Parkash Chand, Bhawanigarh V. ITO, Sangrur

ITA 431/CHANDI/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7097 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Opportunity of being heard; Principle of natural justice; Agreed addition; Assessment record
• Section: 143(3); 54F; 54; 6; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.431/CHD/2014 ASSESSMENT YEAR 2009-10 SHRI PARKASH CHAND, VS THE INCOME TAX OFFICE R, C/O SITA RAM &SONS, WARD 1, COMMISSION AGENTS, SANGRUR. BHAWANIGARH. PAN : ABIPC2392N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK GOYAL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 08.07.2014 DATE OF PRONOUNCEMENT : 28.08.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX, PATIALA DATED 20.03 .2014 AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE INCOME TAX AC T, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT ORDER PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX PATIALA IS AGAINST LAW & FACTS ON THE FILE IN AS MUCH AS HE W AS NOT JUSTIFIED TO HOLD THAT ORDER DATED 23.08.2011 PASSED BY THE ITO WARD 1, SANGRUR IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2. THE LEARNED COMMISSIONER OF INCOME TAX GRAVELY ERRE D IN GIVING CONTRADICTORY DIRECTIONS REGARDING INVESTMENT IN LA ND. 3. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO AP PRECIATE THE IMPORT OF DETAILED SUBMISSION MADE BEFORE COMING TO THE CONCL USION TO HOLD THAT ASSESSMENT ORDER DATED 23.8.2011 IS ERRONEOUS IN AS MUCH AS PR EJUDICIAL TO THE INTEREST OF REVENUE. 2 3. THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAI NST THE ORDER OF REVISION PASSED UNDER SECTION 263 OF THE INCOME TAX ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THE CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 23.08.2011 ON A TOTAL INCOME OF RS. 158,990/- AS AGAINST RETURNED INCOME OF RS. 133,990/-. THE COMMISSIONER OF INCOME TAX, ON THE PERUSAL OF RECORDS NOTED THAT THE ASSESSEE H AD SOLD LAND FOR RS. 29,35,000/- AGAINST WHICH IT HAD CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. THE SALE CONSIDERATION IN ENTIRETY WAS RECEIVED IN CASH AGAINST WHICH THE RESIDENTIAL PLOT MEASURING 666.66 SQ.YDS. WAS PURCHASED FOR TOTAL CONSIDERATION OF RS. 11,62,300/ - INCLUDING STAMP DUTY CHARGES. THE BALANCE SUM OF RS. 17,72,700/- W AS CLAIMED TO HAVE BEEN INVESTED IN THE CONSTRUCTION ON THE SAID PLOT. THE COMMISSIONER OF INCOME TAX OBSERVED THAT THE ASSESS EE HAD FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE REGARDING CONSTRUC TION ON THE SAID PLOT, NEITHER ANY APPROVAL FOR CONSTRUCTION OF PLOT FROM THE MUNICIPAL COMMITTEE WAS AVAILABLE ON RECORD NOR ANY MAP WAS A VAILABLE ON RECORD. FURTHER, THE ASSESSEE HAD FAILED TO FURNIS H BILLS OF CONSTRUCTION. THE ASSESSING OFFICER HAD FAILED TO MAKE ANY ENQUIRY. THE COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT THERE WAS NO JUSTIFICATION IN THE DEDUCTION ALLOWED UNDER SECTIO N 54F OF THE ACT. SHOW CAUSE NOTICE DATED 11/12.12.2013 WAS ISSUED TO THE ASSESSEE, THE CONTENTS OF WHICH ARE REPRODUCED AT PAGES 1 AND 2 OF THE ORDER PASSED UNDER SECTION 263 OF THE ACT. IN RESPONSE, THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED AT PAGES 2 TO 4 OF THE SAID ORDER. THE PLEA OF THE ASSESSEE WAS THAT PHOTO COPY OF THE PURCHASE DEED OF THE PLOT WAS FILED ALONGWITH RETUR N OF INCOME AND FURTHER COPY OF BANK LOAN TAKEN FOR CONSTRUCTION OF THE RESIDENTIAL 3 HOUSE WAS ALSO FILED. THE SUPPORTING DOCUMENTS REG ARDING MAP AND OTHER PAPERS WERE PRODUCED BEFORE THE ASSESSING OFF ICER DURING THE ASSESSMENT PROCEEDINGS. 5. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT THE BANK LOAN WAS DISBURSED IN INSTALLMENTS WHICH PROVED THAT CONSTRU CTION WAS IN PROGRESS. THE ASSESSEE FURTHER SUBMITTED THE COPY OF APPROVED MAP BEFORE THE COMMISSIONER OF INCOME TAX WHICH WAS CLA IMED TO HAVE BEEN PRODUCED DURING THE ASSESSMENT PROCEEDINGS. T HE COMMISSIONER OF INCOME TAX ON ANALYSIS OF THE DOCUMENT NOTED THA T THE ASSESSEE HAD FURNISHED COPIES OF PURCHASE AND SALE DEED OF THE H OUSES AND HAD FURTHER FURNISHED CAPITAL ACCOUNT WHICH IS CREDITED WITH THE CASH RECEIVED AS SALE CONSIDERATION. FURTHER WITHDRAWAL S WERE MADE FROM THE SAID ACCOUNT. 6. THE COMMISSIONER OF INCOME TAX FURTHER NOTED THA T DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAI MED THAT IT HAD SPENT RS. 26,45,342/- ON COST OF CONSTRUCTION WHERE AS IN THE PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME TAX, THE ASSESSEE CLAIMED TO HAVE INCURRED AN EXPENDITURE OF RS. 25,3 7,500/- BUT NO VOUCHERS FOR THE CONSTRUCTION EXPENSES WERE KEPT. THE CLAIM OF THE ASSESSEE THAT SANCTION OF HOUSING LOAN AND ITS DISB URSEMENT COULD BE TAKEN AS EVIDENCE OF CONSTRUCTION EXPENSES AND THE CONSTRUCTION OF HOUSE WAS NOT ACCEPTED BY THE COMMISSIONER OF INCOM E TAX IN THE ABSENCE OF ANY OTHER EVIDENCE. THE COMMISSIONER OF INCOME TAX WAS THUS, OF THE VIEW THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS NOT ONLY ERRONEOUS BUT PREJUDICIAL TO T HE INTEREST OF REVENUE AND CONSEQUENTLY, THE SAME WAS SET ASIDE WI TH DIRECTIONS TO MAKE FRESH ASSESSMENT ON THE ISSUE OF DEDUCTION UND ER SECTION 54F OF THE ACT AND INVESTMENT IN THE LAND. 4 7. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT CO MPLETE DETAILS AVAILABLE WERE FURNISHED BEFORE THE ASSESSING OFFIC ER AND CLAIM OF THE ASSESSEE WAS LOOKED INTO BY THE ASSESSING OFFICER D URING THE FIRST ROUND AND COMPLETE DETAILS WERE ALSO FILED BEFORE C OMMISSIONER OF INCOME TAX INCLUDING THE APPROVAL OF MAP AND SOURCE OF WITHDRAWAL FROM THE CAPITAL ACCOUNT WITH M/S SITA RAM PARKASH CHAND FOR THE SAID INVESTMENT AGAINST WHICH THE ASSESSEE HAD CLAIMED D EDUCTION UNDER SECTION 54F OF THE ACT AND THERE IS NO MERIT IN THE ORDER PASSED UNDER SECTION 263 OF THE ACT. 8. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDER OF THE COMMISSIONER OF INCOME TAX. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 263 OF THE ACT, THE COMMISSIONER IS EMPOWERED TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND WHERE HE CONSIDERS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THEN HE MAY AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE AND/OR AFTER MAKING ANY ENQUIRY AS HE DEEMS NECESSA RY IS EMPOWERED TO PASS AN ORDER AS THE CIRCUMSTANCES JUSTIFY INCLU DING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND/OR DIRECTING AFRESH ASSESSMENT. 10. IN THE FACTS OF THE PRESENT CASE, THE ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD A PIEC E OF LAND AND THE SALE PROCEEDS THEREOF WERE INVESTED IN ANOTHER PIEC E OF LAND ON WHICH CONSTRUCTION WAS MADE BY THE ASSESSEE BY UTILIZING THE SALE PROCEEDS AND ALSO BY OBTAINING LOAN FROM THE BANK AGAINST HO USING LOAN. THE 5 PLEA OF THE ASSESSEE BEFORE US WAS THAT THE SAID CO NSTRUCTION WAS MADE AFTER GETTING THE PLANS APPROVED FROM THE MUNICIPAL CORPORATION AND THE NECESSARY COPIES OF THE APPROVALS ARE PLACED AT PAGES 7 TO 13 OF THE PAPER BOOK. FURTHER, THE SALE PROCEEDS OF THE ORIGINAL HOUSE WERE DEPOSITED IN ACCOUNT OF M/S SITA RAM PARKASH CHAND, OUT OF WHICH WITHDRAWALS WERE MADE FROM DAY-TO-DAY FOR INVESTING IN THE CONSTRUCTION OF THE NEW PLOT OF LAND PURCHASED. THE COPY OF THE SAID ACCOUNT IS PLACED AT PAGES 16 TO 18 OF THE PAPER BO OK. FURTHER, THE ASSESSEE CLAIMS TO HAVE TAKEN A HOUSING LOAN OF RS. 24,70,000/- WHICH IN-TURN WAS UTILIZED FOR THE PURPOSE OF INVESTMENT IN THE NEW PROPERTY PURCHASED BY THE ASSESSEE. THE ASSESSEE CLAIMS THA T THE NEW PLOT OF LAND WAS PURCHASED AT SANGRUR FOR RS. 11,62,360/- A ND THE BUILDING ON THE SAID PLOT OF LAND WAS CONSTRUCTED OVER A PERIOD OF TIME AND THE CONSTRUCTION EXPENSES UPTO 31.03.2009 WAS RS. 18,72 ,842/- AND UPTO 31.3.2010 WAS RS. 672,500/- AND UPTO 31.3.2011 WAS RS. 2,00,000/- TOTALING RS. 27,45,340/-. THE ASSESSEE HAD PLACED ON RECORD THE COPY OF PURCHASE DEED OF THE SAID PLOT OF LAND AND ALSO THE DETAILS OF WITHDRAWALS FROM THE CONCERN AND THE COPY OF BANK L OAN BOTH DURING THE ASSESSMENT PROCEEDINGS AND ALSO BEFORE THE COMM ISSIONER OF INCOME TAX. THE CLAIM OF THE ASSESSEE WAS THAT IN VIEW OF ITS INVESTMENT IN THE PURCHASE OF PLOT AND CONSTRUCTION THEREUPON, THE EXEMPTION AVAILABLE UNDER SECTION 54F OF THE ACT ON SALE OF THE ORIGINAL PLOT OF LAND WAS AVAILABLE TO THE ASSESSEE . THE ASSESSMENT PROCEEDINGS WERE STARTED AGAINST THE ASSESSEE AS TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS ON THE BASIS OF AIR INFORMATION. THE ASSESSING OFFICER IN THE ASSESSME NT ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED NIL OBSERVE D THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE AIR INFORMATION AND WAS ASKED TO JUSTIFY THE CLAIM OF D EDUCTION UNDER 6 SECTION 54 IN THE RETURN. THE ASSESSEE HAS FILED T HE REPLY AND INFORMATION AS CALLED FOR DURING THE ASSESSMENT PRO CEEDINGS, WHICH IS PLACED ON RECORD. THE CONTENTION OF THE ASSESSEE H AD BEEN TEST CHECKED AND VERIFIED WITH REFERENCE TO THE BOOKS OF ACCOUNT AND OTHER MATERIAL PRODUCED DURING THE ASSESSMENT PROCEEDINGS . AFTER DISCUSSION, ADDITION OF RS. 25,000/- IS MADE ON AGR EED BASIS. THE ASSESSMENT ORDER WAS THEREAFTER PASSED UNDER SECTIO N 143(3) OF THE ACT ON TOTAL INCOME OF RS. 158,990/-. 11. THE COMMISSIONER OF INCOME TAX, IN THE ABOVESAI D FACTS AND CIRCUMSTANCES HAD INVOKED HIS POWER UNDER SECTION 2 63 OF THE ACT HOLDING THE ASSESSMENT FRAMED BY THE ASSESSING OFFI CER TO BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AS THE ASSESSING OFFICER HAD FAILED TO MAKE THE ENQUIRIES. THE BASIS FOR SUCH CONCLUSION WAS THAT NO EVIDENCE OF THE APPROVED MAP BEING PROD UCED BEFORE THE ASSESSING OFFICER WAS AVAILABLE ON RECORD. THE COM MISSIONER OF INCOME TAX WAS OF THE VIEW THAT THE ASSESSING OFFIC ER HAD NOT CALLED FOR REQUISITE DETAILS OF THE AMOUNTS SPENT ON THE C ONSTRUCTION OF THE HOUSE AND THE ASSESSMENTS HAVE BEEN COMPLETED WITHO UT MAKING PROPER ENQUIRY. EVEN THE EVIDENCE OF THE SOURCE OF INVEST MENT WAS FILED DURING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT BEFORE THE COMMISSIONER OF INCOME TAX AS PER WHICH LOAN OF RS. 25 LACS WAS RECEIVED FROM THE SANGRUR CENTRAL COOPERATIVE BANK LTD., SANGRUR. IN VIEW THEREOF, THE COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT WHERE NECESSARY ENQUIRIES HAD NOT BEEN MADE BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER WAS DIRECTED TO MAKE AFRE SH ASSESSMENT ON THE ISSUE OF DEDUCTION UNDER SECTION 54F OF THE ACT . 12. ANOTHER ASPECT NOTED BY THE COMMISSIONER OF INC OME TAX WAS THAT THE LOAN DOCUMENTS OBTAINED FROM THE BANK SHOW THAT THE COST OF 7 PLOT OF LAND PURCHASED DURING THE YEAR ITSELF FOR R S. 11,62,360/- WAS DECLARED AT RS. 34 LACS. THE ASSESSEE, IN REPLY SU BMITTED THAT THE SAID DOCUMENT WAS NOT PART OF THE RECORD FOR ISSUE OF NO TICE UNDER SECTION 263 OF THE ACT AND FURTHER, IT WAS THE MARKET VALUA TION OF THE SAID PLOT FOR OBTAINING LOAN FROM THE MARKET. THE COMMISSION ER OF INCOME TAX ALSO REFERRED THE ISSUE OF INVESTMENT IN THE LAND B ACK TO THE FILE OF ASSESSING OFFICER. 13. UNDER THE PROVISIONS OF SECTION 263 OF THE ACT, IT IS STIPULATED THAT THE COMMISSIONER OF INCOME TAX WOULD ISSUE SHO W CAUSE NOTICE TO THE ASSESSEE WHERE THE ORDER PASSED BY THE ASSES SING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE COMMISSIONER OF INCOME TAX IN THE PRESENT CASE HAD ISSUED THE SAID SHOW CAUSE NOTICE TO THE ASSESSEE WHICH IS AS UNDER : IN THIS CASE ASSESSMENT WAS MADE U/S 143(3) OF THE ACT VIDE ORDER DATED 23.08.2011 AT AN INCOME OF RS. 1,58,990/- AGAINST T HE RETURNED INCOME OF RS.1.33,990/-, MAKING AN ADHOC ADDITION OF RS.25 ,000/- ON AGREED BASIS. ON PERUSAL OF RECORDS, THE ASSESSMENT ORDER WAS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND THEREFORE, A SHOW CAUSE NOTICE DATED 11/12.12.2013 WAS ISSUED U/ S 263 OF THE ACT AS UNDER:- 'ORIGINAL ASSESSMENT U/S 143(3) OF THE INCOME TAX A CT, 1961 FOR THE ASSESSMENT YEAR [FOR BREVITY 'AY'] 2009-10 WAS MAD E IN YOUR CASE BY THE INCOME TAX OFFICER, WARD-1, SANGRUR, HEREINA FTER CALLED THE AO, VIDE ORDER DATED 23.08.2011 AT AN INCOME OF RS.1,5 8,900/- AS AGAINST RETURNED INCOME OF RS. 1,33,990/-, THEREBY MAKING A N ADDITION OF RS.25,000 ON AGREED BASIC. 2. ON AN EXAMINATION OF YOUR ASSESSMENT RECORD FOR THE ASSESSMENT YEAR 2009-10, IT IS SEEN THAT, YOU HAVE SOLD LAND FOR RS .29,35,000/- AGAINST WHICH YOU HAVE CLAIMED DEDUCTION U/S 54F OF THE I.T .ACT, 1961. ON FURTHER PERUSAL OF RECORDS, IT IS SEEN THAT YOU HAV E RECEIVED THE ENTIRE SALE CONSIDERATION AMOUNTING TO RS.29,35,000/- IN C ASH AGAINST WHICH YOU HAVE PURCHASED A RESIDENTIAL PLOT MEASURING 666 .66 SQ. YARDS FOR TOTAL CONSIDERATION OF RS. 11,62,300/- INCLUDING ST AMP DUTY CHARGES. THE BALANCE AMOUNT OF RS.17,72,700/- HAVE BEEN CLAIMED TO HAVE BEEN INVESTED IN THE CONSTRUCTION ON SAID PLOT. NEITHER HAVE YOU SUBMITTED NOR HAS THE AO OBTAINED ANY DOCUMENTARY EVIDENCE REGARD ING CONSTRUCTION ON THE SAID PLOT. NO DOCUMENTARY EVIDENCE REGARDING APPROVAL FOR CONSTRUCTION OF PLOT FROM THE MUNICIPAL COMMITTEE I S AVAILABLE ON RECORD. NO SANCTIONED MAP IS AVAILABLE ON RECORD. N O BILLS OF CONSTRUCTION EXPENSES HAVE BEEN PLACED ON RECORD. T HE AO HAS NOT EVEN ASKED YOU TO FURNISH THE BANK ACCOUNT WHERE THE SAI D CASH WAS 8 DEPOSITED. NO INDEPENDENT ENQUIRY HAS BEEN MADE BY THE AO TO JUSTIFY THE CLAIM OF DEDUCTION U/S 54F OF THE IT. ACT, 1961 . THE UNUTILIZED AMOUNT WAS REQUIRED TO BE DEPOSITED INTO A SEPARATE BANK ACCOUNT AS PER PROVISIONS OF SECTION 54F(4) OF THE ACT WHICH D OES NOT APPEAR TO HAVE BEEN DONE BY YOU. THUS THE COMPLIANCE OF SECTI ON 54F(4) OF THE ACT HAS NOT BEEN MADE AND NO DOCUMENTARY EVIDENCE REGAR DING INVESTMENT MADE IN THE CONSTRUCTION OF SAID PLOT, HAS BEEN FUR NISHED. HENCE, THE DEDUCTION U/S. 54F FOR CONSTRUCTION OF RESIDENTIAL HOUSE HAS BEEN WRONGLY ALLOWED BY THE A. O.. 3. THE ORDER OF ASSESSMENT PASSED BY THE SAID ASSES SING OFFICER IS THUS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST S OF REVENUE, WITHIN THE MEANING OF THE EXPRESSION OCCURRING IN SECTION 263 OF THE INCOME TAX ACT,1961. 4. NOW, THEREFORE, IN EXERCISE OF POWERS CONFERRED UNDER SECTION 263(1) OF THE INCOME TAX ACT, 1961, I PROPOSE TO SE T ASIDE THE SAID ORDER OF ASSESSMENT DATED 30.11.2012 PASSED UNDER SECTION 143(3) BY THE ASSESSING OFFICER AND TO DIRECT THE FRAMING OF A FR ESH ASSESSMENT IN RESPECT OF THE AFORESAID ISSUE. HOWEVER, BEFORE DOI NG SO, I HEREBY GIVE YOU AN OPPORTUNITY OF BEING HEARD. 14. THE PERUSAL OF THE SAID SHOW CAUSE NOTICE ISSUE D UNDER SECTION 263 OF THE ACT REFLECTS THAT THE ENQUIRY WAS MADE I N RESPECT OF THE CONSTRUCTION ON THE NEW PLOT OF LAND PURCHASED BY T HE ASSESSEE. THE CLAIM OF THE ASSESSEE UNDER SECTION 54F OF THE ACT WAS REFERRED TO BY THE COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NO TICE ISSUED UNDER SECTION 263 OF THE ACT AND THE ASSESSEE WAS SHOW CA USED AS TO WHY THE DEDUCTION UNDER SECTION 54F FOR THE CONSTRUCTION OF RESIDENTIAL HOUSE, SHOULD NOT BE WITHDRAWN. HOWEVER, THE COMMISSIONER OF INCOME TAX WHILE PASSING THE ORDER UNDER SECTION 263 OF THE AC T HAS DIRECTED THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT ON THE I SSUE OF DEDUCTION UNDER SECTION 54F AND THE INVESTMENT IN LAND, AS RE FERRED TO BY US IN THE PARAS HEREIN ABOVE. THE LD. DR FOR THE REVENUE HAS FAILED TO PRODUCE ANY OTHER SHOW CAUSE NOTICE ISSUED BY THE C OMMISSIONER OF INCOME TAX VIS--VIS THE INVESTMENT MADE IN THE PUR CHASE OF LAND. AS THE COMMISSIONER OF INCOME TAX HAS FAILED TO ISSUE ANY SHOW CAUSE NOTICE TO THE ASSESSEE ON THE ISSUE OF PURCHASE OF LAND WHICH WAS DECLARED BY THE ASSESSEE AT RS. 11,62,360/-, HOWEVE R BEFORE THE BANK, 9 VALUE OF WHICH WAS SHOWN AT RS. 34,00,000/-. WE FI ND NO MERIT IN THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX IN RES PECT OF THE INVESTMENT IN PURCHASE OF LAND IN THE ABSENCE OF AN Y SHOW CAUSE NOTICE BEING ISSUED TO THE ASSESSEE UNDER SECTION 263 OF T HE ACT AND THE SAME ARE REVERSED. 15. NOW COMING TO THE SECOND ASPECT OF THE SHOW CAU SE NOTICE ISSUED UNDER SECTION 263 OF THE ACT IN RELATION TO THE ENQ UIRIES MADE BY THE ASSESSING OFFICER VIS--VIS THE COST OF CONSTRUCTIO N OF THE PLOT OF LAND AND THE CLAIM OF THE ASSESSEE UNDER SECTION 54 OF T HE ACT. THE PERUSAL OF THE ASSESSMENT ORDER REFLECTS THAT THE ASSESSMEN T IN THE CASE WAS MADE AFTER THE CASE WAS SELECTED FOR SCRUTINY THROU GH CASS ON THE BASIS OF AIR INFORMATION. THE SAID INFORMATION WAS SHOW CAUSED TO THE ASSESSEE AND THE ASSESSEE WAS ALSO ASKED TO JUS TIFY THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT. THE ASSESSI NG OFFICER HAS GIVEN A FINDING THAT THE ASSESSEE HAD FILED THE REP LY AND HAS ALSO FURNISHED THE INFORMATION AS CALLED FOR DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER, THEREAFTER ACC EPTED THE CLAIM OF THE ASSESSEE VIS--VIS THE EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT, EXCEPT TO MAKE AGREED ADDITION OF RS. 25,000/- . IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WE ARE NOT IN CONFORMI TY WITH THE OBSERVATION OF THE COMMISSIONER OF INCOME TAX THAT THE ASSESSING OFFICER HAS FAILED TO MAKE ANY ENQUIRY. MERELY BEC AUSE THE COPY OF SANCTIONED PLANS WAS NOT AVAILABLE ON RECORD, DOES NOT IMPLY THAT THE SAID PLANS WERE NOT SANCTIONED. THE ASSESSEE IN AL L FAIRNESS ADMITTED THAT THE SAID PLANS WERE PRODUCED BEFORE THE ASSESS ING OFFICER AND THE COPIES OF THE SAME WERE PRODUCED BEFORE THE COMMISS IONER OF INCOME TAX AND HAVE ALSO BEEN PLACED IN THE PAPER BOOK FIL ED BEFORE US. THE PERUSAL OF THE SAID PLANS REFLECT THE SAME BEING SA NCTIONED BY THE 10 MUNICIPAL CORPORATION ON 10.10.2008 WHICH RELATES T O ASSESSMENT YEAR 2007-08. THEREAFTER, THE COPIES OF THE SANCTIONED PLAN HAVE ALSO BEEN PLACED AT PAGES 9 TO 13 OF THE PAPER BOOK WHICH IN- TURN FURTHER ESTABLISHES THE CASE OF THE ASSESSEE. THE COMMISSI ONER OF INCOME TAX HAS ALSO NOTED FROM THE PERUSAL OF ASSESSMENT RECOR DS THAT THE COPY OF HOUSING LOAN OBTAINED FROM THE BANK WAS ALSO AVAILA BLE ON RECORD WHICH AGAIN APPROVES THE CASE OF THE ASSESSEE THAT IT HAD CONSTRUCTED THE PROPERTY DURING THE YEAR. 16. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIES COMPANY LTD V CIT [243 ITR 83 (SC)] HELD AS UNDER:- THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONL Y WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOY AND CO. V. S. P. JAIN [1957] 31 ITR 872 , THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 422 , THE HIGH COURT OF BOMBAY IN CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 108 AND THE HIGH COURT OF GUJARAT IN CIT V. SMT. MINALBEN S. PARIKH [1995] 215 ITR 81 TREATED LOSS OF TAX AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. MR. ABRAHAM RELIED ON THE JUDGMENT OF THE DIVISION BENCH OF THE HIGH COURT OF MADRAS IN VENKATAKRISHNA RICE COMPANY V. CIT [1987] 163 ITR 129 INTERPRETING 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE.' THE HIGH COURT HELD (PAGE 138) : 'IN THIS CONTEXT, IT MUST BE REGARDED AS INVOLVING A CONCEPTION OF ACTS OR ORDERS WHICH ARE SUBVERSIVE O F THE ADMINISTRATION OF REVENUE. THERE MUST BE SOME GRIEVOUS ERROR IN THE ORDER PASSED BY THE INCOME-TA X OFFICER, WHICH MIGHT SET A BAD TREND OR PATTERN FOR SIMILAR ASSESSMENTS, WHICH ON A BROAD RECKONING, 11 THE COMMISSIONER MIGHT THINK TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE ADMINISTRATION.' IN OUR VIEW, THIS INTERPRETATION IS TOO NARROW TO MERIT ACCEPTANCE. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF TH E ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF D UE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, TH E REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS O F THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER 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 INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE ; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. 17. FURTHER, THE HON'BLE SUPREME COURT IN MAX IN DIA LTD [295 ITR 282 (SC)] UPHELD THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE SAID CASE, WHEREIN IT WAS HELD THAT IF THE VIEW EXPRESSED BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW, THE C IT WOULD HAVE NO JURISDICTION TO INTERFERE WITH SUCH A VIEW, WHILE E XERCISING THE POWER U/S 263 OF THE ACT. THE HON'BLE SUPREME COURT IN T HE SAID CASE FURTHER CLARIFIED THAT WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAD TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGRE E, THE ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY THE A SSESSING OFFICER WAS UNSUSTAINABLE. 18. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE AP EX COURT AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSING OFFICER HAD ALREADY TAKEN A VIEW ON THE ISSUE, WE FIND NO M ERIT IN THE ORDER OF 12 COMMISSIONER OF INCOME TAX IN TAKING A DIFFERENT VI EW ON THE SAID ISSUE. ACCORDINGLY, WE HOLD THAT THERE WAS NO MERI T IN EXERCISE OF POWER UNDER SECTION 263 OF THE ACT BY THE COMMISSIO NER OF INCOME TAX AND THE SAME IS CANCELLED. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: 28 TH AUGUST,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT/CHD