Savitaben Dhanjibhai Kankotia IND., Surat V. PCIT-1, , Surat

ITA 34/SRT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1757 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-05-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 06-04-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 263; 143(3); 54F; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.34/SRT/2021 (Ǔनधा[रणवष[ / Assessment Years: (2016-17) (Virtual Court Hearing) Savitaben Dhanjibhai Kankoti Ind.6, Narayan Muni Society, Swaminarayan Gurukul, Nani Ved, Ved Road, Surat-395004. Vs. Principal Commissioner of Income-Tax-1, Surat, Aaykar Bhavan Nr. Majura Gate, Surat- 395001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AFLPK6403K (Appellant) (Respondent) Assessee by : Shri Tinish R. Modi, CA Revenue by : Shri H. P. Meena, CIT(DR) स ु नवाईकȧ तारȣख/ Date of Hearing : 27/05/2022 घोषणाकȧ तारȣख/Date of Pronouncement : 18/08/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: By way of this appeal, the assessee has challenged the correctness of the order passed by the Learned Principal Commissioner of Income Tax-1 (in short the “ld. PCIT”) under section 263 of the Income Tax Act, 1961 [hereinafter referred to as the “Act”] dated 31.03.2021. 2. Grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the order passed u/s 263 of the Act by the learned PCIT- Surat-1 is bad in law and without jurisdiction. 2. On the facts and circumstances of the case as well as law on the subject, the learned PCIT-Surat-1 erred in treating the assessment order passed under section 143(3) of the Act dated 12-12-2018 as erroneous and prejudicial to the interest of revenue and thereby setting-aside the assessment to the AO for deciding de Novo with a direction to examine the issue of deduction claimed u/s 54F of the Act.” 3. Brief facts qua the issue are that assessee before us is an individual and had filed his return of income for assessment year 2016-17 on 24.02.2017 declaring total income of Rs.1,59,66,260/-. The case of the assessee was selected for Page | 2 ITA No.34/SRT/2021 A Y. 2016-17 Savitaben Dhanjibhai Kankotia scrutiny assessment through CASS. The assessment was framed u/s 143(3) of the Income Tax Act, 1961 on 12.12.2018 accepting return of income. 4. Later on, Ld. PCIT has exercised his jurisdiction under section 263 of the Income Tax Act. On perusal of records, it was noticed by ld PCIT that during the year under consideration, the assessee had claimed deduction under section 54F of the Act, at Rs.1,06,33,268/- against the long term capital gain of Rs.2,65,99,529/- arising from sale of land, for a consideration of Rs.2,75,00,000/-. The Ld.PCIT was of the view that assessee was allowed deduction under section 54F of the Act wrongly and without verifying the eligibility of the assessee. The Ld PCIT noted that as per return of income for assessment year 2016-17, the assessee was found to be owner of house property at Flat C-102, Panchshila Ved, Katargam, Surat, which is self-occupied. As per computation of income for assessment year 2015- 16, the assessee had shown rental income of Rs.16,800/- from a property at 6, Narayanmuni Nagar Ved, Katargam, Surat. As the assessee had not shown to have disposed of (sold) this residential property neither in assessment year 2015-16 nor in assessment year under consideration 2016-17. Therefore, ld PCIT observed that assessee continued to own the said property in assessment year 2016-17. In view of the above observation that assessee was owner of more than one residential house other than the new assets, therefore, her claim of deduction u/s 54F amounting of Rs.1,06,33,268/- allowed by the Assessing Officer, was not correct. On consideration of above irregularities, the assessment order is found to be erroneous and prejudicial to the interest of Revenue. Therefore, ld PCIT issued a show cause notice to the assessee on 25.03.2021. 5.In response to show-cause notice dated 25.03.2021, the assessee submitted her reply through ITBA system. The assessee stated that she was not owner of the house property addressed at 6, Narayanmuni Nagar Ved, Katargam, Surat during the year under revision. In support to her claim, the assessee submitted copy of light bills, Municipal Bills/and copy of a 'Kabja Receipt'. Page | 3 ITA No.34/SRT/2021 A Y. 2016-17 Savitaben Dhanjibhai Kankotia 6. However, Ld. PCIT observed that documentary evidences submitted by the assessee are related to previous year, that is, prior to the year under consideration. The assessee has not submitted any documentary evidences, which prove that assessee was not owning the house property during the assessment year under consideration. The copy of the 'Kabja Receipt' is just a piece of paper not having signature of any witness persons, therefore not acceptable as documentary evidence. The ld PCIT noted that during the assessment year 2015-16, the assessee has shown rental income from the property addressed at, Narayanmuni Nagar Ved, Katargam, Surat. As the assessee had not shown to have disposed of (sold) this residential property neither in assessment year 2015-16 nor in assessment year 2016-17. The assessee continued to own the paid property in A.Y. 2016-17. Thus, assessee failed to establish that she was not owning the said house property during the F.Y. 2015-16 relevant of assessment year 2016-17. During the year under consideration, the assessee was owner of more than one residential house other than the new assets, therefore, she is not entitled to get deduction u/s 54F of the Act, amounting of Rs.1,06,33,268/-. 7. Having gone through the provisions of section 54F of the Act, the Ld. PCIT observed that this is not a case of lack of inquiry, but no inquiry was made by the Assessing Officer in respect of the issue under consideration, thus Assessing Officer passed the order without application of his mind, and without making inquiries. In view of the above facts, the order passed u/s 143(3) of the Act dated 12.12.2018 was considered by ld PCIT as erroneous and prejudicial to the interest of revenue. Therefore, ld PCIT has directed the Assessing Officer to examine the issue of deduction claimed u/s 54F of the Act. 8. Aggrieved by the order of the ld. PCIT, the assessee is in appeal before us. 9. Learned Counsel for the assessee submitted that Assessing Officer issued show cause notice dated 05-12-2018 for disallowing the deduction claimed u/s54F of the Act for the alleged reason that the assessee was owner of two residential house at time of transfer of original asset. In response to above said show cause notice Page | 4 ITA No.34/SRT/2021 A Y. 2016-17 Savitaben Dhanjibhai Kankotia dated 05-12-2018, the assessee submitted her reply vide letter dated 07-12-2018 along with evidences to substantiate her claim that she was owner of one residential house only at the time of sale of original asset. The assessee is owner of one residential house at the time of sale of original asset and as such accepted the returned income by passing order u/s. 143(3) of the Act. Therefore, order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. 10. On the other hand, Ld CIT-DR for the Revenue submits that assessee has not explained whether she has sold the house. The assessee has not produced the agreement to show that there was a sale of house. The assessee has shown income under the head house property vide paper book page no.12. However, now Learned Counsel have submitted the electricity bill, water bill and Kabza receipt to demonstrate that property was sold. In the absence of any agreement, it will not be treated that property had been sold. Therefore, issue raised by ld. PCIT is tenable in law and therefore order passed by ld. PCIT must be upheld. 11. We have heard both the parties and perused the material available on record. We note that before us, Learned Counsel submitted the copy of return of income for assessment year 2016-17 in respect of Savitaben Dhanjibhai Kankotia (vide PB.11). The Learned Counsel submitted statement of computation to total income which shows income from house property (vide PB.12 to 15). The assessee submitted profit and loss account (vide PB.16). The assessee submitted balance sheet on 13.01.2016 (vide PB.17). During the assessment proceedings, Assessing Officer issued a show cause notice under section 143(2) dated 05.12.2018 wherein the assessee was asked to submit the details of the capital account and deduction claimed under section 54F of the Act, the said show cause notice of the Assessing Officer is placed at paper book page no.36. Page | 5 ITA No.34/SRT/2021 A Y. 2016-17 Savitaben Dhanjibhai Kankotia In response to the show cause notice, the assessee has submitted its reply vide letter dated 07.12.2018 which is placed at paper book page no.19. We note that reply of the assessee does not contain any evidence to the effect that it has been submitted before the Assessing Officer, as it does not contain any acknowledgment/receipt/signature of Assessing Officer to the effect that the reply has been received by the Assessing Officer. We also note that this reply has not been signed by assessee. Therefore, it is not treated as evidence in the eye of law. Hence, it will be treated that assessee has not submitted its reply during assessment proceedings in response to notice issued by Assessing Officer. 12. We also note that assessee had shown rent income from the residential property situated at 6, Narayanmuni Nagar Ved, Katargam, Surat. Therefore, the property which is rented by the assessee can not be treated, as if it is sold. Therefore, the claim of deduction u/s 54F of the Act should be rejected, as held by the ld PCIT. The copy of the 'Kabja Receipt' was produced by the assessee to claim deduction under section 54F of the Act, which can not be accepted, as the scheme of section 54F of the Act, does not contain such provision to accept the 'Kabja Receipt' as an evidence to sale the property. The ld DR also submitted that 'Kabja Receipt' is just a piece of paper not having signature of any witness persons, no part payment was received by the assessee, therefore not acceptable as documentary evidence. Therefore, the order of the Assessing Officer was erroneous for want of proper enquiry. He had not recorded reasons for accepting the return of the assessee as submitted by it on the impugned issue. The Assessing Officer without making any enquiry, accepted the claim of the assessee and the assessment order was silent about the issue raised by the Commissioner. 13. Here it is pertinent to mention that the Assessing Officer has twin functions i.e. he is an investigator as well as an adjudicator. He cannot remain passive to the reply, when it calls for further inquiry. As an adjudicator he has to collect the facts and after analyzing them as per law and judicial precedent, has to pass a speaking order. In the present case, the Assessing Officer has not made any informed Page | 6 ITA No.34/SRT/2021 A Y. 2016-17 Savitaben Dhanjibhai Kankotia opinion. The Assessing Officer has acted merely as an approver and ignored both his core functions investigation and adjudication. The Assessing Officer had not examined the merit of the claim of the assessee. Therefore, it could not be said that he had taken one of the permissible views in accordance with law. The Assessing Officer had not taken any view, except blindly accepting the view of the assessee on the issue. In the assessee`s case, the failure of the Assessing Officer to make an enquiry with regard to the claim of the assessee and to record such a reason, why he was taking particular view, makes the assessment order erroneous and prejudicial to the interest of the revenue. From the above facts it is vivid that order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue, hence we uphold the order of ld PCIT. 14. In the result, appeal filed by the assessee is dismissed. Order is pronounced in the open court on 18/08/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat / Ǒदनांक/ Date: 18/08/2022 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat