Sri Paramjith Singh , Bangalore V. Principal Commissioner of Income Tax -4 , Bangalore

ITA 2465/BANG/2018

AI Insights

The case revolves around the appeal by Shri Paramjith Singh against the order passed by the Pr. CIT under section 263 of the Income Tax Act, which set aside the assessment order accepted by the AO. The Pr. CIT had initiated the revisionary proceedings based on a proposal from the AO, alleging that the assessment order was erroneous and prejudicial to the interests of the revenue as it did not adequately examine the cost of improvements claimed by the assessee on a property sold. The Tribunal, referencing several precedents, held that the Pr. CIT's order was invalid as it did not independently examine the records and relied on the AO's proposal, which is not a sanctioned procedure under the law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124299 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2018
• Other Referred Cases: Collector, Land Acquisition Vs. MST. Katiji and Others, CIT v Sattandas Mohandas Sidhi, Satish Kumar Keshri V ITO (T), Patna, Alfa Laval Lund AB v CIT, Cyber Park Development & Construction Ltd, Malabar Industrial Co. Ltd, Sunbeam Auto Ltd, Karabi Dealers Pvt. Ltd. vs. Pr. CIT Kolkata
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Depreciation; Opportunity of being heard; Fair market value; Valuation report; Capital Gains
• Section: 147; 263; 154; 143(3); 69B; 208; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI N. V. VASUDAEVAN VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.2465/Bang/2018 Assessment year : 2011-12 Shri Paramjith Singh, R/at A 602, Daffodils Tower – 4, Adarsh Palm Retreat, Bellandur, Outer Ring Road, Devarbisanahalli, Behind INTEL, Bengaluru - 560 103. PAN – AFAPS 4639 C Vs. The Pr. Commissioner of Income Tax - 4, Bengaluru. APPELLANT RESPONDENT Assessee by : Shri S.V Ravishankar, Advocate Revenue by : Shri K Sankar Ganesh, JCIT (DR) Date of hearing : 28.11.2022 Date of Pronouncement : 30.01.2023 O R D E R Per Laxmi Prasad Sahu, Accountant Member : This appeal filed by the assessee is against the order passed by the Pr.CIT(A), Bangalore-4 order dated 24/01/2018 on the following grounds of appeal. “1. Commissioner exercising jurisdiction u/s. 263 of the IT Act, failed to appreciate that the Assessing Officer had directed the assessee to file details of the sale transactions and as to why the sale did not attract ITA No.2465/Bang/2018 Page 2 of 28 capital gains tax. Assessee had furnished details with supporting documents in respect of sale of property regarding both cost of acquisition and improvements to the property supported by valuation report which was verified by the Assessing Officer and accepted the explanation furnished by the assessee. 2. Explanation 2 to Section 263 of the IT Act came into force by Finance Act of 2015 w.e.f 01.06.2015. This explanation will not be applicable to assessment year 2011-12. In fact, the notice issued by the Commissioner was well before Explanation was introduced. The explanation should be in aid of the main provision and cannot be expanded to improve any further lacuna which was being filled up. 3. Commissioner failed to appreciate that a query was raised by the Assessing Officer which was replied by furnishing details. When the Assessing Officer appreciates and takes one view and proceeds to drop the proceedings regarding levy of capital gains tax. It is not open to the Commissioner exercising jurisdiction u/s 263 of the IT Act to take one other view and direct re-enquiry. 4. Commissioner had summoned the record and the details furnished by the assessee in support of the claim that capital gains tax was not attracted was before her and could have examined the same to ascertain whether the view taken by the Assessing Officer was correct or not. However, Commissioner, arrives at a conclusion that the assessment order is erroneous and prejudicial to the interest of the revenue without even examined the materials which was on the file of the Assessing Officer. Therefore, the order of the Commissioner is without jurisdiction. 5. The appellant seeks leave of this Hon'ble Tribunal to raise all other grounds in support of their contention at the time of arguments.” 2. The assessee has also filed revised grounds, which is as under:- “1. The order passed by the learned Principal Commissioner of Income Tax, Bangalore , passed under section 263 of the Act is SO far as it is against the Appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant's case. 2. The notice issued for initiation of proceedings under section 263 of the Act is bad in law. 3. The learned PCTT is not justified in law in invoking the jurisdiction under section 263 of the Act and setting aside the order of the learned assessing officer as being "erroneous and prejudicial to the interest of the revenue" ITA No.2465/Bang/2018 Page 3 of 28 4. The learned PCIT failed to appreciate that the provisions of section 263 of the Act shall be attracted only when the order is both erroneous and prejudicial to the interest of revenue and since the order passed under section 143(3) of the Act was not erroneous, much less prejudicial, the invoking of section 263 was not warranted on the facts and circumstances of the case. 5. The learned CIT failed to appreciate that the valuation of the building was accepted by the AO and hence there was no mention in the order passed, hence the AO has taken a possible view, thus there was no error in the order of assessment, on the facts of the case. 6. The learned CIT failed to appreciate that the requirement of referring to a valuation officer was not mandatory but optional and explanation 2 to section 263 was introduced with effect from 01.06.2015 and is not applicable for the assessment year 2011-12. Further, the AO has chosen not to do the same, thereby has taken a conscious decision to accept the valuation as offered by the appellant, thus was beyond the scope of revision, on the facts and circumstances of the case. 7. The appellant craves to add, alter, amend, substitute, change and delete any of the grounds of appeal. 8. For the above and other grounds that maybe urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.” 3. The assessee filed application for delay in condoniaton of appeal vide letter dated 29.08.2018. We have heard the rival submission of both the parties and after pursing of the materials placed before us and we are satisfied that the delay in filing the appeal was due to reasonable and sufficient cause and the delay in filing the appeal deserves to be condoned. We accordingly condone the delay in filing the appeal after relying on the judgment of Hon’ble Supreme Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others (Supra). 4. The brief facts of the case are that this is second round of proceedings before the ITAT. In the first round of ITA No.2465/Bang/2018 Page 4 of 28 proceedings, the ld.Pr.CIT passed order on 10/03/2016 ex- parte, which was challenged before the Tribunal. The Tribunal considering the submissions of the assessee, remitted back the issue to the file of ld.Pr.CIT for de- novo consideration and it was held that the assessee should be given adequate opportunity of being heard. Accordingly, the ld. Pr.CIT passed order on 24/1/2018. 5. The assessee filed his return of income for the assessment year 2011-12 on 31/07/2011 declaring income of Rs.9,88,260/- under the head ‘income from business and profession of Rs.1,03,157/-‘ and ‘income from other sources’ for Rs.8,84,744/-. The case was selected for scrutiny and assessment was completed on 30/09/2013 accepting the returned income. Later, on verification of record, the ld.Pr.CIT noticed that the AO has not made adequate enquiries regarding the development expenses and the exact expenditure of land sold by the assessee and accepted the submission made during the course of assessment proceedings. On 28/04/2015, Shri R shankaran, ITO, Head Quarter on behalf of ld.Pr.CIT, Bangalore – 4 issued proposal u/s 263 of the Act to the assessee. 6. In the second round of proceedings, the case was posted for hearing on 15/09/2017 and the assessee was ITA No.2465/Bang/2018 Page 5 of 28 appeared on 23/09/2017, 22/11/2017 and 20/01/2018 and he filed written submission after recoding many case laws, which has been incorporated by the ld.Pr.CIT in his order. The assessee objected to the revisionary power exercised by the ld.Pr.CIT and requested for dropping the proceedings. 7. After considering the submissions of the assessee, the ld.Pr.CIT observed that the assessee has sold 3 acres 30 guntas of land but not 4 acres and 10 guntas as claimed by the assessee and the cost of acquisition claimed by the assessee is not supported by any cogent materials as well as in the sale deed, there is no reference of the further construction of sheds, swimming pool and other construction on the scheduled property. In the opinion of the ld.Pr.CIT, the AO did not verify the material on record properly and further not made adequate enquiries and also the AO has not applied his mind as per law & he accepted the claim of the assessee on mechanical manner and did not do his work as per sec. 263 explanation (ii). Accordingly, order passed by the AO is erroneous and prejudicial to the interest of revenue. Consequently, the assessment was set aside with direction to the AO to examine the issue of cost of construction of land, improvement and to redo the assessment afresh as per law. ITA No.2465/Bang/2018 Page 6 of 28 8. Aggrieved from the above order, the assessee filed appeal before the Income Tax Appellate Tribunal. 9. The ld.AR vehemently argued the case and reiterated the submissions made before the lower authorities and he has filed written synopsis which is as under:- 7. Revised Grounds of appeal No. 2: The notice issued for initiation of proceedings under section 263 of the Act is bad in law. a. The office of the learned PCIT, has issued a notice, dt: 28/04/2015, intimating the appellant that the 263 proceedings have been initiated. b. The appellant submits that the notice for initiating proceedings, dt:28/04/2015 under section 263 is not valid as it did not bear the signature of the learned PCIT and powers enshrined in the learned PCIT, for initiating any proceedings cannot be further delegated and since the assumption of jurisdiction cannot be delegated to other officers, the initiation of proceedings is without authority and consequently bad in law. c. The provisions of section 120 of the Income Tax Act, 1961 stipulates that the authorities shall exercise the powers and perform the functions conferred upon them. The board may authorise any income tax authority to perform functions by the income tax authorities, who are below it. d. The appellant submits that the powers endowed upon the authorities shall not be delegated, in so far as the assumption of jurisdiction is concerned. The authority conferred on the Income ITA No.2465/Bang/2018 Page 7 of 28 tax authorities, shall be exercised by themselves and no other officer, other than the jurisdictional officer, shall perform the duties required of the officer. In the instant case, the proposal notice for initiating the 263 proceedings have been issued by the ITO (HQ), against the requirement of the officer arriving atthe satisfaction, that it was a fit case for initiating proceedings under section 263 of the act, i.e. the PCIT. f. The appellant places reliance upon the decision in the case of CIT v Sattandas Mohandas Sidhi [1998] 23o ITR 591 (MP), (page 38 to 4o) which has dismissed the appeal of the revenue and upheld the order of the Tribunal, holding that the issue of notice U/s 263 of the act, was invalid, since it was not signed by the concerned officer. a. The appellant places further reliance upon the decision of the ITAT Patna Bench, in Satish Kumar Keshri V ITO (T), Patna, [2007] 106 TTJ 980 (Patna), (page 41 to 56) which in similar set of facts, held that the notice through which the Commissioner has assumed jurisdiction under section 263 was not under his signature, thus the assumption of jurisdiction was invalid, illegal and hence was to be quashed (Para 13, page 55). b. The Tribunal has appreciated the fact that the opportunity of hearing by the PCIT, through which the initiation of 263 proceedings has been made, is without authority and consequently the entire proceedings were bad in law. c. The appellant places further reliance upon the decision of the Bombay high court in the case of Ramswaroop v CIT, [2016] 388 ITR 208 (Born), which has after appreciating the provisions of section 127 of the Income Tax Act, 1961, quashed the centralisation of cases, by an officer, who did not possess the authority to issue notices, (Para 15 - page 27, Para 27, 28 — Page 29, 30). J. Referral by the AO to initiate 263 proceedings: The appellant submits that the assessing officer has sought the PCIT to initiate the 263 proceedings, which is contrary to the scope of section 263 of the Act. ITA No.2465/Bang/2018 Page 8 of 28 e. k. The appellant places reliance upon the decision in the case of Alfa Laval Lund AB v CIT, in ITA No. 1287/Put - Ow7, dt:02/11/2021, (page 94 to loo) which has held as under; 5. It is trite that a power which vests exclusively in one authority, can "t be invoked or cause to be invoked by another, either directly or indirectly. Section 263 of the Act confers power on the CIT to revise an assessment order, subject to certain conditions. Instantly, we are confronted with a situation in which the revision was initiated on the basis of the AO sending a proposal to the CIT and not on the CIT suo motu calling for and examining the record of the assessment proceedings and thereafter considering the assessment order erroneous and prejudicial to the interests of the revenue. The AO recommending a revision to the CIT has no statutory sanction and is a course of action unknown to the law. If AO, after passing an assessment order, finds something amiss in it to the detriment of the Revenue, he has ample power to either reassess the earlier assessment in terms of section 147 or carry out rectification u/s 154 of the Act. He can "t usurp the power of the CIT and recommend a revision. No overlapping of powers of the authorities under the Act can be permitted. As the revision proceedings in this case have triggered with the AO sending a proposal to the ld. CIT and then the latter passing the order u/s 263 of the Act on the basis of such a proposal, we hold that it became a case of jurisdiction deficit resulting into vitiating the impugned order. Without going into the merits of the case, we quash the impugned order on this legal issue itself. (emphasis supplied) 1. In so far as the decision of the recent decision of the Kolkata Bench, in ITA No. 389/Ko1/2021, dt:o2/11/2022, the appellant submits that the honourable Kolkata bench has not held that the decision in Alpha Laval Lund AB, is not correct, however proceeded on the factual premise that the submission purported to have been made, was non-existent, thus there could have been no enquiry on the said date, thus upholding the initiation of 263 proceedings. ITA No.2465/Bang/2018 Page 9 of 28 a. m. The relevant portion is available at paragraph 14.4 (last four lines), which has also been relied upon by the revenue. The appellant submits that in the instant case, the computation and documents have been accepted and for mere non- description in the order passed, there could be no inference that the assessing officer has not made proper enquiries, before passing the order of assessment. n. The principle laid down by the decision in Alfa Laval Lund AB, in so far as the jurisdiction of the PCIT, has not been controverted by the later decision of the Kolkata tribunal and is still holding the fort. In view of the above, the principle laid down by the Pune Tribunal, is squarely applicable to the facts of the case and the 263 order of the PCIT, is required to be quashed on this count alone. a. Record: the appellant submits that the assessing officer has in the course of assessment proceedings, appreciated the valuation report, the photos of the buildings built, the computation of income, the sale deed of the property, etc and the same are available on the record of the revenue and not in dispute. P. The learned PCIT in invoking the provisions of section 263 of the act, is required to appreciate the material available on record, in arriving at the satisfaction that it was a fit case for invoking section 263 of the act. The learned PCIT, has without appreciating the material available on record, and without arriving at the satisfaction that the order passed was erroneous and prejudicial to revenue, initiated the revision proceedings, which is against the settled position of law that where the assessing officer has taken a view, the PCIT cannot substitute his view on the issue. q. The appellant submits that the notice issued for initiation of 263 proceedings is without jurisdiction and consequently the entire proceedings are required to be quashed. 8. Revised Grounds of appeal No. (3) to (5): Invoking the provisions of section 263. ITA No.2465/Bang/2018 Page 10 of 28 b. a. The appellant submits that the learned PCIT was not justified in treating the impugned order as erroneous and prejudicial to the revenue on the premise that the assessment order is passed without making inquiries or verification without appreciating the fact that the learned assessing officer has made reasonable inquiries and has passed the order after examining and considering the documents furnished by the appellant. c. The appellant has furnished evidence for building, swimming pool etc., during the course of assessment by way of photos and a valuation report, the copies of which have been provided by the assessing officer to the appellant (page 8, 10 to 15 of paper book) and which has also been observed by the registered valuer of the revenue (Pg 51 & 53 of Paper compilation), thus, there is more than adequate enquiry made by the learned assessing and the order passed is not erroneous under the facts and circumstances of the case. d. The learned assessing officer has accepted the valuation report submitted by the appellant during the course of assessment after verifying the fact that the buildings etc were present and the volume of construction was consummerate with the value arrived at by the valuer. Thus, taking a conscious and possible view and has passed the assessment order accepting the value of the valuation officer. e. The appellant submits that once a possible view is taken by the learned assessing officer in accepting the valuation report, revision under section 263 was not warranted for the sole reason that the AO ought to have made a reference to a valuation officer. ITA No.2465/Bang/2018 Page 11 of 28 f. The appellant submits that the discretion to make a reference to the valuation officer was discretionary and even after the amendment to the provisions of section 142A, dt: o 1 / 1 0/2014, the reference to the valuation officer is discretionary. The appellant submits that the assessment order was passed prior to the amendment to section 142A of the act, and the assessing officer has taken a permissible view, of the requirement of the law prevailing at that point of time. g. In view of the above, the PCIT cannot order revision under section 263 citing for inadequate enquiry. The appellant places reliance upon the decision of the Jurisdictional High Court in the case of Cyber Park Development & Construction Ltd, (para 7 at page 19 of the case law paper compilation). Further, similar view has been held by the Hon'ble Delhi High Court in the case of Anil Kumar Sharma, (para 7 at page 22 of the case lawpaper compilation). h. The appellant places reliance on the decision of the Hon'ble Supreme Courtin the case of Malabar Industrial Co. Ltd, (para 9 at page 4 of case law paper compilation) and the decision of the Hon'ble Delhi High Court in the case of Sunbeam Auto Ltd, (para 16 at page 15 of the case law paper compilation). i. In view of the above, the appellant submits that the action of the PCIT in invoking the provisions of section 263 of the Act, for the presumed lack of enquiry is contrary to fact and the PCIT ought to have appreciated that the assessing officer has appreciated the evidence and documents filed and taken a view in passing the order of assessment. j. ITA No.2465/Bang/2018 Page 12 of 28 k. Thus, there is no instance of lack of enquiry, resulting in the order being erroneous and consequently prejudicial to the interest of revenue and the order of the PCIT is required to be quashed as being bad in law and on fact. 9. Revised Grounds of Appeal No.6: l. a. The appellant submits that the learned assessment officer has with full consciousness accepted the valuation report submitted during the course of assessment and reference to valuation officer to value any asset or property was not within the scope of section 142A of the Act as it stood prior to 01.10.2014. Section 142A is extracted hereunder for ready reference; Estimate by Valuation Officer in certain cases. 142A.(1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69Befor fair market value of any property referred to in sub-section (2) of section 561 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him. The Valuation Officer to whom a reference is made under sub-section (1) shall, for the purposes of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1 957). (1) On receipt of the report from the Valuation Officer, the Assessing Officer may, after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment: b. The appellant submits that the order of assessment was passed on 30.09.2013 much before section 142A was amended, thus, the learned assessing officer ITA No.2465/Bang/2018 Page 13 of 28 has rightly passed the order after considering the valuation report submitted by the appellant and reference to the valuation officer, was a discretion of the assessing officer and not mandatory as perceived by the learned PCIT. a. The learned assessing officer has adopted the valuation report submitted by the appellant in good faith and in a bonafide manner, thus, the order cannot be labelled as erroneous. 10. Revised Ground 6: The appellant further submits that explanation 2 to section 263 was introduced with effect from 01.06.2015 and is not applicable for the assessment year 2011-12 and the reliance placed upon the aforementioned explanation by the learned PCIT is not valid and the order deserves to be annulled on this ground also. PRAYER It is prayed before your Honour to consider the above submission and pass an order holding: a. That the notice issued under section 263, dt: 28/04/2015, is invalid for want of seal and signature of the learned PCIT. b. That the order under section 263 is without jurisdiction and consequently bad in law. The order of learned assessing officer is not erroneous, much less prejudicial to the revenue. 10. In addition to the written synopsis, he also relied on the following judgments:- 1. CIT v. Sattamdas Mohandas Sidhi, [1998] 96 Taxman 263 (Madhya Pradesh) ITA No.2465/Bang/2018 Page 14 of 28 2. Satish Kumar Keshri v. ITO, [2007] 104 lTD 382 (Patna) 3. PCIT v. Shreeji Prints (P.) Ltd., [?021] 130 taxrnann.ccom 294 (SC) 4. Narayan Tatu Rane v. ITO, [2016] 70 taxmann.com 227 ( MumbaiTrib) 5. CIT v. Jolly Fantasy World Ltd., [2015] 57 taxmann.com 8o (Gujarat) 6. Collector Land acquisition v. Mst. Katiji & Ors, 1987 AIR 1353 7. Ram Nath Sao v. Gobardhan Sao and Ors., AIR 2002 SC 1201 8. Alfa Laval Land AB in ITA No.1287/PUN/2017 11. In addition to the written synopsis, the ld.AR submitted that the ld.Pr.CIT has not exercised his power properly as per sec. 263 of the Act. He further submitted that it is mandatory to issue show cause notice to the assessee by the ld. Pr.CIT before exercising his power as per sec. 263 of the Act. A letter dated 28/04/2015, which is proposal u/s 263 of the Act issued by the ITO, Headquarter on behalf of ld.Pr.CIT, Bangalore, which is not a show cause notice issued by the ld.Pr.CIT and he further submitted that the proposal has come from the lower authorities through proper channel vide their letter dated 08/04/2015 filed by the ld.DR. According to the proposal, the AO tried to revive his own order for observing that certain expenditures incurred by the assessee towards cost of improvement ( like construction of the shed measuring 36750 sqft, digging of borewell, construction of staff quarters etc. ) has not been examined during the course of ITA No.2465/Bang/2018 Page 15 of 28 assessment proceeding and he also observed that the valuation report filed by the assessee was not duly scrutinized and genuineness of the expenses too. It clearly shows that the ld. Pr.CIT has not applied independent mind before exercising his power as per sc. 263 of the Act. Therefore, the order passed by the ld. Pr. CIT is nonest in the eyes of law. He strongly relied on the judgment of coordinate bench of ITAT Pune Bench in the case of Alfa Laval Lund AB in ITA No.1287/Pune/2017 for assessment year 2012-13 vide order dated 02/11/2021 and he submitted that the facts are similar to the present case. He also submitted that the case in ITA No.389/Kol/2021 order dated 02/11/2022 is not applicable in the present set of facts of the case. The ld.AR from the case law relied by him, strongly supported para No.13 of the ITA Patna Bench in ITA No.488/PAT/2004 for assessment year 2002-03 reported in [2007] 104 ITD 382 (Patna) in the case of Satish Kumar Keshari Vs. ITO. He further supported the decision of Hon’ble High Court of Bombay in the case of Ramswaroop Vs. CIT, Nagpur reported in [2016] 70 taxmann.com 5 (Bom), which is placed at paper book page No.23 to 31 at para No.14,15, 25, 27,28,29. He further submitted that the assessee’s case is squarely falls on the judgment cited supra and he further submitted that if there is completely lack of enquiry, the ld. Pr. CIT could have exercised the power as per u/s 263 of the Act but in this case, there was inadequacy of the enquiry as himself accepted in his ITA No.2465/Bang/2018 Page 16 of 28 order ,which is clear from the para No.3 of ld.Pr.CIT’s order, which is stated a under:- “3. The assessee vide his letter dated 27.09.2013 stated that the immovable property, situated at Sy. No.25/2 and Sy No.35 of Madavara Village, Dasanapura Hobli, Nelamangala Taluk, Bangalore measuring 4 acres 10 guntas of industrial land owned by his father Shri Avtar Singh Giani purchased in 1972, was inherited by the assessee and his brother Shri Manjit Singh consequent to their father's death. The property was sold to M/s H.S.A Builders Pvt Ltd, New Delhi by sale deed 1209/2010-11 dated 21.06.2010 for sale consideration of Rs. 9 crores out of which the assessee received Rs. 6 crores being 2/31d share. After taking into account the cost of improvement to the property and indexation of the property as per index of 1981, the total cost price of the property worked out to Rs. 14,82,50,752/- whereas the property was sold for a consideration of Rs. 9,00,00,000/-. In support of his claim, the assessee produced Valuation Report dated 19.02.1981. The said submissions made by the assessee have been accepted by the Assessing Officer without any verification and the returned income has been accepted.” Thus, the AO has not verified the material on record properly and further not made adequate enquiries. The cost of acquisition claimed by the assessee is with respect to 04 acres 10 guntas . The AO has not applied his mind to this aspect. Further with reference to construction of sheds, swimming pool and other structures no verifivation is made with respect to cost of construction and also as to why these buildings and sheds have not mention in the registered sle deed. 12. On this point, the ld.AR of the assessee supported the judgment of Hon’ble jurisdictional high court in the case of CIT Vs. Cyber Park Development and construction Ltd., reported at (2020) 121 taxmann.com 172 (Kar) at para No.7, wherein it has been held as under ITA No.2465/Bang/2018 Page 17 of 28 “7. The Tribunal has found that the Assessing Officer on meticulous appreciation of evidence on record has allowed depreciation on intangible assets and the Commissioner of Income-tax (Appeals) while passing the order under section 263 of the Act has held that the enquiry and verification made by the Assessing Officer is inadequate and the land cannot be treated as intangible asset. On the aforesaid basis, the powers under section 263 of the Act has been exercised and the order of the Assessing Officer has been set aside. The Tribunal has held that mere inadequacy of an enquiry or insufficiency of material on record cannot be a ground to invoke powers under section 263 of the Act. The view taken by the Tribunal is in consonance with well settled legal principles referred to supra.” 13. The ld.DR relied on the order of the lower authorities and he has filed a paper book contained 18 pages. 1. Written Synopsis 2. ITAT order Alfa Laval Lund AB 3. Proposal u/s 263 of the Act dated 28/04/2015 4. Proposal u/s 263 of the Act on 08/04/2015 by JCIT 5. Letter dated 08/04/2015 on proposal u/s 263 of the Act by AO 6. Copy of order sheets and letter dated 31/10/2022 7. Letter to JCIT dated 31/20/2022 filed by Dr. on 21.11.22 14. The ld.DR tried to sought out the objections raised by the ld.AR of the assessee and he submitted that the ITO, (Technical) issued show cause notice after obtaining due approval from the ld.Pr.CIT-4, Bengaluru. In support of his argument, he produced the copy of order sheet which is placed on record. Accordingly he ITA No.2465/Bang/2018 Page 18 of 28 submitted that the notice issued u/s 263 of the Act regarding jurisdiction is correct. He further submitted that during the course of assessment proceedings, the AO did not made proper enquiry and he simply accepted the computation submitted by the assessee, whereas the cost of improvement as claimed by the assessee was not examined during the course of assessment by the AO. He should have asked about the details of the cost of constructions of sheds, swimming pool and other structures as claimed by the assessee, but on the sale deed these are not mentioned. Firstly the AO is an investigator and thereafter he is an adjusicator. The AO cannot remain passive when the issue in the return of income calls for further enquiries. The case was manually selected for scrutiny. after obtaining necessary approval from the CCIT, Bengalrue-2 vide letter No.F.No.208/CCIT/Bang-H- /2012-13/737 dated 29/08/2012. In order to verify large sums invested in fixed deposits being first year of investments, the AO did not checked the size of the land as claimed by the assessee. considering the totality of the facts, the order passed by the AO is erroneous and prejudicial to the interest of the revenue and he requested order of the ld.Pr.CIT should be upheld. 15. After hearing both the sides, perusing the entire material on record and examining the orders of the authorities, we note that the assessee filed return declaring income from business and income from other sources only, whereas he had sold capital asset. ITA No.2465/Bang/2018 Page 19 of 28 There is no mentioning about the capital gain or loss in his computation of income. The ld. Pr.CIT exercised his power u/s 263 of the Act and passed the order on 10/03/2016 ex-parte, which has been remitted by the coordinate bench of the Tribunal for passing order after affording proper opportunity of being heard to the assessee. 16. In the second round of proceedings, the ld.Pr.CIT observed that the order passed by the assessee is erroneous and prejudicial to the interest of the revenue. The ld.AR raised legal issue challenging the power invoked by ld.Pr.CIT as per sec.263 of the Act. In this regard it is necessary to reproduce the documents filed by the ld. DR which is as under:- ITA No.2465/Bang/2018 Page 20 of 28 ITA No.2465/Bang/2018 Page 21 of 28 ITA No.2465/Bang/2018 Page 22 of 28 ITA No.2465/Bang/2018 Page 23 of 28 ITA No.2465/Bang/2018 Page 24 of 28 17. On perusal of the above documents sheet filed by the ld.DR, it is clear that the proposal for enquiry of revisionary proceedings u/s 263 of the Act has been received from ITO, Ward-4(3)(4). Further, on perusal of the letters by the JCIT to the ld. Pr.CIT, which is a forwarding letter received from the ITO, Ward-4(3)(4), for the proposal u/s 263 of the Act submitted by the ITO, Ward- 4(3)(4), Bangalore and further on perusal of the letter dated 08/04/2015, written by the ITO, Ward-4(3)(4) to ld. Pr. CIT, Bangalore through proper channel , as per the said letter the AO himself wanted to review his order and prayed to the ld.Pr.CIT for exercising his power u/s 263 of the Act, in which he has stated that the genuineness of the valuation report filed by the assessee regarding claiming of various expenses has not been examined by the AO and failed to scrutinize the genuineness of the expenses. We also note that a letter dated 28/04/2015, the proposal u/s 263 of the Act dated 28/04/2015 (approved by the ld. Pr. CIT in order sheet) has been signed by Shri R Shankaran, ITO Headquarter on behalf of Pr. CIT. On perusal of the letters written by the lower authorities, it clearly shows that the proposal for initiation u/s 263 of the Act has come from the lower authorities, whereas it should be independently done by the ld.Pr.CIT. But in this case, the ld.Pr.CIT has not done, it clearly shows that it is non application of mind before exercising jurisdiction as per sec. 263 of the Act. A similar issue has been decided by the coordinate bench ITA No.2465/Bang/2018 Page 25 of 28 of the Tribunal in the case of Alfa Laval Lund AB cited supra, which is as under:- 3. We have heard both the sides through Virtual Court and gone through the relevant material on record. It can be seen from para 4 of the ld. CIT‟s order that: “A proposal for revision u/s 263 of the IT Act, 1961 was received from DCIT(IT)-1, Pune through the Jt.CIT(IT), Pune vide letter No. Pn/Jt.CIT(IT)/263/2016-17/61 dated 23.05.2016”. It is thus manifest that the edifice of the revision in the extant case has been laid on the bedrock of receipt of the proposal from the AO. At this stage, it would be worthwhile to have a glance at sub-section (1) of section 263 of the Act, which runs as under:- “The 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 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 an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.” 4. Sub-section (1) of section 263 of the Act is an enabling provision which confers jurisdiction on the CIT to revise an assessment order which he considers erroneous and prejudicial to the interests of revenue. The process of revision u/s 263 of the Act initiates only when the CIT calls for and examines the record of any proceeding under this Act and considers that any order passed by the AO is erroneous and prejudicial to the interests of the revenue. The twin conditions of – (i) the CIT calling for and examining the record; succeeded by (ii) his considering the assessment order as erroneous etc. – are sine qua non for the exercise of power under this section. The use of the word `and’ between the expression `call for and examine the record ....‟ and the expression `if he considers that any order ... is erroneous ...‟ abundantly demonstrates that both these conditions must be cumulatively fulfilled by the CIT and in the same order, that is, the first followed by the second. In other words, the kicking in point for invoking jurisdiction u/s 263 is calling for and examining the record of any proceedings under the Act by the CIT leading him to consider the assessment order erroneous etc. A communication from the AO is not `the record of any proceedings under this Act’. To put it simply, the consideration that the assessment order is erroneous and prejudicial to the interests of the revenue should flow from and be the consequence of his examination of the record of proceedings. If such a consideration is not preceded by the examination of record of the proceedings under the Act, the condition for revision does not get magnetized. 5. It is trite that a power which vests exclusively in one authority, can‟t be invoked or cause to be invoked by another, either directly or indirectly. Section 263 of the Act confers power on the CIT to revise an assessment order, subject to certain conditions. Instantly, we are confronted with a situation in which the revision was initiated on the basis of the AO sending a proposal to the CIT and not on the CIT suo motu calling for and examining the record of the assessment proceedings and thereafter considering the assessment order erroneous and prejudicial to the interests of the revenue. The AO recommending a revision to the CIT has no statutory sanction and is a course of action unknown to the law. If AO, after passing an assessment order, finds something amiss in it to the detriment of the Revenue, he has ample power to either reassess the earlier assessment in terms of ITA No.2465/Bang/2018 Page 26 of 28 section 147 or carry out rectification u/s 154 of the Act. He can‟t usurp the power of the CIT and recommend a revision. No overlapping of powers of the authorities under the Act can be permitted. As the revision proceedings in this case have triggered with the AO sending a proposal to the ld. CIT and then the latter passing the order u/s 263 of the Act on the basis of such a proposal, we hold that it became a case of jurisdiction deficit resulting into vitiating the impugned order. Without going into the merits of the case, we quash the impugned order on this legal issue itself. 6. In the result, the appeal is allowed. 18. From the above case it is clear that the ld. Pr. CIT should exercise his power independently, whether the order passed by the AO is erroneous and prejudicial to the interest of the revenue. 19. The Kolkotta co-ordinate bench has decided the issue in favour of the revenue in the case of Karabi Dealers Pvt. Ltd.,vs. Pr. CIT Kolkata in ITA No.389/Kol/2021 order dated 02/11/2022 relied by the ld. DR is on different set of facts. In the case on hand the AO himself prayed to the ld. Pr. CIT for exercising his power 263, which is clear from the para No. 05 of his letter noted supra, therefore, it is not applicable in this case. 20. Respectfully following the judgments of ITAT Pune Bench cited and case law relied by the ld. AR cited supra , we allow the appeal of the assessee. 21. Since we have allowed the appeal of the assessee on legal issue, there is no need to go on the merits of the case. ITA No.2465/Bang/2018 Page 27 of 28 22. In the result, the appeal of assessee is allowed. Order pronounced in court on 30 th day of January, 2023 Sd/- Sd/- (NV VASUDEVAN) (LAXMI PRASAD SAHU) Vice President Accountant Member Bangalore, Dated, 30 th January, 2023 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore. ITA No.2465/Bang/2018 Page 28 of 28 1. Date of Dictation .......................................... 2. Date on which the typed draft is placed before the dictating Member ......................... 3. Date on which the approved draft comes to Sr.P.S ................................... 4. Date on which the fair order is placed before the dictating Member .................... 5. Date on which the fair order comes back to the Sr. P.S. ....................... 6. Date of uploading the order on website................................... 7. If not uploaded, furnish the reason for doing so ................................ 8. Date on which the file goes to the Bench Clerk ....................... 9. Date on which order goes for Xerox & endorsement.......................................... 10. Date on which the file goes to the Head Clerk ......................... 11. The date on which the file goes to the Assistant Registrar for signature on the order ..................................... 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order ............................... 13. Date of Despatch of Order. .....................................................