Ramesh Chand, Kanpur V. Principal Commissioner of Income Tax-I, Kanpur

ITA 252/LKW/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2806 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 18-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S MINHAS
• Assessee Lawyers: JAGDISH
• Keywords: Principle of natural justice; Revised return
• Section: 54F; 142(1); 263; 63; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 252/LKW/2017 ASSESSMENT YEAR: 2013 - 14 RAMESH CHAND BANSAL 73/20, COLLECTOR GANJ KAN PUR V. PRINCIPAL CIT - I KANPUR T AN /PAN : AAMPB6026F (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI JAGDISH, ADVOCATE RESPONDENT BY: SHRI J.S. MINHAS, CIT (DR) DATE OF HEARING: 08 08 201 8 DATE OF PRONOUNCEMENT: 24 08 201 8 O R D E R PER P ARTHA SARATH I CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER PASSED BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED IN SHORT 'THE ACT'), DATED 31/3/2017 AS PER GROUNDS OF APPEAL APPEARING ON RECORD. 2 . THOUGH THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS OF APPEAL, THE CRUX OF THE GRIEVANCE IS AGAINST ASSUMPTION OF REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR. ITA NO .252/LKW/2017 PAGE 2 OF 16 3 . THE FACTS IN T HIS CASE WOULD CLEARLY ESTABLISH THROUGH THE SHOW CAUSE NOTICE ISSUED BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR UNDER SECTION 263 OF THE ACT, DATED 21/3/2017 WHICH IS AS FOLLOWS: - F.NO.12B/4PR.CIT - L/KNP/TECH/U/S263/SRIRCBANSAL/2016 - 17 /4207 DA TED: 21/03/2017 TO SRI RAMESH CHANDRA BANSAL, 73/20, COLLECTOR GANJ, KANPUR SUB: - SHOW CAUSE NOTICE U/S 263 OF THE INCOME TAX ACT 1961 IN THE CASE OF RAMESH CHANDRA BANSAL, 73/20, COLLECTOR GANG, KANPUR,(PAN:AAMPB6026F), A.Y.2013 - 14 - REG - THE ASSESSMENT IN YOUR CASE FOR A.Y. 2013 - 14 WAS COMPLETED ON 23.01.2015 U/S143(3) OF THE INCOME TA X ACT, 1961 AT AN INCOME OF RS. 1,93,81,882/ - . FROM THE PERUSAL OF THE RECORDS, IT HAS BEEN NOTICED THAT YOU WERE THE CO - OWNER OF A LAND PROPERTY AND THE SAME WAS SOLD ON 07.01 .2013 FOR A SALE CONSIDERATION OF RS.7,50,00,000 / - . FURTHER, ON GOING THROUGH YOUR RETURN OF INCOME AND THE COMPUTATION OF INCOME, IT IS NOTICED THAT YOU HAVE NOT DISCLOSED THIS TRANSACTION TO THE DEPARTMENT. EVEN DURING THE COURSE OF ASSESSMENT PROCEEDING S, YOU COULD NOT FURNISH ANY JUSTIFICATION ABOUT NON - DISCLOSURE OF THIS TRANSACTION AS WELL AS NON - PAYMENT OF DUE TAXES ON RESULTANT CAPITAL GAIN INCOME. WHEN YOU WERE CONFRONTED BY THE AO ON THIS ISSUE, YOU COULD NOT PROVE YOUR CLAIMS. HOWEVER, YOU REVISE D YOUR RETURN OF INCOME JUST 02 DAYS BEFORE THE COMPLETION OF ASSESSMENT PROCEEDINGS. THIS CLEARLY SHOWS THAT REVISION OF THE RETURN BY YOU WAS NOT DUE TO A BONAFIDE OMISSION ON YOUR PART WHILE SUBMITTING THE ORIGINAL RETURN OF INCOME BUT IT WAS A COLOURIN G DEVICE TO CAMOUFLAGE THE EVASION OF TAX. FURTHER, IN YOUR SO CALLED REVISED RETURN, YOU HAVE CLAIMED THE DEDUCTION U/S 54F AGAINST THE RESULTANT CAPITAL GAIN INCOME ARISING ON THE SALE OF LAND BY CLAIMING THAT YOU HAVE PURCHASED A HOUSE PROPERTY. ON GOIN G THROUGH THE DETAILS OF ITA NO .252/LKW/2017 PAGE 3 OF 16 THIS NEWLY ACQUIRED HOUSE PROPERTY, IT IS NOTICED THAT THIS IS COMMERCIAL CUM RESIDENTIAL PROPERTY. THE AO HAS ACCEPTED YOUR SO CALLED REVISED RETURN OF INCOME (FILED JUST 02 DAYS BEFORE THE COMPLETION OF ASSESSMENT) AS WELL AS YOU R CLAIM OF DEDUCTION U/S 54F WITHOUT APPRECIATING THE FACTS & CIRCUMSTANCES OF THE CASE AS WELL AS THE PROVISIONS OF THE ACT IN THIS REGARD. IT IS ALSO NOTICED THAT YOU WERE ENGAGED IN THE BUSINESS OF SHARE TRADI N G BUT NO ENQUI R IES HAVE BEEN MADE BY THE AO IN THIS REGA RD . F URTHER, YOU HAVE ALSO TAKEN A LOAN OF RS.0.925 CRORES FROM YOUR BROTHER BUT THE AO HAS NOT MADE PROPER INVESTIGATION IN THE MATTER. FROM THE ABOVE, IT IS CLEAR THAT THE AO HAS FAILED THE EXAMINE THESE ISSUES/FACTS WHILE COMPLETING THE AS SESSMENT AND THERE IS COMPLETE ABSENCE OF ENQUIRIES ON THE PART OF THE AO. IN VIEW OF ABOVE FACTS, THE ABOVE REFERRED ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IS LIABLE TO BE SET ASIDE UNDER THE PROVISION OF SECTION 2 63 OF THE I.T. ACT 1961. HOWEVER, FOR THE SAKE OF NATURAL JUSTICE, YOU ARE HEREBY GIVEN AN OPPORTUNITY TO EXPLAIN AS TO WHY THE ASSESSMENT ORDER DATED 23.01.2015, PASSED BY THE ASSESSING OFFICER, SHOULD NOT BE SET ASIDE AND A FRESH ORDER MAY BE PASSED IN L IGHT OF ABOVE OBSERVATIONS. YOU ARE REQUIRED TO SUBMIT YOUR REPLIES AND EXPLANATIONS BEFORE THE UNDERSIGNED ON 28TH MARCH, 2017 AT 03:30 PM; BEFORE THE UNDERSIGNED EITHER PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE. IN CASE YOU DO NOT ATTEND OR DO NOT FILE ANY REPLY/EXPLANATION, IT SHALL BE PRESUMED THAT YOU HAVE NOTHING TO SAY IN THIS REGARD AND THE DECISION IN THE MATTER WILL BE TAKEN AS PER THE PROVISIONS OF THE ACT AS WELL AS ON THE BASIS OF MATERIAL AVAILABLE IN THE RECORDS. SD/ - [ ASHIM KUMAR ] PRI NCIPAL COMMISSIONER OF INCOME TAX - 1 KANPUR. 4 . IN RESPONSE TO NOTICE ISSUED UNDER SECTION 263 OF THE ACT, LD. A.R. OF THE ASSESSEE ATTENDED AND FILED ORAL AND WRITTEN SUBMISSIONS ITA NO .252/LKW/2017 PAGE 4 OF 16 WHICH ARE PLACED ON RECORD. PR. COMMISSIONER OF INCOME TAX - I, KANPUR HAS PASSE D ORDER UNDER SECTION 263 OF THE ACT AS ACCORDING TO THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR, ASSESSING OFFICER HAS NOT CONDUCTED ENQUIRY AND HAS NOT EXAMINED THE ISSUES IN RELATION TO THREE IMPORTANT ASPECTS OF THE RETURN FILED BY THE ASSESSEE. THES E THREE ISSUES/ ASPECTS ARE ALSO EVIDENT FROM THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE ACT , WHICH ARE AS UNDER: - ( 1 ) REGARDING CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, IT IS THE CONTENTION OF THE REVENUE THAT THE ASSESSING OFFICER HAS ACCEP TED REVISED RETURN FILED JUST TWO DAYS BEFORE COMPLETION OF ASSESSMENT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR IS OF THE OPINION THAT ASSESSING OFFICER HAS NOT CONDUCTED PROPER ENQUIRY SIN CE REVISED RETURN WAS FILED JUST TWO DAYS PRIOR TO COMPLETION OF ASSESSMENT. ( 2 ) ASSESSEE WAS ENGAGED IN THE BUSINESS OF SHARE TRADING AND THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY IN THIS REGARD. ( 3 ) LOAN OF RS.0.925 CRORES HAS BEEN TAKEN BY THE ASSESSE E FROM HIS BROTHER AND THE ASSESSING OFFICER HAS NOT MADE PROPER INVESTIGATION IN THIS REGARD. 5 . PR. COMMISSIONER OF INCOME TAX - I, KANPUR AFTER HEARING THE ASSESSEE, ON THE BASIS OF THESE THREE REASONS, HELD THE ASSESSMENT ORDER TO BE ERRONEOUS INSOFAR AS PR EJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO .252/LKW/2017 PAGE 5 OF 16 6 . L D. A.R. OF THE ASSESSEE AT THE TIME OF HEARING BEFORE US VEHEMENTLY ARGUED THAT ON ALL THESE THREE ASPECTS, ON WHICH NOTICE UNDER SECTION 263 WAS ISSUED AND DETAILED ENQUIRY AND INVESTIGATION WAS CONDUCTED BY THE ASSESSING OFFICER. LD. A.R. OF THE ASSESSEE FURTHER SUBMITTED THAT EVEN THOUGH REVISED RETURN WAS FILED TWO DAYS BEFORE COMPLETION OF ASSESSMENT, HOWEVER, ASSESSING OFFICER WAS IN POSSESSION OF ALL THE RELEVANT DOCUMENTS SUCH AS PURCHASE DEED OF PROPERTY, COPIES OF BANK STATEMENT S , COPIES OF LEDGER ACCOUNT S OF ALL THE BANKERS, COMPUTATION OF INCOME, TRADING ACCOUNT AND BALANCE SHEET . T HEREFORE, IT WAS POSSIBLE FOR THE ASSESSING OFFICER TO DECIDE TH E ISSUE RELATING TO INVESTMENT IN PURCHASE OF PROPERTY WAS DONE BY THE ASSESSEE AND ASSESSEE WAS THEREFORE ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF THE ACT , SINCE THE PROVISION SPEAKS OF INVESTMENT AND NOT USE OF PROPERTY. PURCHASE DEED OF PROPERTY WAS ALREADY WITH THE ASSESSING OFFICER, SO WERE BANK STATEMEN TS AND IT WAS CLEAR TO THE ASSESSING OFFICER BEFOREHAND THAT THE ASSESSEE HAS INVESTED IN RESIDENTIAL PROPERTY AND, THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF THE ACT. 7 . SIMILARLY, IT WAS FURTHER SUBMITTED BY THE LD. A.R. OF THE ASSESSEE REGARD ING SHARE TRADING BUSINESS OF THE ASSESSEE THAT IT WAS IN DETAIL ENQUIRED AND INVESTIGATED ALONG WITH VERIFICATION OF FACTS BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. EVEN REGARDING LOAN TAKEN FROM BROTHER WAS ALSO ENQUIRED BY THE ASSESSI NG OFFICER AND THE ASSESSEE HAS FILED DUE REPLY AND EVIDENCES BEFORE THE ASSESSING OFFICER . COPY OF BANK ACCOUNT OF THE ASSESSEE WAS FILED WITH THE ASSESSING OFFICER AND FROM THEREIN IT WAS CRYSTAL CLEAR THAT FOR ENTRY DATED 24/9/2012 AN AMOUNT OF RS.0.92 5 CRORES WAS RECEIVED FROM SHRI MOHAN LAL BANSAL, BROTHER OF ASSESSEE AS ADVANCE. LD. A.R. OF THE ASSESSEE, THEREFORE, CONTENDED THAT IN THE CASE OF THE ASSESSEE , ORDER ITA NO .252/LKW/2017 PAGE 6 OF 16 PASSED UNDER SECTION 263 OF THE ACT IS ARBITRARY, PERVERSE AND LIABLE TO BE QUASHED. 8 . T HE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDER PASSED BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR UNDER SECTION 263 OF THE ACT. LD. D.R. SPECIFICALLY ARGUED THAT REVISED RETURN WAS FILED TWO DAYS PRIOR TO COMPLETION OF ASSESSMENT AND THAT TIME WAS TOO LESS FOR THE ASSESSING OFFICER TO MAKE ENQUIRY ON ALL THE THREE ASPECTS FOR WHICH ORDER UNDER SECTION 263 WAS PASSED BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR. LD. D.R. ALSO ARGUED THAT IN THE ABSENCE OF PROPER ENQUIRY AND LACK OF MATERIAL B EFORE THE ASSESSING OFFICER AND FOR THE FACT THAT WITHIN TWO DAYS ASSESSMENT WAS COMPLETED AFTER FILING OF REVISED RETURN, ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR IS JUSTIFIED IN LAW , SINCE THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9 . WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTIONS AND WE WOULD AT THE VERY OUTSET LOOK INTO THE NOTICE DATED 5/9/2014 ISSUED UNDER SECTION 142(1) OF THE AC T BY THE ASSESSING OFFICER ALONG WITH QUESTIONNAIRE, WHICH IS REPRODUCED HEREUNDER: - GOVERNMENT OF INDIA ROOM NO. 323, 3RD FLOOR, OFFICE OF THE 16/69, AAYAKAR BHAWAN INCOME TAX OFFICER - 2 (3), CIVIL LINES, KANPUR - KANPUR 208001 PHONE NO: 0512 - 2331658 PAN. : - AAMPB6026F DATED :08/09/2014 NOTICE UNDER SECTION 142 {1) OF THE INCOME TAX ACT, 1961 ITA NO .252/LKW/2017 PAGE 7 OF 16 TO, SHRI RAMESH CHAND BANS AL, 73/20, COLLECTOR GANJ, KANPUR IN CONNECTION WITH ASSESSMENT FOR THE ASSESSMENT YEAR 2013 - 14 YOU ARE REQUIRED TO: - (I) PREPARE A TRUE AND CORRECT RETURN OF YOUR INCOME IN RESPECT OF WHICH YOU ARE ASSESSA BLE UNDER THE IN COME TAX ACT, 1961, DURING THE PREVIOUS - YEAR RELEVANT TO THE ASS E SSME NT YEAR MENTIONED ABOVE. THE RETURN SHOULD BE IN T HE APPROPRIATE FORM AS PRESCRIBED IN RULE 12 OF THE INCOME TAX RULES, 1962. I T SHOULD BE DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF T HE SAID ACT AND DELIVERED AT MY OFFICE ON OR BEFORE , (II) P RODUCE OR CAUSE TO BE PRODUCED BEFORE ME AT MY OFFICE AT ROOM NO.323, 3 RD FLOOR, 16/69, AAYAKAR BHAWAN, CIVIL LINES, KANPUR ON OR BEFORE 18.09.2014 AT 11.50 A.M.. (III) PLEASE ENSURE COMPLI ANCE OF THE QUESTIONNAIRE DATED 05.09.2014. ENCL: AS ABOVE. SD/ - (GOVMD SINGH INCOME TAX OFFICER - 2 (3) KANPUR ITA NO .252/LKW/2017 PAGE 8 OF 16 ITA NO .252/LKW/2017 PAGE 9 OF 16 10 . WE WOULD FIRST DEAL WITH THE ISSUE RELATING TO ELIGIBILITY OF DEDUCTION UNDER SECTION 54F OF THE ACT. IT IS THE CASE OF THE REVENUE THAT AS SESSEE WAS A CO - OWNER OF A LAND PROPERTY AND THE SAME WAS SOLD ON 7/1/2013 FOR A SALE CONSIDERATION OF RS.7,50,00,000/ - . THEREAFTER , ASSESSEE FILED A REVISED RETURN WHEREIN HE HAS CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT AGAINST THE RESULTANT CAPI TAL GAIN INCOME ARISING ON THE SALE OF THE LAND CLAIMING THAT ASSESSEE HAS PURCHASED A HOUSE PROPERTY. NOW WE LOOK INTO POINT NO.7 OF THE QUESTIONNAIRE , WHICH READS AS PLEASE FURNISH DETAILS OF MOVEABLE/IMMOVABLE PROPERTIES PURCHASED BY YOU DURING THE RE LEVANT FINANCIAL YEAR, ITS SOURCE OF INVESTMENT ALONG WITH THE COPY OF THE PURCHASE DEED/BILL IN RESPECT OF THE SAID PURCHASES. ALSO GIVE DETAILS OF EXPENDITURE/INVESTMENT, IF A NY, MADE IN RENOVATION/ADDITION THEREON. PLEASE ALSO FURNISH THE DETAILS OF FD RS, NSCS/BONDS ETC. HELD BY YOU. WE ALSO PERUSED THE COPY OF ORDER SHEET RECORDED BY THE ASSESSING OFFICER , A COPY OF WHICH IS FILED BEFORE US , WHEREIN ON 10/11/2014 ASSESSING OFFICER HAS RECORDED THAT LD. A.R. OF THE ASSESSEE HAS ATTENDED AND FILED REP LY ON THE QUERIES RAISED IN THE QUESTIONNAIRE WITH COMPUTATION OF INCOME/TRADING ACCOUNT, BALANCE SHEET, BANK STATEMENT, COPIES OF LEDGER ACCOUNT OF ALL THE BANKS, PURCHASE DEED OF PROPERTY NO.16/79D & D1, CIVIL LINES, KANPUR PURCHASED FOR RS.1,50,00,000/ - ; WITHDRAWAL OF HOUSEHOLD EXPENSES; LEDGER COPY OF EXPENSES; CLOSING STOCK OF SHARES; TDS CERTIFICATES AND COPY OF SALE DEED OF AGRICULTURAL LAND SOLD. WE, THEREFORE, FIND THAT ON THIS ISSUE AND FIRST OF ALL IN THE QUESTIONNAIRE ANNEXED TO THE NOTICE ISS UED UNDER SECTION 142(1) OF THE ACT , A SPECIFIC QUESTION HAS BEEN RAISED BY THE ASSESSING OFFICER WITH REGARD TO THE PURCHASE AND SALE OF MOVEABLE AND IMMOVEABLE PROPERTIES AND THE LD. A.R. OF THE ASSESSEE A TTENDED THE HEARING AND HAS FILED COPY OF SALE DE ED OF AGRICULTURAL LAND WHICH WAS SOLD BY THE ASSESSEE AND IN ITA NO .252/LKW/2017 PAGE 10 OF 16 WHICH HE WAS THE CO - OWNER. SIMILARLY, ASSESSEE HAS ALSO FILED PURCHASE DEED OF THE PROPERTY FOR WHICH HE HAS CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. 11 . REVENUE HAS ALSO RAISED AN OBJECTI ON BEFORE US THAT PROPERTY PURCHASED WAS RESIDENTIAL - CUM - COMMERCIAL PROPERTY. ON THIS ISSUE WE TAKE GUIDANCE FROM THE DECISION OF THE CO - ORDINATE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MAHAVIR PRASAD GUPTA VS. CIT [2006] 101 TTJ 1078 WHEREIN IT WAS HE LD THAT SECTION 54F OF THE ACT ENVISAGES EXEMPTION OF LONG TERM CAPITAL GAIN IF THE NET CONSIDERATION THEREOF IS APPROPRIATED TOWARDS THE CONSTRUCTION OF A NEW RESIDENTIAL HOUSE. THE NEW PROPERTY, IN TH IS CASE, HAS BEEN LET OUT FOR COMMERCIAL USE, AND THUS REVENUE SEEK S TO DENY THE EXEMPTION UNDER SECTION 54F. THEREAFTER DELHI TRIBUNAL HELD THAT THE USE OF THE PROPERTY IS NOT THE RELEVANT CRITERION TO CONSIDER THE ELIGIBILITY OF S ECTION 54F BENEFIT. A BARE READING OF THE PROVISIONS OF S ECTION 54F REFLECT S T HAT WHAT IS REQUIRED IS INVESTMENT IN A NEW RESIDENTIAL HOUSE. THEREFORE, THE QUESTION THAT ARISES IN THE INSTANT CASE IS AS TO WHETHER THE INVESTMENT MADE IN THE NEW PROPERTY CONSTRUCTED OR PROCURED BY THE ASSESSEE WAS FROM THE MONEY ASSESSEE RECEIVED FRO M SALE OF IMMOVEABLE PROPERTY. WE OBSERVE THAT IN THE PRESENT CASE IT IS NOT DISPUTED BY THE DEPARTMENT THAT ASSESSEE HAS PURCHASED ANOTHER PROPERTY BY SELLING AGRICULTURAL LAND, THEREFORE, INVESTMENT PART IS CLEAR AND IS PROVED. THE DEPARTMENT IS NOT AG REEABLE TO ALLOW DEDUCTION UNDER SECTION 54F OF THE ACT SINCE THE PROPERTY WAS PARTLY COMMERCIAL AND PARTLY RESIDENTIAL. SINCE WE HAVE ALREADY EXAMINED FROM THE DECISION OF THE CO - ORDINATE DELHI BENCH OF THE TRIBUNAL THAT INTENTION OF THE LEGISLATURE IS T HAT IN ORDER TO GET ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF THE ACT , ONE HAS TO SEE WHETHER INVESTMENT IS COMPLETED OR NOT. IN THIS CASE OF THE ASSESSEE, INVESTMENT HAS ALREADY BEEN PROVED. ITA NO .252/LKW/2017 PAGE 11 OF 16 12 . SIMILARLY, IN THE CASE OF M. HARINITHA READDY, HYDERABAD AN D OTHERS VS. DEPARTMENT OF REVENUE IN ITA NO.1019 & 1021/HYD/2009, IT WAS HELD THAT MERE NON - RESIDENTIAL USE SUBSEQUENTLY WOULD NOT RENDER THE PROPERTY INELIGIBLE FOR BEING BENEFITTED UNDER SECTION 54F OF THE ACT IF IT IS OTHERWISE A RESIDENTIAL PROPERTY A ND UPH ELD THE VIEW OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MAHAVIR PRASAD GUPTA VS. CIT (SUPRA). MEANING THEREBY , SUBSTANTIAL USE FOR RESIDENTIAL PURPOSE , AN INVESTMENT SHOULD HAVE BEEN MADE BY THE ASSESSEE. IN THE IN STANT CASE, PROPERTY IS PARTLY RESIDENTIAL AND PARTLY COMMERCIAL, THEREFORE, RESIDENTIAL ASPECT IS ALREADY INVOLVED THEREIN AND WE HAVE EXAMINED THAT ASSESSEE HAS MADE INVESTMENT IN RESIDENTIAL PROPERTY OUT OF SALE PROCEEDS RECEIVED FROM SALE OF AGRICULTURAL LAND IN WHICH HE WAS CO - OWN ER. 13 . NOW WE LOOK INTO THE PROVISO TO SECTION 54F OF THE ACT WHICH SPECIFIES THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY WHERE THE ASSESSEE,(I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGIN AL ASSET; OR(II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR(III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFT ER THE DATE OF TRANSFER OF THE ORIGINAL ASSET ; AND(B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE ESSENCE OF THE PROVISO IS, THEREFORE, THAT DEDUCTION UNDER SECTION 54F OF THE ACT SHALL NOT BE APPLICABLE IN CASE AN ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE AT THE TIME WHEN NEW ASSET IS PROCURED. THIS ASPECT WAS NOT EXAMINED BY THE ASSESSING OFFICER AND NO THING ON RECORD SHOWS THAT THIS ISSUE WAS ITA NO .252/LKW/2017 PAGE 12 OF 16 ENQUIRED OR INVESTIGATED BY THE ASSESSING OFFICER TO VERIFY ELIGIBILITY OF DEDUCTION UNDER SECTION 54F OF THE ACT. 14 . SO FAR ALL OTHER FACTORS ARE CONCERNED, AS WE HAVE EXAMINED EARLIER THOUGH THE ASSESSEE QUALIFIES, HOWEVER, THE VERY FACT THAT PROVISO TO SECTION 54F OF THE ACT AND THE CONDITIONS SPECIFIED THEREIN HAS NOT BEEN ENQUIRED AND DEALT WITH BY THE ASSESSING OFFICER, SO AS TO WHETHER BENEFIT OF SECTION 54F OF THE ACT WAS ALLOWABLE TO THE ASSESSEE OR NOT HAS NO T BEEN EXAMINED AND TO THIS EXTENT WE HOLD THAT THE ORDER PASSED BY THE PR. COMMISSIONER OF INCOME - TAX STANDS GOOD. 15 . SECOND ISSUE FOR WHICH 263 ORDER WAS PASSED IS THAT ACCORDING TO THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR , ASSESSEE WAS INVOLVED IN SHAR E TRADING BUSINESS AND THIS WAS NOT ENQUIRED BY THE ASSESSING OFFICER. WE FIND THAT IN THE QUESTIONNAIRE ITSELF POINT NO.1 READS AS PLEASE PROVIDE A BRIEF NOTE OF YOUR SOURCE(S) OF INCOME DURING THE PREVIOUS YEAR AND ALSO FURNISH A DETAILED NOTE ABOUT AC TIVITIES CARRIED OUT AND ITS MODUS OPERANDI. IN CASE OF MANUFACTURING UNIT, BRIEFLY STATE THE MANUFACTURING PROCESS. PLEASE ALSO STATE METHOD OF ACCOUNTING, WHETHER CASH OR MERCANTILE. PLEASE ALSO FURNISH THE COMPLETE ADDRESS OF BUSINESS PREMISES, BRANC HES AND GODOWNS . PAGES 31 TO 33 OF THE PAPER BOOK FILED BEFORE IS THE DETAILED REPLY WITH REGARD TO QUESTION NO.1 OF THE QUESTIONNAIRE ISSUED TO THE ASSESSEE AND THEREIN ASSESSEE HAS STATED THAT HE IS ENGAGED IN SHARE TRADING BUSINESS AND STILL HOLDING ME MBERSHIP OF AHMEDABAD STOCK EXCHANGE. FURTHER, HE HAS STATED THAT HE IS NOT DOING THE BUSINESS OF SHARE TRADING S IN CE ABOUT EIGHT YEARS, ALTHOUGH TRADING OFFICE IS STILL BEING MAINTAINED AT AHEMDABAD. IT IS ALSO STATED THAT ASSESSEE IS HAVING INCOME FROM OTHER SOURCES MAINLY INTEREST INCOME ON BANK FIXED DEPOSITS AND THERE IS NO MANUFACTURING ACTIVITY. B OOKS OF ACCOUNTS ARE MAINTAINED ON CASH BASIS. ASSESSEE HAS ALSO ITA NO .252/LKW/2017 PAGE 13 OF 16 GIVEN ITS ADDRESS AND ADDRESS OF TRADING OFFICE IS AT AHEMDABAD. FURTHERMORE, IN THE COPY OF ORDER SHEET FILED BEFORE US, WE ALSO FIND THAT IN THE ENTRY RECORDED ON 10/11/2014 DETAILS OF CLOSING STOCK OF SHARES WAS ALSO PROVIDED TO THE ASSESSING OFFICER BY THE ASSESSEE. ON PERUSAL OF THESE DOCUMENTS, IT BECOMES ABSOLUTELY CLEAR THAT ASSESSING OFFICER HAD ENQUIRED ABOUT THE SOURCE OF INCOME OF THE ASSESSEE AND ASSESSEE HA D REPLIED REGARDING EACH AND EVERY SOURCE OF INCOME AND IT CANNOT BE SAID THAT ON THIS SHARE TRADING BUSINESS NO ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER. FACTS AVAILABL E ON RECORD ON THE CONTRARY SPELL OUT THAT ADEQUATE ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER AND ENTIRE SOURCE OF INCOME WAS IN THE KNOWLEDGE OF THE REVENUE. ASSESSEE HAS NOT ONLY STATED THAT HE WAS INTO SHARE TRADING BUT ALSO STATED THAT FOR THE LA ST EIGHT YEARS HE IS NOT DOING SHARE TRADING BUSINESS AND HE HAS ALSO PROVIDED ADDRESS OF THE TRADING OFFICE WHICH HE AGREES THAT IS STILL IN EXISTENCE AT AHMEDABAD. THESE EVIDENCES CLEARLY SHOW THAT FACTUAL VERIFICATIONS WERE CONDUCTED BY THE ASSESSING O FFICER. 16 . THIRD ISSUE FOR PASSING ORDER UNDER SECTION 263 OF THE ACT BY THE PR. COMMISSIONER OF INCOME TAX - I, KANPUR IS WITH REGARD TO THE LOAN TAKEN OF RS.0.925 CRORES FROM THE BROTHER OF THE ASSESSEE AND IT IS THE ALLEGATION THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY ON THIS ASPECT. WE OBSERVE THAT IN THE QUESTIONNAIRE ATTACHED WITH THE NOTICE UNDER SECTION 142(1) OF THE ACT ISSUED BY THE ASSESSING OFFICER POINT NO.6 READS AS PLEASE EXPLAIN THE BUSINESS EXPEDIENCY OF BORROWED UNSECURED LOANS , IF ANY. THE INFORMATION ABOUT UNSECURED LOANS MAY PLEASE BE FURNISHED IN A CONSOLIDATED CHART IN THE FOLLOWING FORMAT.AS REGARDS FRESH UNSECURED LOANS TAKEN DURING THE YEAR, PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THESE TRANSACTION S. PAGE 34 OF THE PAPER BOOK IS THE A NSWER TO THIS QUESTION IN WHICH ASSESSEE HAS CATEGORICALLY STATED BEFORE THE ASSESSING OFFICER ITA NO .252/LKW/2017 PAGE 14 OF 16 THAT DEPOSIT OF RS.92,50,000/ - SHOWN AS DEPOSIT IN HDFC BANK IS THE LOAN TAKEN FROM YOUNGER BROTHER OF THE ASSESSEE, SHRI MOHAN LAL BANSAL. CONFIRMATION IS SUBMITTED TO THE DEPARTMENT. SIMILARLY, AT PAGE 258 OF THE PAPER BOOK , WHICH IS THE COPY OF BANK ACCOUNT OF HDFC BANK OF THE ASSESSEE , WHEREIN THERE IS A DEPOSIT OF RS.92,50,000/ - AND IT IS STATED THAT IT IS RECEIVED FRO M SHIR MOHAN LA L BANSAL AS ADVANCE. SIMILARLY, BANK ACCOUNT COPY OF SHRI MOHAN LAL BANSAL IS ALSO ANNEXED AT PAGE 260 OF THE PAPER BOOK WHEREIN IT IS CLEARLY STATED THAT SAME AMOUNT WAS DEBITED ON THE SAME DATE AND CONFIRMATION THEREOF HAS BEEN FILED BY T HE BROTHER OF THE ASSESSEE. THESE DOCUMENTARY EVIDENCES CLEARLY BRINGS TO LIGHT THAT ON TH IS ISSUE ASSESSING OFFICER HAS MADE NECESSARY ENQUIRY AND INVESTIGATION, AND ASSESSEE HAS REPLIED TO THE QUERY OF THE ASSESSING OFFICER THROUGH DOCUMENTARY EVIDENCES ALONG WITH CONFIRMATION AND BANK ACCOUNT STATEMENT FROM THE BROTHER OF THE ASSESSEE. ENTIRE PROCESS SIGNIFIES THAT ADEQUATE ENQUIRY PROCESS WAS UNDERTAKEN BY THE ASSESSING OFFICER. 17 . AT THIS POINT OF TIME, WE WOULD LIKE TO REFER TO EXPLANATION 2 OF CLAUS E (A) OF SECTION 263 OF THE ACT. REVENUE MAY PERHAPS TRY TO TAKE SHELTER ON THE BASIS OF THIS EXPLANATION. OVER THE YEARS , IT HAS BEEN SETTLED POSITION OF LAW THAT COMMISSIONER OF INCOME TAX UNDER SECTION 263 HAS NO UNF ETTERED POWER AND IS SUBJECT TO VAR IOUS RESTRICTIONS . IT SHOULD BE CLEAR FROM HIS ORDER AS TO WHY ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT IT SHOULD BE A SPEAKING ORDER AND HE SHOULD BRING HIS THOUGH IN THE ORDER THAT ON WHAT GROUN D HE FEELS THAT SUCH ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN OUR HUMBLE UNDERSTANDING, EVEN AFTER INSERTION OF EXPLANATION 2(A) TO SECTION 263 OF THE ACT, THE WISDOM ENSHRINED IN VARIOUS JUDICIAL PRONOUNCEMENTS SHALL STILL HO LD GOOD, THAT IS TO SAY THAT EVEN NOW ALSO THE COMMISSIONER OF ITA NO .252/LKW/2017 PAGE 15 OF 16 INCOME TAX CANNOT HAVE UNF ETTERED POWER OR UNLIMITED POWER UNDER SECTION 263 OF THE ACT. IF SUCH POWER IS ALLOWED, THEN ASSESSING OFFICER SHALL NEVER BE APPLYING HIS MIND IN A FREE AND JUDICIO US WAY WHICH HE IS REQUIRED TO DO. FURTHERMORE, IF UNLIMITED POWER IS ASSIGNED TO THE COMMISSIONER OF INCOME TAX THROUGH EXPLANATION 2 TO SECTION 263 OF THE ACT , THAT WOULD LEAD TO INNUMERABLE LI TIGA TIONS. 18 . IN VIEW OF ABOVE DISCUSSION, SO FAR AS DEDUCT ION UNDER SECTION 54F OF THE ACT IS CONCERNED, THE ORDER OF THE PR. COMMISSIONER OF INCOME - TAX PASSED UNDER SECTION 263 OF THE ACT IS VALID IN VIEW OF THE PROVIS O TO SECTION 54F WHEREAS REGARDS THE OTHER ISSUES ARE CONCERNED, THEY HAVE BEEN ALREADY EXAMINE D BY THE ASSESSING OFFICER AND FOR THEM THERE IS NO APPLICABILITY OF REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT BY THE PR. COMMISSIONER OF INCOME - TAX AND TO THAT EXTENT I.E. SHARE TRADING BUSINESS OF THE ASSESSEE AND THE LOAN TRANSACTION FROM BRO THER OF THE ASSESSEE , F OR TH E SE ISSUES, WE QUASH THE ORDER UNDER SECTION 263 OF THE ACT. THEREFORE, THE ORDER UNDER SECTION 263 OF THE ACT IS QUASHED IN PART AS INDICATED HEREINABOVE. 19 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 24 / 0 8 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH AUGUST , 201 8 JJ: 0808 ITA NO .252/LKW/2017 PAGE 16 OF 16 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR