Late Shri Ramavtar Gupta L/H Smt. Shanti Devi C/o- Jain & Co.228, City Centre, S.C. Road, Jaipur-2368066, Jaipur V. Pr. Commissioner of Income Tax Alwar, Alwar

ITA 529/JPR/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1240 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 15-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Sale consideration of property below Jantri Value; Capital asset; Business income; Revision of order; Principle of natural justice; Cost of acquisition; Date of conversion; Fair market value; Set aside; Capital Gains
• Section: 6; 263; 45(2); 143(3); 50C; 54F; 54EC; 48; 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B , JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 529/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 LATE SHRI RAMAVTAR GUPTA L/H SMT.SHANTI DEVI, 82, NAGAR PALIKA KI GALI, RAJGARH, ALWAR CUKE VS. THE PR.CIT ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ P AN/GIR NO .: BDGPR 3689 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ASHOK KUMAR GUPTA & SHRI S.L.JAIN ,ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : SHRI B.K. GUPTA, CIT- DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11/12/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /12/2019 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E REVISION ORDER OF LD. PR.CIT, ALWAR DATED 18-02-2019 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 2 1. PROFIT ON SALE OF ANCESTRAL PROPERTY IS TAXABLE UNDER CAPITAL GAIN :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN HOLDING THAT THE ASSESSMENT ORDER OF LD. AO IS ERRONEOUS AND PREJUDICED TO THE INTERE ST OF REVENUE ON THE GROUND THAT PROFIT ON SALE OF ANCESTRAL PROPERTY HAS TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS INSTEAD OF CAPITAL GAIN, AFTER COMPUT ING CAPITAL GAIN U/S 45(2) OF THE IT ACT 1961 ON CONVERSION OF CAPITAL ASSETS INTO 'STOCK IN TRADE'. 2. APEX COURT JUDGMENT IS NOT APPLICABLE :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN PLACING RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF RAJA J RAMESHW AR RAO VS CIT (1961) 42 ITR 179(SC) WHICH IS PER-SE IRRELEVANT AND ASSESSEE FACTS ARE NOT IDENTICAL. 3. LIMITED POWER OF PR. CIT :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE REVISIONARY JURISDICTION CANNOT BE ALLOWED TO BE EXERCISED BY T HE COMMISSIONER EITHER FOR SUBSTITUTING HIS OWN OPINION FOR THAT OF THE AO OR FOR MAKING A FISHING OR ROVING ENQUIRY. 4. AO'S ORDER IS NOT PREJUDICIAL TO THE INTEREST OF RE VENUE :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN THE SAL E PRICE MINES MARKET VALUE AS ON THE DATE OF CONVERSION SHALL BE TREATED AS BU SINESS INCOME AND TAXED UNDER PROFIT AND GAINS OF BUSINESS. 5. MERE CHANGE IN OPINION - REVISION IS BAD IN LAW :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN WHERE T HE AO HAS APPLIED HIS MIND AT THE TIME OF PASSING THE ASSESSMENT ORDER ALLOWED THE CLAIMED OF ASSESSEE. AO 'S VIEW WAS A LEGALLY PERMISSIBLE VIEW. THE ORIG INAL ORDER CANNOT BE LIABLE TO BE VISITED WITH A REVISIONARY ORDER BY THE PR. C IT HAVING DIFFERENT OPINION. - MALABAR INDUSTRIAL CO. LTD. VS CIT 243 ITR 83(SC) 6. WHERE TWO VIEWS PASSABLE :- ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN WHERE TWO ARE PASSABLE ONE WHICH IS BENEFICIAL TO THE ASSESSSEE WAS TO BE TAKEN WHILE D ECIDING THE ISSUE IN TERMS OF THE DECISION. - CIT VS VEGETABLE PRODUCTS LTD. (1973)88ITR 192(SC ) 7. NO PROPER OPPORTUNITY WAS PROVIDED :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN NOT PROVIDING AN OPPORTUNITY TO REPRESENT HIS CASE WHICH IS ALSO SPECIFICALLY MANDATED U/S 23 6 OF THE ACT AND THE PRINCIPLE OF NATURAL JUSTICE HAS BEEN VIOLATED. 8. PROPER ENQUIRY WAS CONDUCTED :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. PR. CIT ALWAR HAS GROSSLY ERRED IN LAW AND FACTS IN HOLDING THAT LD. AO HAS NOT CONDUCTED PROPER ENQUIRY / INVESTIGATION BEFORE ACCEPTING THE STATEMENT OF THE ASSESSEE. 2.1 THE ASSESSEE IS AN INDIVIDUAL AND FILED E-RETUR N OF INCOME ON 11-07-2015 DECLARING TOTAL INCOME OF RS. 13,18,050/ -. THE SCRUTINY ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 2 7-03-2017 WHEREBY THE AO ACCEPTED THE RETURNED INCOME AT RS. 13,18,05 0/-. SUBSEQUENTLY, THE LD. PR.CIT NOTED THAT THE ORDER PASSED BY THE A O IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY , THE SHOW CAUSE NOTICE U/S 263 OF THE ACT WAS ISSUED ON 3-01-2019. THE LD. PR.CIT WAS OF THE VIEW THAT THE AO HAS ACCEPTED THE CAPITAL GAINS OFF ERED BY THE ASSESSEE FROM SALE OF ANCESTRAL PROPERTY WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE SOLD THE SAID PROPERTY BY PLOTTING TO 59 D IFFERENT PERSONS. THUS IN ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 4 VIEW OF THE LD. PR.CIT, THE TRANSACTIONS SHOULD HAV E BEEN JUDGED AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AFTER COMP UTING THE CAPITAL GAINS U/S 45(2) OF THE ACT. THE LD. PR.CIT HAS THEN PROCE EDED TO PASS THE IMPUGNED ORDER EX-PARTE. THUS IT WAS HELD THAT ORDE R PASSED BY THE AO DATED 27-03-2017 IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE AND CONSEQUENTLY THE SAME WAS CANCELLED WITH THE DI RECTION TO THE AO TO PASS THE SPEAKING ASSESSMENT ORDER AFTER CONSIDERIN G THE ISSUE AS TAKE UP IN THE REVISION PROCEEDINGS. 2.2 BEFORE THE TRIBUNAL, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE JURISDICTION U/S 263 OF THE ACT CAN BE INVOKED BY T HE LD. PR.CIT ONLY WHEN THE ORDER PASSED BY THE AO IS FOUND TO BE ERRO NEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD.AR T HUS CONTENDED THAT FOR INVOKING THE REVISIONARY POWER U/S 263 OF THE ACT, THE TWIN CONDITIONS BEING THE ORDER PASSED BY THE AO IS ERRONEOUS AS WE LL AS PREJUDICIAL TO THE INTEREST OF REVENUE ARE TO BE SATISFIED. IN THE CAS E IN HAND, THE AO HAS ACCEPTED THE CAPITAL GAINS DECLARED BY THE ASSESSEE FROM THE SALE OF THE ANCESTRAL PROPERTY AFTER CLAIMING THE DEDUCTION U/S 54F OF THE ACT. THE LD. PR.CIT HAS PROPOSED TO REVISE THE ASSESSMENT ORDER ONLY ON THE ISSUE THAT PROVISIONS OF SECTION 45(2) OF THE ACT ARE APPLICAB LE IN THIS CASE AS THE ASSESSEE HAS SOLD THE PROPERTY BY PLOTTING TO 59 DI FFERENT PERSONS AND ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 5 CONSEQUENTLY THE INCOME HAS TO BE ASSESSED AS BUSIN ESS INCOME INSTEAD OF CAPITAL GAINS. THE LD.AR FURTHER CONTENDED THAT EVE N IF THE PROVISIONS OF SECTION 45(2) OF THE ACT IS APPLIED IN THE CASE OF THE ASSESSEE, THERE WOULD BE NO CHANGE SO FAR AS THE CAPITAL GAINS ARISING FR OM THE SAID TRANSACTION AND THERE WILL BE NO BUSINESS INCOME AS THE COST OF STOCK IN TRADE WOULD BE SAME AS SALE CONSIDERATION BEING THE FAIR MARKET PRICE. IF THE VALUATION U/S 50C IS APPLIED THEN THE COST OF STOCK IN TRADE U/S 45(2) WOULD BE RS. 10,08,25,150/- WHICH IS EQUIVALENT TO THE SALE CONS IDERATION. THEREFORE, THERE WOULD BE NIL BUSINESS INCOME. THUS THE LD.AR OF THE ASSESSEE SUBMITTED THAT EVEN AFTER APPLYING THE PROVISIONS O F SECTION 45(2) OF THE ACT, THERE WOULD BE NO REVENUE EFFECT AND CONSEQUEN TLY THE ORDER PASSED BY THE AO WOULD NOT BE PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD.AR OF THE ASSESSEE FURTHER CONTENDED THAT THE ISSUE OF TREATING THE ANCESTRAL PROPERTY SOLD BY THE ASSESSEE AS BUSINESS TRANSACTI ON OR SALE OF CAPITAL ASSETS IS DEBATABLE ISSUE. THE LD.AR FURTHER CONTE NDED THAT SINCE IT WAS A SALE OF ANCESTRAL PROPERTY BY THE ASSESSEE FOR REA LIZING THE MAXIMUM PRICE. IF THE ASSESSEE HAS SOLD THE PROPERTY IN VAR IOUS PLOTS INSTEAD OF ONE PIECE OF LAND THEN THE SAME WOULD NOT CHANGE THE CH ARACTER OF THE PROPERTY WHICH IS A CAPITAL ASSET TO TRADING ACTIV ITY. THUS EVEN ON MERITS OF THE ISSUE, ONCE THE AO HAS ACCEPTED THE TRANSACT IONS OF SALE OF THE ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 6 PROPERTY AS SALE OF CAPITAL ASSET WHICH IS ONE OF T HE POSSIBLE VIEWS THEN THE LD. PR.CIT IS NOT PERMISSIBLE TO EXCISE ITS REV ISIONARY POWERS ONLY BECAUSE HE DOES NOT AGREE WITH THE VIEW TAKEN BY TH E AO. IN SUPPORT OF HIS CONTENTIONS, THE LD.AR OF THE ASSESSEE RELIED O N THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS A M OHAMMED MOHIDEEN 74, CTR 129 (MAD). HE HAS ALSO RELIED ON T HE DECISION OF BOMBAY HIGH COURT IN THE CASE OF INDIA HUME PIPE CO . LTD VS CIT , 107 CTR 95 (BOM.). THUS THE LD.AR OF THE ASSESSEE SUBMI TTED THAT WHEN THE ASSESSEE HAS NEVER INDULGED IN THE BUSINESS OR TRAD ING ACTIVITY OF REAL ESTATE AND THE TRANSACTION OF THE SALE OF THE ANCES TRAL PROPERTY IS ONLY SALE OF CAPITAL ASSET THEN SELLING THE SAID PROPERTY BY PLOTTING ITSELF WOULD NOT BE REGARDED THAT THE ASSESSEE WAS INDULGING IN TRAD ING ACTIVITY. THUS THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE ORDER PASS ED BY THE LD. PR.CIT IS NOT SUSTAINABLE IN LAW AND THE SAME MAY BE SET ASID E. 2.3 ON THE OTHER HAND, THE LD. DR SUBMITTED THAT I T IS A CASE OF LACK OF ENQUIRY ON THE PART OF THE AO WHILE PASSING THE ASS ESSMENT ORDER. THEREFORE, THE ORDER OF THE AO IS ERRONEOUS FOR WAN T OF PROPER ENQUIRY ON THE ISSUE OF APPLICABILITY OF PROVISIONS OF SECTION 45(2) OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE LD. PR.CIT HAS NOT GI VEN ANY FINDING ON THE MERITS OF THE CAPITAL GAINS OR BUSINESS INCOME BUT DIRECTED THE AO PASS ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 7 THE SPEAKING ASSESSMENT ORDER AFTER CONSIDERING THE ISSUE AS RAISED IN THE REVISION PROCEEDINGS. THE LD. DR RELIED ON THE IMPU GNED REVISION ORDER PASSED BY THE LD. PR.CIT. 2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS W ELL AS RELEVANT MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAS SOL D THE ANCESTRAL PROPERTY DURING THE YEAR UNDER CONSIDERATION FOR A CONSIDERA TION OF RS. 1,08,28,148/-. THE STAMP DUTY VALUATION OF THE SAID PROPERTY WAS AMOUNTING TO RS.1,08,25,150/-. THEREFORE, THE DEEME D FULL VALUE CONSIDERATION U/S 50C OF THE ACT CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE WHERE THE SALE CONSIDERATION SHOWN IN THE SALE DEED AND DECLARED BY THE ASSESSEE IS EQUIVALENT TO THE STAMP DUTY VAL UATION. THE AO WHILE PASSING THE ASSESSMENT U/S 143(3) ON 27-03-2017 HAS ACCEPTED THE CAPITAL GAINS AS CLAIMED BY THE ASSESSEE FROM THE SALE OF A NCESTRAL PROPERTY. SUBSEQUENTLY, THE LD. PR.CIT HAS EXERCISED ITS REVI SIONARY POWER U/S 263 OF THE ACT AND ISSUED SHOW CAUSE NOTICE DATED 3-01- 2019 AS UNDER:- DURING THE RELEVANT PERIOD, YOU HAD SOLD YOUR ANCESTRAL PROPERTY AND GOT YOUR SHARE AMOUNTING TO RS. 1,08,28,148/- WHEREON YOU HAD COMPUTED CAPITAL GAIN . THEREAFTER, YOU HAD PURCHASED A PROPERTY I.E. D-15- A PREM COLONY KACHHI BASTI, PANI PECH, JAIPUR FOR RS. 23.0 0 LAKHS ON 11-02-2015 AND CLAIMED DEDUCTION U/S 54F THEREON . YOU HAD ALSO INVESTED RS. 50.00 LAKHS IN NHAI BONDS ON 31-03- 2015 AND CLAIMED DEDUCTION U/S 54EC THEREON SEPARA TELY. ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 8 IT IS PERUSED FROM THE RECORD THAT YOU HAD SOLD YOUR ANCESTRAL PROPERTY BY PLOTTING TO 59 DIFFERENT PERSONS AND OFFERED CAPITAL GAIN THEREON FOR TAXATION, HOWE VER, IN VIEW OF THE JUDGEMENT OF HON'BLE APEX COURT IN TH E CAS E OF RAJA J RAMESHWAWR RAO VS COMMISSIONER OF INCOME TAX (1961) 42 ITR 179 (SC) THE NATURE OF SUCH TRANSAC TION SHOULD HAVE BEEN JUDGED AS BUSINESS INCOME INSTEAD OF CAPITAL GAIN, AFTER COMPUTING CAPITAL GAIN U/S 45(2 ) OF THE I.T. ACT, 1961 ON CONVERSION OF CAPITAL ASSETS INTO ST OCK IN TRADE. THUS IT IS CLEAR THAT THE LD. PR.CIT INVOKED THE PR OVISIONS OF SECTION 263 OF THE ACT ONLY IN RESPECT OF CAPITAL GAINS DECLARE D BY THE ASSESSEE FROM THE SALE OF ANCESTRAL PROPERTY AS THE AO HAS NOT AP PLIED THE PROVISIONS OF SECTION 45(2) OF THE ACT AND CONSEQUENTLY THE PROFI T ARISING FROM SALE OF THE PROPERTY OUGHT TO HAVE BEEN BIFURCATED INTO CAP ITAL GAINS AS WELL AS BUSINESS INCOME. THERE IS NO ALLEGATION BY THE LD. PR.CIT IN SHOW CAUSE NOTICE THAT THE ASSESSMENT ORDER PASSED BY THE AO I S ERRONEOUS ON ACCOUNT OF LACK OF ENQUIRY. AT THE OUTSET, WE NOTE THAT WHEN THE ANCESTRAL PROPERTY WAS SOLD BY THE ASSESSEE DURING THE YEAR U NDER CONSIDERATION BY PLOTTING TO 59 DIFFERENT PERSONS THEN EVEN IF PROVI SIONS OF SECTION 45(2) ARE APPLIED IN THE CASE AND THE CAPITAL ASSET IS TR EATED AS CONVERTED INTO STOCK IN TRADE THEN THE FAIR MARKET VALUE OF THE ASSET ON THE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEMED TO BE THE F ULL VALUE OF THE ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 9 CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF CAPITAL ASSET. FOR READY REFERENCE, WE REPRODUCE SECTION 45(2) OF THE ACT AS UNDER:- [ (2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (1), THE PROFITS OR GAINS ARISING FROM THE TRANSFER BY WAY O F CONVERSION BY THE OWNER OF A CAPITAL ASSET INTO, OR ITS TREATMENT BY HIM AS STOC K-IN-TRADE OF A BUSINESS CARRIED ON BY HIM SHALL BE CHARGEABLE TO INCOME-TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUCH STOCK-IN-TRADE IS SOLD OR OTHERWISE T RANSFERRED BY HIM AND, FOR THE PURPOSES OF SECTION 48 , THE FAIR MARKET VALUE OF THE ASSET ON THE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEMED TO BE THE F ULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET.] THUS FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS , THE FAIR MARKET VALUE OF THE ASSET AS ON THE DATE OF SUCH CONVERSION WILL BE DEEMED AS FULL VALUE CONSIDERATION RECEIVED OR ACCRUED ON TRANSFER OF CA PITAL ASSET AND CONSEQUENTLY THE SAME AMOUNT WILL BE TAKEN AS COST OF ACQUISITION OF STOCK IN TRADE. IN THE CASE IN HAND, THE FAIR MARKE T VALUE OF THE ASSET SHALL BE TAKEN AS THE VALUATION ADOPTED BY THE STAMP DUTY AUTHORITY AS PROVIDED U/S 50C OF THE ACT BEING FULL VALUE CONSIDERATION AND THEREFORE, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS THE SAID AMO UNT OF RS. 1,08,25,150/- WOULD BE DEEMED TO BE FULL VALUE CONS IDERATION WHICH IS THE ACTUAL SALE CONSIDERATION. THEREFORE, THERE WILL BE NO CHANGE IN THE CAPITAL GAINS COMPUTED AND DECLARED BY THE ASSESSEE EVEN AF TER APPLYING THE PROVISIONS OF SECTION 45(2) OF THE ACT. RESULTANTLY , THE BUSINESS INCOME, IF ANY, FROM THE SAID TRANSFER UNDER THE PROVISIONS OF SECTION 45(2) OF THE ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 10 ACT WOULD BE NIL BEING THE COST OF ACQUISITION OF S TOCK IN TRADE AND THE SALE CONSIDERATION OF THE SAID PROPERTY IS THE SAME . THEREFORE, EVEN AFTER INVOKING THE PROVISIONS OF SECTION 45(2) OF THE ACT , THERE WOULD BE NO CHANGE IN THE TAX LIABILITY OF THE ASSESSEE AND HEN CE THE ORDER PASSED BY THE AO CANNOT BE SAID PREJUDICIAL TO THE INTEREST O F THE REVENUE. IT IS UNDISPUTED PROPOSITION OF LAW THAT FOR EXERCISING T HE POWER U/S 263 OF THE ACT, THE COMMISSIONER HAS TO SATISFY ITSELF THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE I NTEREST OF THE REVENUE. WITHOUT SATISFACTION OF THE TWIN CONDITIONS THAT TH E ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTER EST OF THE REVENUE, THE PROVISIONS OF SECTION 263 CANT BE INVOKED. THEREFOR E, IN THE CASE IN HAND, WHEN THERE WILL BE NO REVENUE LOSS EVEN IF PROVISIO NS OF SECTION 45(2) IS APPLIED THEN IN SUCH A SITUATION THE COMMISSIONER I S NOT ALLOWED TO EXERCISE ITS POWER U/S 263 OF THE ACT MERELY BECAUS E THE AO HAS ACCEPTED THE CAPITAL GAINS DECLARED BY THE ASSESSEE. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED EX-PARTE OR DER PASSED BY THE LD.PR. CIT WITHOUT PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE AND WITHOUT ESTABLISHING THE ORDER OF THE AO IS PREJUDI CIAL TO THE INTEREST OF THE REVENUE IS NOT SUSTAINABLE IN LAW AND CONSEQUEN TLY THE SAME IS QUASHED AND SET ASIDE. ITA NO.529/JP/2019 LATE SHRI RAMAVTAR GUPTA VS PR.CIT, ALWAR 11 3 . IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /12/20 19. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/12/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- LATE SHRI RAMAVTAR GUPTA L/H SMT. S HANTI DEVI, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- THE PR.CIT, ALWAR 3. VK;DJ VK;QDR@ CIT, 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.529/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR