, THEN IT IS INCUMBENT UPON THE LD. PCIT TO GIVE A CONCLUDING FI NDING AND REASONS THAT THE ORDER IS NOT SUSTAINABLE IN LAW. AN IDENTICAL ISSUE WAS CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. GANPAT RAM VISHNOI, 296 ITR 292 (RAJ.) IN PARA 7 TO 12 AS UNDER :- 7. IN THIS CONNECTION, IT WOULD BE RELEVANT TO REFER TO THE MATERIAL WHICH WAS RELIED BY THE TRIBUNAL TO SET ASIDE THE ORDER OF TH E CIT. THE TRIBUNAL NOTICED THAT AS PER THE RECORD OF THE PROCEEDINGS; ON 16-10-1995, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROD UCE DOCUMENTS OR MATERIAL IN RELATION TO 10 DIFFERENT ITEMS, WHICH INCLUDED T HE DETAILS OF CAPITAL CONTRIBUTED BY PARTNERS, DETAILS OF PURCHASES MADE IN EXCESS OF RS. 20,000 WITH EVIDENCE, CONFIRMATION OF UNSECURED LOANS, AMO NGST OTHER MATTERS, WHICH THE ASSESSING OFFICER DESIRED TO ENQUIRE INTO. THE ASSESSEE HAS PRODUCED DESIRED INFORMATION BY 15 -11-1995. THERE-AFTER, THE CASE WAS ADJOURNED TO 22-11-1996 AND 1-12-1995. ON 5-12-1995, THE ASSESSING OFFICER STUDIED THE SUNDRY CREDITORS, UNS ECURED LOANS AND DESIRED TO FURNISH AFFIDAVITS OF UNSECURED LOANS AND DETAILS O F INTEREST PAID AND THE CASE WAS ADJOURNED TO 19-1-1996. ON 19-1-1996, THE ASSES SING OFFICER AGAIN REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF PAR TNERS CAPITAL ACCOUNTS AND ALSO TO PRODUCE VOUCHER FOR EXPENSES AND THE MATTER WAS ADJOURNED FOR 23-1-1996. ON 23-1-1996, THE CASE WAS DISCUSSED AND FINALISED. AFTER THAT, ASSESSMENT WAS COMPLETED BY PASSING ASSESSMENT ORDER. THESE MA TTERS CLEARLY INDICATE THAT THE ASSESSING OFFICER PARTICULARLY MADE REFERE NCE TO THE MATTERS, WHICH THE CIT HAS OPINED WERE NOT INQUIRED. THUS, ACCORDING TO THE TRIBUNAL, THE FOUNDATION TO EXERCISE POWER UNDER SECTION 263 OF THE INCOME-TAX ACT, WAS NOT EXISTING . 8. WE ARE OF THE OPINION IN THE AFORESAID CIRCUMSTANC ES ON THE FINDING REACHED BY THE ASSESSING OFFICER, NO QUESTION OF LAW REALLY ARISES FOR CONSIDERATION IN THIS APPEAL. 9. IT IS TRUE THAT IN A GIVEN CASE NOT HOLDING OF ANY ENQUIRY, WHICH IS RELEVANT FOR ASSESSMENT MAY INDICATE NON-APPLICATION OF MIND BY ASSESSING OFFICER OR FURNISH THE GROUND FOR TAKING ACTION UNDER SECTION 263 BY THE CIT. IN THIS CONNECTION, REFERENCE MAY BE MADE IN THE CA SE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 1 (SC), WHEREIN THE CIT OPINED THAT THE ITO 16 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. HAS PASSED THE ORDER OF ' NIL ' ASSESSMENT WITHOUT APPLICATION OF MIND. THE HIGH COURT ACCEPTED THIS PART OF THE ASSERTION MADE BY THE CIT IN HIS ORDER THAT THE ITO HAS FAILED TO APPLY HIS MIND TO THE CA SE IN ALL PERSPECTIVES AND THE ORDER PASSED BY HIM WAS ERRONEOUS. THE HIGH COURT H AS ALSO FOUND THAT THE ASSESSMENT ORDER WAS PASSED WITHOUT APPLICATION OF MIND. THE HIGH COURT RIGHTLY HELD THAT THE EXERCISE OF JURISDICTION BY T HE CIT UNDER SECTION 263(1) WAS JUSTIFIED. 10. FROM THE RECORD OF THE PROCEEDINGS, IN THE PRESENT CASE, NO PRESUMPTION CAN BE DRAWN THAT THE ASSESSING OFFICER HAD NOT APP LIED ITS MIND TO THE VARIOUS ASPECTS OF THE MATTER. IN SUCH CIRCUMSTANCES, WITHO UT EVEN PRIMA FACIE LAYING FOUNDATION FOR HOLDING THAT ASSESSMENT ORDER IS ERR ONEOUS AND PREJUDICIAL TO INTEREST IN ANY MATTER MERELY ON SPACIOUS GROUND TH AT 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. 11. UNDOUBTEDLY, THE JURISDICTION UNDER SECTION 263 IS WIDE AND IS MEANT TO ENSURE THAT DUE REVENUE OUGHT TO REACH THE PUBLIC T REASURY AND IF IT DOES NOT REACH ON ACCOUNT OF SOME MISTAKE OF LAW OR FACT COM MITTED BY THE ASSESSING OFFICER, THE CIT CAN CANCEL THAT ORDER AND REQUIRE THE CONCERNED ASSESSING OFFICER TO PASS A FRESH ORDER IN ACCORDANCE WITH LA W AFTER HOLDING A DETAILED ENQUIRY. BUT WHEN ENQUIRY IN FACT HAS BEEN CONDUCTE D AND THE ASSESSING OFFICER HAS REACHED A PARTICULAR CONCLUSION, THOUGH REFERENCE TO SUCH ENQUIRIES HAS NOT BEEN MADE IN THE ORDER OF THE ASSESSMENT, B UT 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 ASSESS ING OFFICER WAS NOT IN ACCORDANCE WITH LAW, THE INVOCATION OF JURISDICTION BY THE CIT WAS UNSUSTAINABLE. AS THE EXERCISE OF JURISDICTION BY T HE CIT IS FOUNDED ON NO MATERIAL, IT WAS LIABLE TO BE SET ASIDE. JURISDICTI ON UNDER SECTION 263 CANNOT BE INVOKED FOR MAKING SHORT ENQUIRIES OR TO GO INTO TH E PROCESS OF ASSESSMENT AGAIN AND AGAIN MERELY ON THE BASIS THAT MORE ENQUI RY OUGHT TO HAVE BEEN CONDUCTED TO FIND SOMETHING. 12. THE FINDING OF THE TRIBUNAL THAT THE ITO HAD PASSE D ASSESSMENT ORDER AFTER RELEVANT ENQUIRIES AND CONSIDERING THE ASPECTS OF T HE MATTER REQUIRED BY THE CIT TO BE CONSIDERED BY HIM IS A FINDING OF FACT AN D ON THE BASIS OF WHICH, THE JURISDICTION ASSUMED BY THE CIT BEING NON-EXISTENT MUST BE HELD TO BE NOT SUSTAINABLE. CONSEQUENTLY, THE APPEAL FAILS AND IS HEREBY DISMIS SED. THUS THE HONBLE HIGH COURT HAS HELD THAT THE LD. C IT CAN CANCEL THE ORDER OF THE AO AND REQUIRE THE CONCERNED AO TO PASS A FRESH ORDER IN ACCORDANCE WITH THE LAW AFTER HOLDING A DETAILED ENQUIRY. BUT WHEN THE ENQUIRY I N FACT HAS BEEN CONDUCTED AND THE AO HAS REACHED A PARTICULAR CONCLUSION, THOUGH REFERENCE TO SUCH ENQUIRIES HAS 17 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. NOT BEEN MADE IN THE ORDER OF ASSESSMENT, BUT THE S AME IS APPARENT FROM THE RECORD OF THE PROCEEDINGS, THE INVOCATION OF JURISD ICTION BY THE LD. CIT WAS UNSUSTAINABLE. A SIMILAR VIEW HAS BEEN TAKEN BY TH E HONBLE DELHI HIGH COURT IN CASE OF ITO VS. D.G. HOUSING PROJECTS LTD. 343 ITR 329 IN PARA 18 AS UNDER :- 18. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MA LABAR INDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME TAX, [2000] 243 ITR 83 / 109 TAXMAN 66 (SC), HAD OBSERVED THAT THE PHRASE 'PREJUDICIAL TO THE INTEREST OF REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT EREST OF REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COURSE S PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESULTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VI EW WITH WHICH THE CIT MAY NOT AGREE; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABL E IN LAW AND, THEREFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHOW THAT PREJUDIC E IS CAUSED TO THE INTEREST OF THE REVENUE. THE HONBLE HIGH COURT HAS LAID OUT A FINE DISTINCT ION BETWEEN THE ORDERS WHERE NO ENQUIRY HAS BEEN MADE BY THE AO FROM THE ORDER BASE D ON INADEQUATE ENQUIRY. THEREFORE, WHERE THE AO HAS MADE AN ENQUIRY AND TAK EN A POSSIBLE/PERMISSIBLE VIEW, THEN THE SAID ORDER CANNOT BE TREATED AS ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY T HE AO IS UNSUSTAINABLE IN LAW. THE HONBLE SUPREME COURT IN CASE OF MALABAR INDUST RIAL CO. LTD. VS. CIT, 243 ITR 18 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. 83 (SC) HAS HELD THAT AN ORDER OF ITO CANNOT BE TRE ATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF THE ITO ADOPTED ONE OF THE COURSE PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE LD. CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. AS IT IS CLEAR FR OM THE IMPUGNED ORDER THAT THE ASSESSEE HAS RELIED UPON VARIOUS DECISIONS AND FURT HER THE ASSESSEE HAS ALSO RELIED UPON THE RECENT DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SHRI RAJENDRA KUMAR SHARMA VS. JCIT IN ITA NO. 358/JP/20 15 WHEREIN THE TRIBUNAL HAS HELD IN PARAS 4 & 5 AS UNDER :- 4. WE HAVE HEARD AND CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED THE MATERIAL PLACED ON RECORD. FROM THE REC ORD, WE FOUND THAT THE ASSESSEE CLAIMED DEDUCTION OF RS. 83,54,434/- U /S 54F FROM THE LTCG DECLARED BY IT. THE ASSESSEE MADE INVESTMENT O F RS. 1,15,00,000/- IN PURCHASE OF LAND AND CONSTRUCTED R ESIDENTIAL HOUSE THEREON. THE AREA OF LAND WAS 4090 SQ.MT. AND CONST RUCTION THEREON IS OF 1504 SQ. FT. THE A.O. ON THESE FACTS ISSUED A SHOW CAUSE NOTICE TO ASSESSEE AS GIVEN IN ASSESSMENT ORDER TO WHICH A SSESSEE REPLIED WHICH IS GIVEN IN PAGE 6 OF ASSESSMENT ORDER. THE A.O. ON FOLLOWING GROUNDS DENIED THE CLAIM OF ASSESSEE: (A) THE LAND IS AGRICULTURAL AND NOT RESIDENTIAL. (B) THE CONSTRUCTION OF RESIDENTIAL HOUSE WITHOUT A PPROVAL OF PLAN BY GOVT. AUTHORITY. 19 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. (C) THE ASSESSEE HAS ALSO NOT SUBMITTED ANY ELECTRI CITY AND WATER CONNECTION EVIDENCE. (D) THE LAND WAS REGISTERED IN THE NAME OF ASSESSEE ON 28-3-13 I.E. BEYOND THE PERIOD SPECIFIED IN SECTION 54F (4) AND SO ASSESSEE NOT COMPLIED CONDITIONS LAID DOWN THEREIN. THE AGRE EMENT TO PURCHASE LAND EXECUTED ON 2-6-2011 CLAIMED BY ASSES SEE HAS NO EVIDENTIARY VALUE AS PAYMENT OF CONSIDERATION SH OWN IN CASH. (E) THE BILLS FOR CONSTRUCTION ARE LACKING DETAILS AND CONTAIN NO DETAIL OF WORK DONE AND EACH PAYMENT MADE THEREFOR WAS IN CASH FOR LESS THAN RS. 20,000/-. (F) THE INSPECTOR PHYSICALLY VERIFIED THE PROPERTY AND FOUND THERE IS ONLY BOUNDARY WALL WITH GATE AND ON WHOLE LAND THER E WAS LITTLE CONSTRUCTION, WITH WALLS AND TIN SHED ROOFING AND C ONSTRUCTION IS ABOUT 700-800 SQ.FT AS AGAINST 1504 SQ.FT. CONSTRUC TION CLAIMED BY ASSESSEE. THE LD. A.O. IN ASSESSMENT ORDER GAVE SCANNED PHOTOGRAPHS STATED TO HAVE BEEN TAKEN BY INPSECTOR ON SITE VISIT. THE A.O. THUS CONCLUDED THAT INVESTMENT WAS PURELY IN LAND AND NOT A RESIDENTIAL HOUSE AS REQUIRED U/S 54F OF I. T. ACT, 1961 AND SO ASSESSEE IS NOT ENTITLED TO CLAIMED DEDUCTION U/S 54F. AS PER OUR C ONSIDERED VIEW, BENEFIT OF SECTION 54F CANNOT BE DENIED ON THE GROUND THAT LAN D ON WHICH CONSTRUCTION DONE WAS AGRICULTURE IN NATURE. RELIANCE IS PLACED ON THE JUDGEMENTS IN CASE OF VISHNU TRADING CO. 259 ITR 724 (RAJ.), NARENDRA MOH AN UNIYAL 34 SOT 152 (DEL.), SHYAM SUNDER MUKHIJA VS. ITO 38 ITD 125 (JP R) AND ACIT VS. OM PRAKASH GOYAL (2012) 53 SOT 158 (JPR). IN THE CASE OF NARENDRA MOHAN UNIYAL (SUPRA) IT IS HELD THAT 'IT IS CRYSTAL CLEAR FROM T HE PLAIN READING OF SS. 54 AND 54F THAT EXEMPTION IS ALLOWABLE IN RESPECT OF AMOUNT IN VESTED IN THE CONSTRUCTION OF A RESIDENTIAL HOUSE. THERE IS NO ANY RIDER UNDER S. 54F THAT NO DEDUCTION WOULD BE ALLOWED IN RESPECT OF INVESTMENT OF CAPITAL GAIN S MADE ON ACQUISITION OF LAND 20 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. APPURTENANT TO THE BUILDING OR ON THE INVESTMENT ON LAND ON WHICH BUILDING IS BEING CONSTRUCTED. WHEN THE LAND IS PURCHASED AND B UILDING IS CONSTRUCTED THEREON, IT IS NOT NECESSARY THAT SUCH CONSTRUCTION SHOULD BE ON THE ENTIRE PLOT OF LAND, MEANING THEREBY A PART OF THE LAND WHICH IS A PPURTENANT TO THE BUILDING AND ON WHICH NO CONSTRUCTION IS MADE, THERE IS NO D ENIAL OF EXEMPTION ON SUCH INVESTMENT. IN THIS CONNECTION REFERENCE MAY BE MAD E TO CIR. NO. 667 DATED 18- 10-1993 (204 ITR (ST) 103) ISSUED BY CBDT WHICH HAS CLARIFIED THAT FOR THE PURPOSE OF COMPUTING EXEMPTION U/S 54 OR 54F, THE C OST OF THE PLOT TOGETHER WITH COST OF THE BUILDING WILL BE CONSIDERED AS COS T OF NEW ASSET, PROVIDED THE ACQUISITION OF THE PLOT AND ALSO THE CONSTRUCTION T HEREON ARE COMPLETED WITHIN THE PERIOD SPECIFIED IN THESE SECTIONS. THERE IS NO NEED OF APPROVAL OF PLAN FROM COMPETENT AUTHORITIES IF CONSTRUCTION IS WITHIN LIM ITS ON AGRICULTURAL LAND AND IT IS NOT A CONDITION LAID DOWN IN SECTION 54F FOR CONSTR UCTION OF RESIDENTIAL HOUSE. THE CONSTRUCTION ON LAND IS MEANT FOR RESIDENTIAL H OUSE. THE ASSESSEE COULD COMPLETE THE CONSTRUCTION OF THE RESIDENTIAL HOUSE WITHIN THREE YEARS AND IF ANY FACILITY LACKING IN THE CONSTRUCTED RESIDENTIAL HOU SE THE SAME COULD BE COMPLETED WITHIN IN THAT PERIOD. THERE IS WATER SUPPLY FROM W ELL AND TEMPORARY ELECTRIC CONNECTION IN THE RESIDENTIAL HOUSE CONSTRUCTED BY ASSESSEE. THE CONSTRUCTION OF RESIDENTIAL HOUSE IS 1553.50 SQ.FT. AND NOT HAVING PROPER BILLS FOR CONSTRUCTION CANNOT BE TAKEN ADVERSELY AGAINST HIM FOR PURPOSES OF SECTION 54F. THESE FACTS ARE EVIDENT FROM THE VALUATION REPORT OF REGD. VALU ER A COPY OF WHICH IS SUBMITTED. THE INSPECTOR OF DEPARTMENT FURNISHED VA GUE DETAILS WITHOUT ANY PHYSICAL INSPECTION OF BUILDING AND TOOK ONLY PHOTO GRAPHS. THE ASSESSEE HAS ONLY TO INVEST NET SALE CONSIDERATION IN PURCHASE OR CON STRUCT A RESIDENTIAL HOUSE AND THEREFORE REGISTRATION OR LEGAL OWNERSHIP IS NOT NE CESSARY WHICH IS EVIDENT FROM CIRCULAR NO. 471 DATED 15-10-1986 ISSUED BY CBDT AN D FROM JUDGEMENTS OF BALRAJ VS. CIT 254 ITR 22 AND CIT VS. LAXMI CHAND 2 11 ITR 804 AND VARIOUS OTHER JUDGEMENTS ON THE ISSUE. THUS, AGREEMENT TO P URCHASE COPY OF WHICH SUBMITTED PROVES DOMAIN AND CONTROL OF ASSESSEE ON THE LAND IN THE HANDS OF ASSESSEE AND SATISFIES THE CONNOTATION OF PURCHA SE OF LAND FOR CONSTRUCTION OF RESIDENTIAL HOUSE. WE FOUND FROM TH E RECORD THAT THE 21 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. ASSESSEE HAD INVESTED RS. 1,15,00,000/-IN CONSTRUCT ION OF RESIDENTIAL HOUSE AND, THEREFORE ENTITLED TO CLAIMED DEDUCTION U/S 54 F. THE LD. A.O. IS WRONG AND HAS ERRED IN LAW IN DISALLOWING THE CLAIMED DED UCTION OF RS. 83,54,434/- U/S 54F THE ACT, WHICH DESERVES TO BE ALLOWED. 5. WE FOUND THAT IN THE PREVIOUS YEAR RELEVANT TO T HE ABOVE SAID ASSESSMENT YEAR THE ASSESSEE INVESTED A SUM OF RS.1 ,15,00,000/- IN PURCHASE OF LAND FOR CONSTRUCTION OF A RESIDENTIAL HOUSE. THE DEDUCTION U/S 54F AMOUNTING TO RS.83,54,434/- HAS BEEN CLAIMED ON ACCOUNT OF SAID INVESTMENT IN THE LAND ; COPY OF THE AGREEMENT TO PURCHASE AND REGISTERED PURCHASE DEED WERE VERIFIED BEFORE THE A.O.. THE AS SESSEE GOT CONSTRUCTED A RESIDENTIAL HOUSE IN THE F.Y. 201213 I.E. WITHIN THE STATUTORY TIME LIMIT ALLOWED BY THE ACT I.E. BEFORE THE DUE DATE OF FEBR UARY, 2014. COPY OF BILLS FOR CONSTRUCTION OF HOUSE ALONGWITH MAP OF THE HOUS E WAS FILED BEFORE THE A.O.. THE TOTAL AREA OF LAND IS ABOUT 4090 SQ.MTR. AND THE CONSTRUCTED AREA IS ABOUT 1504 SQ.FT. NO APPROVAL IS REQUIRED FOR CO NSTRUCTION OF THE ABOVE SAID RESIDENTIAL HOUSE. COPY OF REGISTERED SALE DEE D IS ALSO FILED BEFORE THE A.O. WE FOUND THAT IT WAS A RESIDENTIAL UNIT, THEREFORE, THE ASSESSEE IS ENTITLED FOR CLAIM OF DE DUCTION U/S 54F OF THE ACT AMOUNTING TO RS. 83,54,434/-. THUS IT IS CLEAR THAT THE TRIBUNAL HAS REFERRED AND RELIED UPON VARIOUS DECISIONS ON THE POINT OF ALLOWABILITY OF DEDUCTION UNDER SECTIO N 54/54F OF THE ACT IN RESPECT OF THE INVESTMENT MADE IN CONSTRUCTION OF HOUSE ON AGR ICULTURAL LAND. THEREFORE, THE VIEW TAKEN BY THE AO IS A POSSIBLE VIEW THOUGH MAY NOT BE THE ONLY VIEW. FURTHER ONCE THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER S ECTION 54F IS A DEBATABLE ISSUE AND THE AO HAS TAKEN A POSSIBLE VIEW, THEN THE LD. PCIT IS NOT PERMITTED TO INVOKE THE PROVISIONS OF SECTION 263 MERELY BECAUSE HE DOE S NOT AGREE WITH THE VIEW OF THE 22 ITA NO. 246/JP/2020 SMT. LATA PHULWANI, JAIPUR. AO. HENCE IN THE FACTS AND CIRCUMSTANCES OF THE CA SE AS WELL AS THE FOREGOING DISCUSSION ABOUT THE SETTLED PRINCIPLES OF LAW LAID DOWN IN VARIOUS DECISIONS, WE HOLD THAT THE IMPUGNED ORDER PASSED BY THE LD. PCIT IS N OT SUSTAINABLE AND THE SAME IS LIABLE TO BE SET ASIDE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 06/10/2 020. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 06/10/2020. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SMT. LATA PHULWANI, JAIPUR. 2. THE RESPONDENT THE PCIT-2, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 246/JP/2020) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR