Shri Shaligram Barod, , Indore V. Pr. CIT-1, Indore

ITA 625/Ind/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4756 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 24-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Assessee Lawyers: S N AGRAWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Question of law; Assessment record; Revenue expenditure; Capital expenditure; TDS; Capital Gains
• Section: 143(3); 50C; 54F; 80HHC; 43; 13; 119; 22; 54; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE HON'BLE MANISH BORAD,ACCOUNTANT MEMBER AND HON'BLE MADHUMITA ROY, JUDICIAL MEMBER ITA NO.625/IND/2019 ASSESSMENT YEAR:2014-15 SHRI SHALIGRAM BAROD, AH/29, HIG, SUKHLIYA INDORE / VS. PR. CIT - I , INDORE (APPELLANT) (R ESPONDENT ) P.A. NO. AHFPP4068H APPELLANT BY SHRI S.N. AGRAWAL, CA REVENUE BY SHRI S.B. PRASAD , CIT - DR DATE OF HEARING: 12.04.2021 DATE OF PRONOUNCEMENT: 30.04.2021 / O R D E R PER MANISH BORAD, A.M: BY WAY OF THIS APPEAL, THE APPELLANT HAS CHALLENGED THE ASSUMPTION OF JURISDICTION U/S 263 OF THE INCOME TA X ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT FOR SHORT) BY LD. PR. CIT-I INDORE ORDER DATED 29.03.2019.THE ASSESSEE HAS RAISED FOLL OWING GROUNDS OF APPEAL:- 1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. PR. CIT ERRED IN SETTING ASIDE THE ASSESSMENT ORDER AS PASSED BY THE LD. AO U/S 143(3) OF THE ACT ON 14.12.2016 EV EN WHEN THE SHALIGRAM BORAD 2 SAID ASSESSMENT ORDER AS PASSED BY HIM WAS NEITHER ER RONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER SO PASSED BY THE LD. PR. CIT AND PROPERLY APPRECIATING THE FACTS OF THE A SSESSEE SUBMISSION MADE BEFORE HIM IS WRONG AND BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. PR. CIT ERRED IN SETTING ASIDE THE ASSESSMENT ORDER AS PASSED BY THE LD. AO JUST TO RE-VERIFY TO THE PLOTS RELATI NG TO THE CALCULATION OF INCOME FROM CAPITAL GAIN ON SALE OF PLOTS AND EXA MINE WHICH HAS ALREADY BEEN VERIFIED THE COURSE OF ORIGINAL ASSES SMENT . AFTER FULL APPLICATION OF MIND. THE ORDER SO PASSED BY THE P R. CIT BY INVOKING THE PROVISION OF SECTION 263 OF THE ACT IS THEREFORE ILLEGAL AND BAD IN LAW, THE SAID ORDER REQUIRES TO BE QUASHE D. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN THE PRESENT CASE THE LD. PR. CIT ERRED IN SETTING ASIDE THE ORIGINAL ASSESSMENT PASSED BY THE LD. AO AND INVOKING THE PRO VISION OF SECTION 263 OF THE ACT FOR EXAMINATION OF ISSUE REL ATED TO THE CAPITAL GAIN ON SALE OF PLOT AND DEDUCTION AS CLAIMED BY THE A SSESSEE U/S 54F WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. THE ORDER AS PASSED BY T HE LD. PR. CIT REQUIRES TO BE QUASHED. 4. THE ASSESSEE RESERVE ITS RIGHT TO ADD, ALTER, MODI FY OR AMEND THE GROUNDS OF APPEAL AS AND WHEN REQUIRED. 2. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF T OTAL INCOME ON 29- 11-2014 DECLARING TOTAL INCOME AT RS 11,05,320/- WH ICH CONSISTS OF INCOME FROM HOUSE PROPERTY, BUSINESS INCOME, CAPITA L GAIN AND INCOME FROM OTHER SOURCES. IN THE SAID COMPUTATION OF TOTAL INCOME, THE APPELLANT HAS OFFERED LONG TERM CAPITA L GAIN OF RS 193656/- FROM SALE OF PLOT OF LAND AND THE WORKING OF THE SAME IS SHOWN AS UNDER:- S.NO PARTICULARS AMOUNT AMOUNT SALE CONSIDERATION OF PLOT AT 29/D/F SCHEME NO. 74C INDORE 97,65,000 SHALIGRAM BORAD 3 LESS SELLING EXPENSES (-) 6,26,353 NET SALE CONSIDERATION 91,38,647 LESS INVESTMENT IN NEW HOUSE U/S 54F(1) 43,31,991 LESS INVESTMENT BY WAY OF DEPOSIT IN CAPITAL GAIN DEPOSIT SCHEME U/S 54 F(4) UTILIZED IN NEXT YEAR TOWARDS CONSTRUCTION OF HOUSE. 46,13,000 TOTAL INVESTMENT U/S 54 F 89,44,991 89,44,991 NET INCOME FROM LONG TERM CAPITAL GAIN 1,93,656 3. THE CASE OF THE ASSESSEE WAS SELECTED FOR LIMITE D SCRUTINY FOR FOLLOWING TERMS: S.NO REASON FOR SELECTION OF CASE IN SCRUTINY 1 LARGE DEDUCTION CLAIME D U/S 54B,54C,54D, 54G, 54GA 2 SALE CONSIDERATION OF THE PROPERTY IN ITR IS LESS T HAN SALE CONSIDERATION OF PROPERTY REPORTED IN AIR 3 MISMATCH IN SALES TURNOVER REPORTED IN AUDIT REPORT AND ITR 4 MISMATCH IN AMOUNT PAID TO RELATED PERSONS U/S 40A(2)(B) 4. AN ORDER U/S 143(3) OF THE ACT WAS PASSED BY THE LD. ASSESSING OFFICER ON 14.12.2016 ASSESSING THE TOTAL INCOME OF APPELLANT AT RS. 16,21,350/- INCLUDING THE INCOME UNDER THE HEADS LO NG TERM SHALIGRAM BORAD 4 CAPITAL GAIN OF RS. 7,09,689/- AS AGAINST RS. 1,93, 656/- AS DECLARED IN THE RETURN OF TOTAL INCOME AS FILED. TH E ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER, HAS RESTRICTED THE AMOUNT OF SELLING EXPENSES TO RS. 1,10,320/- ONLY AS AGAINST SELLING EXPENSES AS CLAIMED BY THE ASSESSEE AT RS 6,26,353/- AND THE REBY HAS DISALLOWED AN AMOUNT OF RS. 5,16,033/- OUT OF TOTAL SELLING EXPENSES FOR WANT OF SUPPORTING DOCUMENTS ETC. 5. SUBSEQUENTLY, A NOTICE UNDER SECTION 263 OF THE INCOME TAX ACT WAS ISSUED BY THE PR. CIT, INDORE FOR THE FOLLOWING THREE REASONS AND HE WAS OF THE OPINION THAT THE ASSESSMENT ORDER AS PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND SO FAR AS P REJUDICIAL TO THE INTEREST OF THE REVENUE. THE REASONS AS RECORDED BY THE PR. CIT ARE LISTED AS UNDER: 1 GUIDELINE VALUE AT THE TIME OF SALES WA S OF RS 1,30,20,000/- WHEREAS THE APPELLANT HAS OFFERED THE SAME AT RS 97,65,000/- 2 FDRS AS PREPARED FOR RS 46,13,000/ - WAS ON ACCOUNT OF CAPITAL GAIN SCHEME OR NOT WAS NOT EXAMINED BY T HE ASSESSING OFFICER 3 DEDUCTION AS CLAIMED FOR CONSTRUCTION OF HOUSE WAS NOT CORRECT FOR RS 43,31,991/-. 6. THE RELEVANT PORTION OF THE SHOW CAUSE NOTICE IS SUED U/S 263 OF THE ACT IS REPRODUCED AS UNDER- 4.1TWO MAIN ISSUES TO BE EXAMINED UNDER LIMITED SCR UTINY WERE DIFFERENCE IN CONSIDERATION PROPERTY SOLD AND LARGE D EDUCTION CLAIMED AGAINST CAPITAL GAIN INCOME. ON PERUSAL 0/ ASSESSMENT RECORDS IT IS SHALIGRAM BORAD 5 SEEN THAT YOU HAD ENTERED INTO AN AGREEMENT TO SALE (PRESENTED ON 3013/~012) A PLOT OF LAND WITH M/S DAKSHA HOMES PRIV ATE LIMITED (HEREINAFTER REFERRED TO IN AS. 'DAKSHA') FOR: A REC ONSIDERATION OF RS.97,65,OOO/- OUT OF WHICH BARRING A PALTRY SUM 0/ R S:50001- (TO BE PAID AT THE TIME OF REGISTRY WITHIN ONE MONTH), ENTIRE AMOUNT WAS PAID ON OR BEFORE THE DATE OF THE SAID AGREEMENT. THE SAID PLOT OF LAND WAS' IN-TURN SOLD TO TWO PORWAL 'BROTHERS FOR DECLA RED CONSIDERATION OF RS. 1, 30,20, OOO/~ THROUGH A, REGISTERED DEED DATED 26TH MARCH 2014. IN THIS REGISTERED DEED YOU ARE SHOWN AS SELLER NUMBER I & DAKSHA AS SELLER NUMBER 2.YOU HAVE CALCULATED AND DECLARED CAPITAL G AIN ON THE CONSIDERATION OF RS. 97,60,OOO/~ FOR ASSESSMENT YEAR 20,14.15, AGAINST WHICH DEDUCTION UNDER SECTION 54F WAS CLAIMED ON AC COUNT OF INVESTMENT IN CAPITAL GAIN ACCOUNT AND PARTLY IN CONSTRUCTION OF A NEW HOUSE. 4.2 YOU HAVE, CLAIMED THAT TRANSFER OF THE SAID PR OPERTY TOOK PLACE DURING THE AY 2014-15., HOWEVER WHILE DETERMINING SALE CON SIDERATION, YOU HAVE ADOPTED THE VALUE OF SALE AGREEMENT (L.E. RS.97,65,0001-.) WHICH WAS ENTERED INTO DURING THE AY2012~}3. HOWEVER, AS PER SALE DEED AND ALSO AS PER THE STAMP DUTY AUTHORITIES RATE CONSIDERATION I S RS. 1,30,20,000/ - . THE AO OUGHT TO HAVE TAKEN ';HE VALUE 6F SALE CONSIDERATIO N AS .RS. 1, 30,20,000/. INSTEAD OF RS.97, 64. 000/-, 'IF CAPITAL GAIN WAS CALCULATED IN THE YEAR 2014- 15. ' 4.3 YOU HAVE CLAIMED TO HAVE INVESTED RS.46,13,OOO/~ IN CAPITA/GAIN ACCOUNT ON 291} 112014 IN THE FORM OF FDS WITH DENA BANK. IT IS SEEN THAT THE AMOUNT WAS INVESTED IN THE FORM OF-4 FD~ ALL WI TH THE MATURITY OF ONE YEAR HOWEVER IT IS NOT CLEAR WHETHER SUCH FIXED DEPOSITS 'ARE PART OF CAPITAL GAIN ACCOUNT SCHEME. IT IS FURTHER-SEEN THAT ALL THE FOUR FDRS WERE REDEEMED PREMATURELY AND PROCEEDS WERE' DEPOSI TED IN ~ SAVINGS ACCOUNT. THE AO HAS NOT EXAMINED WHETHER SUCH PREMA TURE REDEMPTION IS IN ACCORDANCE WITH CAPITAL GAIN ACCOUNT SCHEME 1988 AND DEDUCTION U/S 54FWAS ALLOWABLE OR NOT. 4.4 YOU HAVE ALSO CLAIMED TO HAVE INVESTED RS. 43,31,99 1/ UP TO THE DATE OF FILING OF' RETURN IN CONSTRUCTION OF A, NEW HOUSE (APPARENTLY AN 28-29). HOWEVER, ON PERUSAL OF THE BALANCE SHEET PLATED ON RECORD THAT A; ON 311312014 THERE IS 'HOUSE ACCOUNT' R'S43 ,76,862/-WHEREAS AS ON 31.3.2013 THE SAME IS AT RS. 41,57,868/~. AS ON 30. 11.2014 THERE 'ARE TWO ENTRIES IN THE BALANCE SHEET VIZ. 'NEW HOUSE- CONST RUCTION RS 4331991/- AND HOUSE ACCOUNT (AH 28-29) RS. 24,76,2591/-. HENCE IT IS NOT CLEAR IN WHICH HOUSE THE ASSESSEE HAS MADE A NEW INVESTMENT FURTHER AS PER THE BALANCE SHEET THERE IS ONE MORE 'ILAT ACCOUNT' RS. 3,30,0001- THUS-IT IS NOT CLEAR WHETHER THE ASSESSEE FULFILLS-THE CONDITION OF NOT OWNING MORE THAN ONE RESIDENTIAL HOUSE BESIDES THE NEW ASSETS AS ENV ISAGED IN SECTION 54F. THE AO HAS NOT EXAMINED THE CLAIM OF DEDUCTION U/S5 4F FROM THIS ANGLE SHALIGRAM BORAD 6 ALSO. IN VIEW OF THE ABOVE. IF IS NOTICED THAT THE AO HAS FAILED TO EXAMINE THE VERACITY OF DEDUCTION AS CLAIMED BY YOU AMOUNTING TO RS. 43,31,991/- CLAIMED U/S 54F(J) & RS.46, 13, OOO/- CLAIMED U/S 54F( 4). 7. THE SHOW CAUSE NOTICE WAS DULY REPLIED BY THE AS SESSEE SUBMITTING THAT ALL THE ISSUES MENTIONED IN THE SHO W CAUSE NOTICE HAVE BEEN DULY EXAMINED BY THE ASSESSING OFFICER, W HO CALLED FOR NECESSARY INFORMATION WHICH WERE DULY SUPPLIED AND ON THE BASIS OF WHICH LD. AO CONCLUDED THE ASSESSMENT. HOWEVER, LD. PR. CIT ACCEPT FOR THE SECOND ISSUE RELATING TO CLAIM OF DE DUCTION U/S 54F OF THE ACT IN RESPECT OF DEPOSIT OF RS.46,13,000/- IN THE CAPITAL GAIN DEPOSIT ACCOUNT SCHEME OF WHICH NECESSARY DOCUMENTA RY EVIDENCES WERE EXAMINED TO THE SATISFACTION OF LD. PR. CIT FO R THE REMAINING TWO ISSUES WAS OF THE VIEW THAT THE ORDER OF THE AS SESSING OFFICER IS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AS THE LD. AO HAS NOT MADE NECESSARY ENQUIRY AND VERIFICATION, THEREBY, ALLOWING RELIEF WITHOUT ENQUIRING INTO THE CLAIM. 8. AGAINST ABOVE FINDING OF LD. PR. CIT, ASSESSEE I S IN APPEAL AND LD. COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE FOLLOW ING WRITTEN SUBMISSIONS: 2.1] A NOTICE UNDER SECTION 263 OF THE INCOME TAX ACT WAS ISSUED BY THE PR CIT, INDORE FOR THE FOLLOWING THREE REASONS AND HE WAS OF THE OPINION THAT THE ASSESSMENT ORDER AS PASSED BY THE ASSESSIN G OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE REASONS AS RECORDED BY THE PR. CIT ARE LISTED AS UNDER: - S.NO REASON FOR ISSUANCE OF THE NOTICE UNDER SECTION 263 OF THE ACT 1 GUIDELINE VALUE AT THE TIME OF SALES WAS OF RS 1,30,20,000/- WHEREAS THE APPELLANT HAS OFFERED THE SAME AT RS 97,65,000/- SHALIGRAM BORAD 7 2 FDRS AS PREPARED FOR RS 46,13,000/- WAS ON ACCOU NT OF CAPITAL GAIN SCHEME OR NOT WAS NOT EXAMINED BY T HE ASSESSING OFFICER 3 DEDUCTION AS CLAIMED FOR CONSTRUCTION OF HOUSE WA S NOT CORRECT FOR RS 43,31,991/-. 2.2] THE PR CIT. HAS THEREFORE PASSED AN ORDER UND ER SECTION 263 OF THE ACT ON 29-03-2019 AND SET- ASIDE THE ORDER OF THE A SSESSING OFFICER ON THE ABOVE THREE POINTS. 2.3] THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDING FILED DETAILED REPLY, THE SAME IS ENCLOSED ON PAGE NOS 96 TO 103 AND ALSO ON PAGE NO 104 OF THE COMPILATION. FROM THE DOCUMENTS IT IS PROVED THAT THE APPELLANT HAD FILED DETAILED REPLY IN RESPECT OF CA LCULATION OF CAPITAL GAIN AND DEDUCTION AS CLAIMED UNDER SECTION 54F OF THE I NCOME TAX ACT. THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND AFT ER REDUCING THE SELLING EXPENSES, ACCEPTED THE CONTENTION OF THE APPELLANT. 2.4] THE REASON FOR ISSUANCE OF THE NOTICE UNDER S ECTION 263 OF THE ACT AND ITS REPLY BY THE APPELLANT IS AS UNDER:- S.NO REASON FOR ISSUANCE OF NOTICE EXPLANATION OF THE APPELLANT GUIDELINE VALUE AS ON THE DATE OF REGISTRY WAS OF RS 13020000/- BUT THE APPELLANT HAD OFFERED SALE CONSIDERATION OF RS 97,65,000/- THE APPELLANT EXECUTED REGISTERED SALE AGREEMENT DT 30- 03-2012 WITHOUT POSSESSION IN FAVOUR OF M/S DAKSHA HOMES P LIMITED FOR RS 97,60,000/- AND SUBSTANTIAL AMOUNT HAS ALREADY BEEN RECEIVED BY THE APPELLANT. RS 37,60,000/- ON 30.03.2012 AND RS 6000000/- ON 19-12- 2012 TOTALING TO RS 97,60,000/-. SALES DEED WAS FINALLY EXECUTED ON 26-03-2014 FOR RS 1,30,20,000/- BY M/S DAKSHA HOMES P LIMITED IN FAVOUR OF BUYER SHRI SANJAY PORWAL AND SHRI RADHEY SHYAM PORWAL ENTIRE SALE CONSIDERATION OF RS 1,30,20,000/- WAS RECEIVED BY THE SELLER NO 2 VIZ M/S DAKSHA HOMES P LIMITED AND NOTHING WAS RECEIVED BY THE APPELLANT THE APPELLANT RIGHTLY OFFERED SALE CONSIDERATION AS AGREED BETWEEN HIM WITH M/S DAKSHA HOMES P LIMITED. THE GUIDELINE VALUE AS SHALIGRAM BORAD 8 ON THE DATE OF AGREEMENT WAS ALSO OF RS 97,60,000/-. THE APPELLANT PLACED RELIANCE ON THE FOLLOWING DIRECT DECISIONS: - CITATION REFERENCE ACIT VS M/S BALMER LAWRIE VAN LEER LTD ITA NO 4361/MUM/2016 DT 20- 11-2018 FOR THE ASST YEAR 2010- 11 RAJARAM PATIDAR ITA NO 371/ IND/ 2015DT 28-09- 2018 FOR THE ASST YEAR 2010-11 DCIT VS VENKAT REDDY (2013) 57 SOT 117 ( HYD BENCH ) LAHIRI PROMOTERS VS ACIT ITA NO 12/VIZAG/ 2009 DT 22- 06-2010 SANJEEV LAL & ANR VS CIT & ANR (2014) 365 ITR 389 (SC) SHRI MOHD IMRAN BAIG, HYDERABAD & OTHERS ITA NOS 1942-1954/ HYD/ 2014 DT 27-11-2015 BHARATHI DEV ANANDANI VS ACIT ITA NO 882/ BANG/ 2014 DT 12- 02-2016 CIT VS SHIMBHU MEHRA ITA NO 373 OF 2010 DT 12-10- 2015 [ 236 TAXMAN 561(ALL) ITO VS MODIPON LTD 168 TTJ 480 ( DEL) HARI MOHAN DAS TANDON (HUF) VS PCIT 169 ITD 639 ( ALL) KUNDABEN AMBHAI SHAH V. ITO ITA NO 3354/ AHD/ 2014 DT 30- 11-2017 DHARAMHI BHAI SONANI 161 ITD 627 [ AHD ] SHALIGRAM BORAD 9 V.ACIT THE FIRST AND SECOND PROVISO TO SECTION 50C(1) OF THE INCOME TAX ACT WAS INSERTED W.E.F 01-04- 2017 BUT THESE PROVISO WAS INSERTED TO EXPLAIN DATE OF VALUATION AS APPLICABLE AS ON THE DATE OF AGREEMENT AND NOT ON THE DATE ON WHICH REGISTRY WAS ACTUALLY EXECUTED MS ZUBEIDA SHAHANSHAH ITA NO 519/ LKW/2017 DT 31- 01-2019 DHARMSHIBHI SONANI VS ACIT, SURAT [2016] 75 TAXMANN.COM 141 [ AHMEDABAD BENCH ] 161 ITD 627 (AHD ) HARI MOHAN DAS TANDON (HUF) 169 ITD 639 (ALL) M/S JAI LAXMI DEVELOPERS (P) LTD VS DCIT ITA NO 5578/ DEL/ 2014 DT SMT KUNDANBEN AMBHAI SHAH V. ITO ITA NO 3354/ AHD/ 2014 DT 30- 11-2017 DEDUCTION U/S 54F OF THE ACT IN RESPECT OF FDRS UNDER CAPITAL GAIN SCHEME OF RS 46,13,000/- THE APPELLANT HAD PROVIDED COMPLETE DETAILS OF FIXED DEPOSIT UNDER CAPITAL GAIN SCHEME BEFORE THE ASSESSING OFFICER FOR RS 46,13,000/-. THE PR CIT HIMSELF IN PARA 8 ON INNER PAGE NO 13 OF THE ORDER HAS ACCEPTED THAT A CERTIFICATE WAS ALSO OBTAINED FROM THE BANK AND PROVIDED TO HIM. IN THAT CASE THERE WAS NO JUSTIFICATION FOR ISSUING OF NOTICE UNDER SECTION 263 OF THE ACT ON THIS COUNT ALSO. IT IS WELL SETTLED PRINCIPLE OF LAW THAT THE PR CIT CAN ALSO MAKE AN INDEPENDENT INQUIRY DURING THE SHALIGRAM BORAD 10 263 PROCEEDING. IN THIS CASE , THE PR CIT HIMSELF ACCEPTED THAT CERTIFICATE WAS OBTAINED FROM THE BANK AND PROVIDED TO HIM. IN THAT CASE THERE WAS NO JUSTIFICATION FOR ISSUANCE OF NOTICE UNDER SECTION 263 OF THE ACT ON THIS COUNT JYOTI FOUNDATION [2013]357 ITR 388 (DELHI) DG HOUSING PROJECT LTD DEDUCTION U/S 54F OF THE ACT FOR NEW CONSTRUCTION OF HOUSE THE COST OF HOUSE AS ON 31.03.2013 WAS OF RS 4157868/- WHICH INCREASED TO RS 43,76,862/-. IT WAS CLAIMED BY THE APPELLANT THAT AN AMOUNT OF RS 218994/- WAS PAID TO THE MUNCIPLA CORPORATION FOR SANCTION OF MAP FOR NEW HOUSE CONSTRUCTION THE OLD HOUSE COST WAS THEREFORE RS 41,57,868/- ONLY, THE WIFE OF THE APPELLANT CONTRIBUTED AN AMOUNT OF RS 16,81,609/- AGAINST HER SHARE IN OLD HOUSE. THUS, THE COST OF HOUSE WAS REDUCED FROM RS 41,57,868/- TO RS 24,76,259/-. THE SAID OLD HOUSE WAS DISMANTLED BY THE APPELLANT. NEW MAP WAS SANCTIONED, COPY OF THE SANCTION LETTER DT 03-04- 2013 IS ENCLOSED ON PAGE NO 119 TO 122 OF THE COMPILATION THE EXPENSES AS INCURRED FOR CONSTRUCTION OF HOUSE WAS TO THE TUNE OF RS 43,31,991/- WHICH ALSO INCLUDES RS 218994/- AS PAID FOR SANCTION OF MAP THE EXPENSES INCURRED WERE FOR CONSTRUCTION OF NEW HOUSE AFTER DEMOLITION OF THE OLD HOUSE. HENCE, THE APPELLANT WAS RIGHTLY ELIGIBLE TO CLAIM DEDUCTION UNDER SHALIGRAM BORAD 11 SECTION 54F OF THE ACT THE LD PR CIT MERELY ON THE BASIS OF AMOUNT AS REFLECTED IN THE BALANCE SHEET DOUBTED THE GENUINENESS OF THE CONSTRUCTION EXPENSES AS INCURRED WHICH IN ANY CASE IS NOT JUSTIFIABLE. THE APPELLANT FOR CLAIMING DEDUCTION UNDER SECTION 54F OF THE ACT CAN INVEST IN ADDITIONAL ONE HOUSE IN ADDITION TO HIS EXISTING HOUSE. IN THE PRESENT CASE, EXISTING HOUSE WAS DEMOLISHED AND PERMISSION WAS OBTAINED FOR CONSTRUCTION OF NEW HOUSE. HENCE, THE APPELLANT IS DULY COMPLIED WITH THE CONDITION AS PER SECTION 54F OF THE ACT 3.1] THAT THE FIRST REASON AS MENTIONED BY THE PR. CIT FOR ISSUING THE NOTICE U/S 263 TO THE APPELLANT WAS AS UNDER:- THAT APPELLANT HAS CLAIMED THAT TRANSFER OF LAND TO OK PLACE IN A.Y. 2014-15 HOWEVER WHILE DETERMINING THE SALE CONSIDER ATION, THE APPELLANT HAS ADOPTED THE VALUE OF SALE AGREEMENT I.E RS. 97,65,000/- WHICH WAS ENTERED INTO DURING THE A.Y. 2012-13 HOW EVER AS PER THE SALE DEED AND ALSO AS PER THE STAMP DUTY AUTHORITIE S RATE , THE CONSIDERATION IS RS. 1,30,20,000/- THE A.O. OUGHT T O HAVE TAKEN THE VALUE OF SALE CONSIDERATION AS RS. 1,30,20,000/- I NSTEAD OF RS. 9765000/- IF CAPITAL GAIN WAS CALCULATED IN THE YEA R 2014-15. 3.2] IT WAS SUBMITTED THAT DURING THE A.Y. 2012-13 THE APPELLANT HAS ENTERED INTO A REGISTERED AGREEMENT TO SELL A P LOT AT 29/D/F SCHEME NO. 74C INDORE BY WAY OF POWER OF ATTORNEY ( WITHOUT POSSESSION) IN FAVOUR OF DAKSHA HOMES P. LTD. ON 30 .03.2012 FOR A CONSIDERATION AMOUNTING TO RS. 97,65,000/- AS PER T HE PREVAILING GUIDELINE RATES FOR A.Y. 2012-13. 3.3] THAT DURING THE YEAR UNDER CONSIDERATION I.E. IN THE A.Y. 2014- 15, THE APPELLANT HAS HANDED OVER THE POSSESSION OF SAID PROPERTY TO THE POWER OF ATTORNEY HOLDER M/S DAKSHA HOMES P. LT D. (PAN NO. AADCD2378J) WHO IN TURN HAS FINALLY GOT THE SAID PR OPERTY REGISTERED IN FAVOUR OF SHRI SANJAY PORWAL AND RADHEY SHYAM PO RWAL ON 26.03.14 FOR RS. 1,30,20,000/- SHALIGRAM BORAD 12 3.4] THAT OUT OF THE TOTAL AGREED CONSIDERATION OF RS 97,65,000/- AS PER THE REGISTERED SALE AGREEMENT WITH THE POWER OF ATTORNEY HOLDER, THE APPELLANT HAS RECEIVED AN AMOUNT OF RS. 97,60,000/- IN THE A.Y. 2012-13 FROM THE SAID PARTY I.E. M/S DAKSHA HO MES P. LTD. (PAN NO. AADCD2378J) THROUGH ACCOUNT PAYEE CHEQUES AND B ALANCE AMOUNT OF RS. 5,000/- WAS RECEIVED AT THE TIME OF EXECUTIO N OF THE REGISTRY I.E. IN THE A.Y. 2014-15. 3.5] DETAIL OF AMOUNT AS RECEIVED BY THE APPELLANT AGAINST THE SALE AGREEMENT AS EXECUTED IS AS UNDER:- S. NO DATE OF CHEQUE AS PER AGREEMENT CH NO AMO UNT [RS] AMOUNT CREDITED IN THE BANK ACCOUNT [RS] 1 26-03-2012 359047 20,00,000 19-12-2012 2 26-03-2012 359048 20,00,000 30-03-2012 3 28-03-2012 359050 20,00,000 19-12-2012 4 28-03-2012 359049 20,00,000 19-12-2012 5 30-03-2012 359046 17,60,000 30-03-2012 TOTAL 97,60,000 3.6] THAT AN AMOUNT OF RS 20,00,000/- AS RECEIVED VIDE CH NO 359048 AND AN AMOUNT OF RS 17,60,000/- AS RECEIVED VIDE CH NO 359046 WERE CREDITED IN THE BANK ACCOUNT OF THE APP ELLANT AS ON 30-03- 2012 AND BALANCE AMOUNT WAS CREDITED IN THE BANK AC COUNT OF THE APPELLANT ON 19-12-2012. 3.7] THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE APPELLANT HAS SUBMITTED A DETAILED REPLY IN RESPECT OF SAID TRANSACTION AND HAS PROPERLY EXPLAINED THE NATURE OF TRANSACTIO N AND ALSO FURNISHED DULY REGISTERED SALE AGREEMENT (WITHOUT P OSSESSION). THE SALE AGREEMENT WAS REGISTERED AND CONSIDERATION WAS ALSO RECEIVED THROUGH AN ACCOUNT PAYEE CHEQUE. THUS, AS PER AMENDED PROVI SO OF SECTION 50C OF THE ACT THE GUIDELINE VALUE AS ON THE DATE OF AG REEMENT IS TO BE CONSIDERED AS FULL VALUE OF CONSIDERATION. THE APPE LLANT IS THEREFORE RIGHTLY OFFERED SALE CONSIDERATION OF RS 97,65,000/ - IN HIS RETURN OF TOTAL INCOME. 3.8] THE DATE WISE EVENT OF PROPERTY AS SOLD BY THE APPELLANT AND WHICH IS UNDER QUESTION IS SUMMARIZED AS UNDER FOR BETTER UNDERSTANDING:- DATE PARTICULARS A.Y. 30.03.2012 APPELLANT EXECUTED REGISTERED SALE AGREEMENT (WITHOUT POSSESSION) OF A.Y. 2012- SHALIGRAM BORAD 13 PLOT ON 30.03.2012 FOR RS. 97,65,000/- IN FAVOUR OF M/S DAKSHA HOMES P. LTD. (PAN NO. AADCD2378J). 13 26.03.2014 REGISTRATION OF SAID PLOT WAS CONCLUDED BY M/S DAKSHA HOMES P. LTD. VIDE REGISTERED SALE DEED DT. 26.03.14 FOR RS. 1,30,20,000 IN FAVOUR OF SANJAY PORWAL AND RADHEYSHYAM PORWAL IN WHICH THE APPELLANT ACTED AS CONSENTOR. A.Y.20 14-15 3.9] THAT ON PERUSAL OF THE ABOVE CHART YOUR HONOUR S WILL APPRECIATE THAT APPELLANT HAS PROPERLY AND CORRECTLY CONSIDERED THE SALE CONSIDERATION RECEIVED BY HIM IN RESPECT OF ABOVE TRANSACTION AT RS. 97,65,000/- IN HIS RETURN OF TOTAL INCOME FOR THE A.Y. 2014-15 WHILE C OMPUTING INCOME UNDER THE HEAD CAPITAL GAIN SINCE HE HAS ENTERED IN TO AN AGREEMENT TO SALE (WITHOUT POSSESSION) AND SUBSTANTIAL AMOUNT OF SALE CONSIDERATION WAS ALSO RECEIVED. AS PER AMENDED PROVISO TO SECTIO N 50C, IF THE SALE AGREEMENT WAS EXECUTED PRIOR TO THE EXECUTION OF RE GISTRY AND SALE CONSIDERATION WAS RECEIVED THROUGH AN ACCOUNT PAYEE CHEQUE IN THAT CASE THE GUIDELINE VALUE AS PREVAILED AS ON THE DAT E OF EXECUTION OF THE SALE AGREEMENT IS TO BE CONSIDERATION AS FULL VALUE OF CONSIDERATION. THUS, ON THE SAID PRINCIPLE, GUIDELINE VALUE AS PREVAILED IN THE PREVIOUS YEAR RELEVANT TO THE ASST YEAR 2012-13 IS TO BE CONSIDER ED BY THE ASSESSING OFFICER AND NOT FOR THE ASST YEAR 2014-15 AS ACTUAL LY CONSIDERED BY THE PR CIT IN HIS ORDER AS PASSED UNDER SECTION 263 OF THE ACT. 3.10] THAT FURTHER THE SELLER HAS ALSO DEDUCTED TDS AT THE TIME OF REGISTRY IN THE NAME OF M/S DAKSHA HOMES P. LTD ONL Y. THE SAME IS CLAIMED BY M/S DAKSHA HOMES P. LTD IN ITS INCOME TA X RETURN. THUS, ON THE EXCESS AMOUNT OF RS. 32,55,000/- [ RS. 1,30,20, 000 - RS. 97,65,000] , M/S DAKSHA HOMES P. LTD WAS LIABLE TO PAY INCOME TAX. THAT M/S DAKSHA HOMES P. LTD IS REGULARLY ASSESSED TO INCOME TAX VIDE PAN NO. AADCD2378J . A COPY OF INCOME TAX RETURN FILED BY T HE SAID COMPANY M/S DAKSHA HOMES P. LTD FOR THE A.Y. 2014-15 ALONG WITH COPY OF ACCOUNT OF ULTIMATE BUYER IN THEIR BOOKS OF ACCOUNT S DULY REFLECTING THE AMOUNT RECEIVED BY THEM AGAINST THE SALE OF SAID PR OPERTY FROM THE ULTIMATE BUYER IS ALSO ENCLOSED FOR YOUR KIND REFER ENCE AND IS AVAILABLE ON PAGES 174 TO 180 OF THE PAPER BOOK FILED BEFORE THE HONBLE BENCH. 1. HONBLE ITAT, INDORE BENCH IN THE CASE OF SHRI R AJA RAM PATIDAR VS ITO 1(2), BHOPAL [ APPEAL NO ITA NO 371/IND/ 2015 D T 28-09-2018 FOR THE ASST YEAR 2010-11 ] 2. THAT HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. SHIMBHU MEHRA AS REPORTED IN [2016] 65 TAXMANN.COM 142 (ALL AHABAD) SHALIGRAM BORAD 14 3.THAT HONBLE DELHI BENCH OF ITAT IN THE CASE OF I TO V/S MODIPON LTD. AS REPORTED IN 168 TTJ 480 4. HONBLEHYDERABAD BENCH OF ITAT IN THE CASE OF SH RI MOHD. IMRAN BAIGV/S ITO [ ITA NO. 1942/HYD/2014] 5. 3.12.1] THAT AS PER FIRST AND SECOND PROVISO TO SECTION 50C(1) OF THE INCOME TAX ACT AS INSERTED AS INSERTED BY THE FINAN CE ACT, 2016 W.E.F 01-04-2017 READ AS UNDER: PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXIN G THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESS ED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEM ENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATI ON FOR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DR AFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT 59 [OR THROUGH SUCH OTHER ELECTRONIC MODE AS MAY BE PRESCRIBED], ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER: 3.12.2] THAT THOUGH THE FIRST AND SECOND PROVISO TO SECTION 50C(1) OF THE INCOME TAX ACT WAS INSERTED W.E.F 01-04-2017 BUT TH ESE PROVISO WAS INSERTED TO EXPLAIN DATE OF VALUATION AS APPLICABLE AS ON THE DATE OF AGREEMENT AND NOT ON THE DATE ON WHICH REGISTRY WAS ACTUALLY EXECUTED. HENCE, BOTH THESE PROVISO HAVING RETROSPECTIVE EFFE CT FROM THE DATE ON WHICH PROVISION OF SECTION 50C OF THE INCOME TAX AC T INSERTED IN THE ACT I.E. W.E.F 01-04-2003. SIMILAR VIEW WAS EXPRESSED I N THE FOLLOWING DECISIONS: S.NO CITATION REFERENCE 1 MS ZUBEIDA SHAHANSHAH ITA NO 519/ LKW/2017 DT 31-01- 2019 2 DHARMSHIBHI SONANI VS ACIT, SURAT [2016] 75 TAXMANN.COM 141 [ AHMEDABAD BENCH] 161 ITD 627 (AHD ) 3 HARI MOHAN DAS TANDON (HUF) 169 ITD 639 (ALL) 4 M/S JAI LAXMI DEVELOPERS (P) LTD VS DCIT ITA NO 5578/ DEL/ 2014 DT 5 SMT KUNDANBEN AMBHAI SHAH V. ITO ITA NO 3354/ AHD/ 2014 DT 30- 11-2017 3.12.3.1] HONBLE LUCKNOW BENCH OF ITAT IN THE CASE OF MS ZUBEIDA SHAHANSHAH [ APPEAL NO ITA NO 519/ LKW/ 2017 DT 31- 01-2019 ] SHALIGRAM BORAD 15 3.12.3.2] THAT HONBLE AHMEDABAD BENCH OF ITAT IN T HE CASE OF DHARAMSHI BHAI SONANI [ ITA NO 1237/ AHD/ 2013 DT 30-09-2016] 3.13] THAT IN VIEW OF THE ABOVE IT IS SUBMITTED THA T APPELLANT HAS PROPERLY SHOWN THE AMOUNT OF RS 97,65,000/- RECEIV ED BY HIM TOWARDS SALE CONSIDERATION AS PER THE REGISTERED SALE AGREE MENT AS THE FULL CONSIDERATION VALUE FOR TRANSFER OF CAPITAL ASSET I N A.Y. 2014-15 AND NOT RS. 1,30,20,000/- WHICH WAS THE GUIDELINE VALUE EFFECTIVE IN A.Y. 2014-15 AND THE SALE VALUE OF RS. 1,30,20,000/- OF SAID PROPERTY WHICH WAS ALSO THE GUIDELINE VALUE IN A.Y. 2014-15 WAS OF FERED TO TAX BY M/S DAKSHA HOMES P. LTD. IN ITS RETURN SINCE THEY WERE THE SELLERS OF PROPERTY IN A.Y. 2014-15 WHICH IS CORRECT AND PROPER. 4.1] THAT THE SECOND REASON AS MENTIONED BY THE PR. CIT FOR ISSUING THE NOTICE U/S 263 TO THE APPELLANT IS AS UNDER: THE A.O. HAS NOT EXAMINED WHETHER 4 FIXED DEPOSITS MADE BY THE APPELLANT AMOUNTING TO RS. 4613000/- IN CAPITAL GAI N DEPOSIT SCHEME ON 29.11.2014 IS IN ACCORDANCE WITH CAPITAL GAIN AC COUNT SCHEME 1988 AND DEDUCTION U/S 54 F WAS ALLOWABLE OR NOT BEFORE ALLOWING THE SAME. 4.2] THAT APPELLANT DURING THE COURSE OF ORIGINAL A SSESSMENT PROCEEDINGS HAD FILED THE COPIES OF CAPITAL GAIN SCHEME FDR MAD E WITH DENA BANK TOTALING TO RS. 46,13,000/-. DETAILS OF FDR MADE BY THE APPELLANT ARE AS UNDER:- FDR NO. DATE [ DUE DATE FOR FILING OF RETURN EXTENDED TO 30-11- 2014] AMOUN T [RS] SDRE8258986 29.11.2014 1613000 SDRE8258985 29.11.2014 1000000 SDRE8258984 29.11.2014 1000000 SDRE8258983 29.11.2014 1000000 TOTAL 4613000 COPIES OF SAID FDR ARE ENCLOSED FOR KIND REFERENCE AND ARE AVAILABLE ON PAGES 109 TO 111 OF THE PAPER BOOK FIL ED BEFORE THE HONBLE BENCH 4.3] THAT APPELLANT HAS PREPARED THE SAID FDRS UND ER THE CAPITAL GAIN DEPOSIT SCHEME TOTALING TO RS. 4613000/- ON 29.11.2 014 WHICH IS BEFORE THE DUE DATE OF FILING OF RETURN FOR A.Y. 2014-15 O N 30.11.2014. 4.4] THAT AGAINST THE SAID AMOUNT, THE BANK ALSO OP ENED A SAVING ACCOUNT WHEREIN THE PROCEEDS OF FDR WERE FIRST TRA NSFERRED FROM FDR ACCOUNT AND THEN THE SAME WERE UTILIZED FOR MAKING PAYMENT TOWARDS CONSTRUCTION OF HOUSE. SHALIGRAM BORAD 16 4.5.1] THE APPELLANT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING FILED A DETAILED SUBMISSION WHEREIN IT WAS PROPERLY EXPLAINED THAT THE AMOUNT WAS FIRST DEPOSITED IN THE CAPITAL GAIN SCHE ME AND THEN UTILISED THE SAME THROUGH THE SAVING BANK ACCOUNT OF THE APP ELLANT. COPY OF THE SAID SUBMISSION IS ENCLOSED FOR YOUR KIND PERUSAL O N PAGE NOS 96 TO 104. 4.5.2] COPY OF SAVING BANK ACCOUNT WHEREIN THE PROC EEDS OF FDR WERE FIRST TRANSFERRED FROM FDR ACCOUNT AND THEN THE SAM E WERE UTILIZED FOR MAKING PAYMENT TOWARDS CONSTRUCTION OF HOUSE IS ALS O ENCLOSED FOR KIND REFERENCE ON PAGE NOS 112 TO 118 OF THE COMPILATION . ON PERUSAL OF THE SAME YOU WILL FIND THAT ENTIRE TRANSACTIONS AS EXEC UTED THROUGH THIS ACCOUNT WAS FOR CONSTRUCTION OF HOUSE ONLY. 4.5.3] THE APPELLANT ALSO OBTAINED A CERTIFICATE F ROM THE BANK DULY CERTIFYING THAT THE AMOUNT WAS DEPOSITED BY THE APP ELLANT IN THE CAPITAL GAIN SCHEME ACCOUNT. COPY OF THE SAID CERTIFICATE I S ENCLOSED ON PAGE NO 109 OF THE COMPILATION. 4.6] THE PR CIT HIMSELF IN THE ORDER AS PASSED UND ER SECTION 263 OF THE ACT IN PARA 8 HAS DULY ACKNOWLEDGE ABOUT THE SUBMIS SION OF THE CERTIFICATE DURING THAT PROCEEDING. THE PARA 8 OF T HE ORDER AS PASSED BY THE PR CIT IS REPRODUCED AS UNDER: - 4.7] THAT FROM THE ABOVE, IT IS CLEAR THAT THE CER TIFICATE IN RESPECT OF CAPITAL GAIN DEPOSIT HAS ALREADY BEEN PROVIDED TO T HE PR CIT, DURING THE COURSE OF 263 PROCEEDING. HENCE, THERE WAS NO JUSTI FICATION FOR HIM TO PASSED AN ORDER UNDER SECTION 263 OF THE ACT WITH A DIRECTION TO RE- EXAMINE THE SAME FACTS AGAIN. THE APPELLANT DURING THE SCRUTINY ASSESSMENT PROVIDED COMPLETE DETAIL OF FIXED DEPOSI T WITH CAPITAL GAIN SCHEME AND ITS UTILISATION. THE ASSESSING OFFICER A FTER BEING SATISFIED WITH THE EXPLANATION OF THE APPELLANT ACCEPTED HIS CONTE NTION.IN VIEW OF THE ABOVE IT IS SUBMITTED THAT APPELLANT HAS PROPERLY C LAIMED DEDUCTION U/S 54F OF THE INCOME TAX ACT OF RS. 46,13,000/- IN HIS RETURN. THE SAME MAY KINDLY BE TREATED AS LEGAL AND PROPER. SHALIGRAM BORAD 17 5.1] THAT THE THIRD REASON AS MENTIONED BY THE PR. CIT FOR ISSUING THE NOTICE U/S 263 TO THE APPELLANT IS AS UNDER: THAT APPELLANT HAS CLAIMED TO HAVE INVESTED RS. 43, 31,991/- UPTO DATE OF FILING OF RETURN IN CONSTRUCTION OF A NEW H OUSE (APPARENTLY AH 28- 29). HOWEVER ON PERUSAL OF THE BALANCE SHEET PLACED ON RECORD IT IS SEEN THAT AS ON 31.03.2014 THERE IS HOUSE ACCOUNT RS. 4376862/- WHEREAS AS ON 31.03.2013 THE SAME IS AT RS. 4157868/-. AS O N 30.11.2014 THERE ARE TWO ENTRIES ON THE BALANCE SHEET VIZ NEW HOUSE CONSTRUCTION RS. 4331991/- AND HOUSE ACCOUNT (AH 28-29) RS. 2476259/ -. HENCE IT IS NOT CLEAR THAT IN WHICH HOUSE THE APPELLANT HAS MADE NE W INVESTMENT. THAT AS PER THE BALANCE SHEET THERE IS ONE MORE FLAT ACC OUNT RS. 330000/- THUS IT IS NOT CLEAR WHETHER THE APPELLANT FULFILLS THE CONDITION OF NOT OWNING MORE THAN ONE RESIDENTIAL HOUSE BESIDES THE NEW ASSETS AS ENVISAGED IN SECTION 54F. THE A.O. HAS NOT EXAMINED THE CLAIM OF DEDUCTION U/S 54 F FROM THIS ANGLE ALSO. IN VIEW OF THE ABOVE, IT IS NOTICED THAT THE A.O. HAS FAILED TO EXAMINE THE VERACITY OF DEDUCTION AS CLAIMED AMOUNTING TO RS. 4331991/- U/S 54F(1) AND RS. 46130 00/- CLAIMED U/S 54F(4). 5.2] THAT FROM THE REASON IT APPEARS THAT THE LD. P R. CIT WANTED TO VERIFY WHERE THE COST OF CONSTRUCTION OF HOUSE HAS BEEN SH OWN BY THE APPELLANT. THAT IN THIS RESPECT A STATEMENT SHOWING THE YEAR-W ISE DETAILS OF COST OF CONSTRUCTION OF HOUSE AS SHOWN BY THE APPELLANT IN HIS BALANCE SHEET WAS FILED BEFORE HIM AND ALSO AVAILABLE BEFORE THE ASSESSING OFFICER IS AS UNDER: - S.NO PARTICULARS 31-03-13 31-03-14 30-11-14 1.1 HOUSE 4157868 4376862 2476259 1.2 NEW HOUSE 0 0 4331991 5.3] THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASST YEAR 2014- 15, AN AMOUNT OF RS 2,18,994/- WAS PAID BY THE APPE LLANT TOWARDS PERMISSION FEE FOR CONSTRUCTION OF THE RESIDENTIAL HOUSE. HOWEVER, INADVERTENTLY THE SAID AMOUNT WAS DEBITED TO THE CO ST OF OLD HOUSE. THE SAID MISTAKE WAS RECTIFIED AND THE SAME WAS INCLUDE D IN THE COST OF NEW HOUSE DURING THE PREVIOUS YEAR RELEVANT TO THE ASST YEAR 2015-16. 5.4] IT IS CLARIFIED THAT HOUSE NO. AH 28 AND PLOT NO. 29 WAS A JOINT PROPERTY OWNED BY THE APPELLANT WITH HIS WIFE SMT. SUMITRA BAROD. THAT THERE WAS HOUSE ON AH- 28 AND PLOT NO. AH 29 W AS VACATE. THAT INITIALLY THE ENTIRE PAYMENT FOR CONSTRUCTION WAS M ADE BY THE APPELLANT AND SHOWN AS INVESTMENT IN HOUSE IN HIS NAME. THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASST YEAR 2015-16, AN AMOUNT OF RS 16,81,609/- WAS RECEIVED BY HIM FROM HIS WIFE TOWAR DS HER SHARE AND THEREFORE THE COST TO THAT EXTENT WAS TRANSFERRED B Y THE APPELLANT IN THE SHALIGRAM BORAD 18 BOOKS OF HIS WIFE. FOR THIS REASON THE COST OF HOUS E REDUCED FROM RS 41,57,868/- TO RS 24,76,259/- IN THE FILE OF THE AP PELLANT AS ON 30.11.2014. 5.5] THE SAID HOUSE SITUATED AT AH 28 HAS BEEN DEMO LISHED BY APPELLANT IN A.Y. 2014-15 AND HE HAS STARTED THE CO NSTRUCTION OF A NEW RESIDENTIAL HOUSE ON AND SAME ALONG WITH ADJOINING PLOT AH29 SUKHLIYA. THE APPELLANT HAS ALSO TAKEN PERMISSION F OR CONSTRUCTION OF NEW HOUSE FROM THE MUNICIPAL CORPORATION ON AH-28 A ND AH 29 COPY OF SAME ARE ENCLOSED. IT WAS FOR THIS REASON THAT THE APPELLANT HAS SHOWN HOUSE (AH-28-29) AT RS. 41,57,868/- AS ON 31.03.201 3. THAT APPELLANT HAS DEMOLISHED THE OLD HOUSE AFTER HE GOT PERMISSIO N FOR CONSTRUCTION IN APRIL 2013. THAT LATER ON AFTER 01.04.2014 THE A PPELLANT HAS STARTED CONSTRUCTION OF NEW HOUSE AND THEREBY HE HAS INCURR ED AN AMOUNT OF RS. 43,31,991/- TILL 30.11.2014 TOWARDS CONSTRUCTIO N OF NEW HOUSE. 5.6] THE APPELLANT HAS DULY FILED THE DETAILS OF AL L THE EXPENSES INCURRED BY HIM TOWARDS HOUSE CONSTRUCTION AND PROD UCED BOOKS OF ACCOUNTS BEFORE THE LD. A.O. DURING THE ORIGINAL AS SESSMENT PROCEEDINGS ALSO AS TO SUBSTANTIATE THE CONSTRUCTIO N COST INCURRED BY HIM. THE ASSESSING OFFICER AFTER BEING SATISFIED WI TH THE EXPLANATION OF THE APPELLANT ACCEPTED THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE INCOME TAX ACT. 5.7] THAT AS PER THE PROVISIONS OF SEC. 54F OF THE ACT IF AN INDIVIDUAL OR HUF TRANSFERS ANY L.T. CAPITAL ASSET OTHER THAN A RESIDENTIAL HOUSE AND WITHIN A PERIOD OF ONE YEAR B EFORE OR TWO YEAR AFTER THE DATE ON WHICH TRANSFER TOOK PLACE, PURCHA SED A NEW HOUSE OR HAS WITH IN A PERIOD OF THREE YEARS AFTER THAT DATE , CONSTRUCTED A NEW RESIDENTIAL HOUSE THEN IT WOULD NOT BE LIABLE TO PA Y TAX ON SUCH CAPITAL GAIN IF IT FULFILLS OTHER CONDITIONS AS MENTIONED I N SAID SECTION. 5.8] THAT IN THE APPELLANT TILL THE DATE OF FILING OF THE RETURN OF TOTAL INCOME FOR A.Y. 2014-15 HE HAS INVESTED AN AMOUNT O F RS 43,31,991/- IN THE CONSTRUCTION OF NEW HOUSE AND AN AMOUNT OF R S 46,13,000/-HAS BEEN DEPOSITED BY HIM IN THE CAPITAL GAIN DEPOSIT S CHEME ACCOUNT. THUS, TOTAL INVESTMENT AS MADE BY THE APPELLANT WAS TO THE TUNE OF RS 89,44,991/-. THUS, THE APPELLANT HAD PROPERLY CLAIM ED DEDUCTION UNDER SECTION 54F OF THE INCOME TAX ACT. 5.9.1] THAT AS REGARDS ONE MORE POINT RAISED BY PR . CIT THAT THERE IS ONE MORE FLAT ACCOUNT RS. 330000/- THUS IT IS NOT C LEAR WHETHER THE APPELLANT FULFILLS THE CONDITION OF NOT OWNING MORE THAN ONE RESIDENTIAL HOUSE BESIDES THE NEW ASSETS AS ENVISAGED IN SECTIO N 54F, IT IS SUBMITTED THAT SAID FLAT IS A OLD RESIDENTIAL FLAT SITUATED AT BHOPAL. SHALIGRAM BORAD 19 5.9.2] THE APPELLANT CAN INVEST IN THE A NEW RESIDE NTIAL HOUSE IN ADDITION TO ONE HOUSE, IT MEANS AFTER CONSIDERING T HE NEW HOUSE, THE APPELLANT CAN HOLD TWO HOUSES. THUS, AS PER PROVISI ON OF SEC. 54F THE APPELLANT WAS ELIGIBLE TO CLAIM DEDUCTION U/S 54F O F THE ACT IN CASE OF CONSTRUCTION OF A NEW HOUSE PROPERTY. 5.10] THAT IN VIEW OF THE ABOVE AFTER CONSIDERING THE FACTS OF THE CASE AND DETAILED SUBMISSION AS FILED ALONG WITH BA LANCE SHEET WHEREIN THESE FACTS WERE PROPERLY DISCLOSED THE APP ELLANT SUBMITS THAT THE DEDUCTION AS CLAIMED BY HIM UNDER SECTION 54F O F THE ACT WAS LEGAL AND PROPER. THE LD. A.O. AFTER CONSIDERING ALL THE ASPECTS HAS PROPERLY ALLOWED THE DEDUCTION U/S 54F. THUS, THE ASSESSMENT ORDER AS PASSED BY THE ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, THE ORDER AS PASSED BY THE LD. PR. CIT REQUIRES TO BE QUASHED. 6.1] THE LANGUAGE OF PROVISION OF SECTION 263 OF T HE INCOME TAX ACT READ AS UNDER:- 263. (1) THE PRINCIPAL COMMISSIONER OR 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 ASSE SSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE APPELLANT AN OPPORTUNITY OF B EING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEE MS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSES SMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. [ EMPHASIS SUPPLIED ] 6.2] THAT PRIOR TO INVOKING THE PROVISION OF SECTI ON 263 OF THE INCOME TAX ACT, THE ORDER IN QUESTION MUST BE ERRON EOUS AND ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. THAT BOTH T HESE CONDITIONS MUST BE SIMULTANEOUSLY SATISFIED. THE ASSESSING OFFICER IN THE PRESENT CASE IN HAND AS ALLOWED THE CLAIM OF DEDUCTION U/S 54 F AND THEREFORE HE HAS TAKEN ONE OF THE POSSIBLE VIEWS. THUS, THE ORDER AS PASSED BY THE ASSESSING OFFICER WAS NOT A ERRONEOUS ORDER. HENCE, THE LD CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISION OF SECTION 263 OF THE INCOME TAX ACT. 6.3] IN THE FACTS OF THE PRESENT CASE, THE ASSESSIN G OFFICER CONDUCTED DUE INQUIRIES AND ACCEPTED THE CLAIM OF THE APPELLANT O NLY AFTER BEING SATISFIED WITH THE EXPLANATIONS OF THE APPELLANT DU LY SUPPORTED WITH THE REQUISITE DOCUMENTARY EVIDENCES. THE ASSESSING OFFI CER TOOK A PLAUSIBLE VIEW BASED ON FACTS AND CIRCUMSTANCES OF THE CASE A FTER DUE EXAMINATION OF THE MATERIAL PLACED ON RECORD. HENCE , ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE TERMED AS ERRONEOUS SO AS TO WARRANT THE INVOKING THE PROVISIONS OF SECTION 263 OF THE I NCOME-TAX ACT, 1961. SHALIGRAM BORAD 20 THE ORDER AS PASSED BY THE LD PR. CIT-2, INDORE UND ER SECTION 263 OF THE INCOME-TAX ACT, 1961 IS THEREFORE WITHOUT JURIS DICTION AND DESERVES TO BE SET-ASIDE. RELEVANT EXTRACTS FROM FEW OF THE JUDICIAL PRECEDEN TS THAT HAVE LAID DOWN THE SCOPE OF SECTION 263 OF THE INCOME-TAX ACT , 1961 AND POWERS OF THE COMMISSIONER UNDER THIS SECTION ARE REPRODUC ED HEREUNDER FOR YOUR READY REFERENCE: 6.4.1] THE HONBLE SUPREME COURT OF INDIA IN THE CA SE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT AS REPORTED IN [2000] 2 43 ITR 83 (SC) 6.4.2] THE HONBLE SUPREME COURT OF INDIA IN THE CA SE OF CIT (CENTRAL) V. MAX INDIA LTD. AS REPORTED IN [2007] 295 ITR 282 (S C) 6.4.3] THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ASSOCIATED FOOD PRODUCTS (P.) LTD. AS REPORTED IN [ 2006] 280 ITR 377 (MADHYA PRADESH) 6.4.4] THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. SUNBEAM AUTO LTD. AS REPORTED IN [2009] 227 CTR 133 (DELHI) 6.4.5] THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT V. JYOTI FOUNDATION AS REPORTED IN [2013] 357 ITR 388 (DELHI ) 6.4.6] THE HONBLE SUPREME COURT OF INDIA IN THE CA SE OF PR CIT-2 V. SHREE GAYATRI ASSOCIATES AS REPORTED IN [2019] 106 TAXMANN.COM 31 (SC) DISMISSED THE SLP FILED BY THE DEPARTMENT AGAI NST THE ORDER OF THE HONBLE GUJARAT HIGH COURT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. CIT-2 V. SHREE GAYATRI ASSOCIATES AS RE PORTED IN [2019] 106 TAXMANN.COM 30 (GUJ.) 6.4.7] THE HONBLE SUPREME COURT OF INDIA IN THE CA SE OF PR CIT-8 V. SUMATICHAND TOLAMAL GOUTI AS REPORTED IN [2019] 111 TAXMANN.COM 287 (SC) DISMISSED THE SLP FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE HONBLE BOMBAY HIGH COURT. THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF PR. CIT-8 V. SUMATICHAND TOLAMAL GOUTI AS REPORTED IN [2019] 111 TAXMANN.COM 286 (BOMBAY) 6.4.8] THE HONBLE SUPREME COURT OF INDIA IN THE CA SE OF CIT V. AMITABH BACHCHAN AS REPORTED IN [2016] 69 TAXMANN.COM 170 ( SC) 6.4.9] THE HONBLE ITAT KOLKATA BENCH C IN THE CA SE OF PATRON VINIMAY PVT. LTD. VS. ITO [ITA NO. 1614/KOL/2019] VIDE ORDE R DATED 31-12-2019. SHALIGRAM BORAD 21 6.4.10] THE HONBLE ITAT PUNE BENCH B IN THE CASE OF RAJESH CHANDRAKANT SHAH (HUF) V. PR. CIT-6 AS REPORTED IN [2019] 102 TAXMANN.COM 428 (PUNE - TRIB.) 6.4.11] THE HONBLE ITAT AHMEDABAD BENCH C IN THE CASE OF JAY AGRICULTURE & HORTICULTURE PVT. LTD. VS PR. CIT-2 [ ITA NO. 605/AHD/2015] 9. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED REITERATING THE FINDING GIVEN BY LD. PR. CIT IN THE IMPUGNED ORDER AND ALSO PLACED RELIANCE ON THE FOLLOWING DEC ISIONS: S. CASE LAW REPORTED NO. 1 MALABAR INDUSTR IAL CO. LTD. VIS COMMISSIONER OF INCOME 243 ITR 83 (SC) TAX 2. SMT. TARADEVI AGGRAWA1 VIS COMMISSIONER 88 ITR 323 (SC) 3 RAMPYARIDEVI SARAOGI V IS COMMISSIONER OF INCOME TAX 67 ITR 84 (SC) 4 COMMISSIONER OF INCOME TAX VIS N AGESH KNITWEARS PVT. LTD. 345 ITR 135 (DELHI HC) 5 GEE VEE ENTERPRISES VIS ADDL. COMMISSIONER OF INCOME TAX 99 ITR 375 (DELHI HC) 6 BHUSHAN STEEL LTD. VIS ASSTT. COMMISSIONER OF LNCOME TAX IT AT A BENCH DELHI 7. COMMISSIONER OF INCOME - TAX V.DEEPAK KUMAR GARG 299 ITR 435 (MADHYA PRADESH) 8. COMMISSIONER OF INCOME-TAX V. MAHAVAR TRADERS 220 ITR 167 (MADHYA PRADESH) 9. SMT. RENU GUPTA V. COMMISSIONER OFLNCOME - TAX 301 ITR 45 (RAJASTHAN) SHALIGRAM BORAD 22 10. PT. LASHKARI RAM V. COMMISSIO NER OF INCOME - TAX 272 ITR 309 (ALLAHABAD) 11. COMMISSIONER OF INCOME - TAX, PATIA1A V. HIMACHAL PRADESH FINANCIAL CORPN. 186 TAXMAN 105 (HIMACHAL PRADESH) 12 COMMISSIONER OF INCOME TAX VIS PRAFULLA C.PANT AND 176 TAXMAN 184 DHARAM VEER JJ (UTTRAKHAND) 13 MOFUSSI1 WAREHOUSE & TRADING CO.LTD.V/S COMMISSIONER 238 ITR 867 (MADRAS) OF INCOME TAX 14 DURGA1A1 & CO. VIS COMMISSIONER OFLNCOME TAX 220 ITR 456(DE1HI) 15 COMMISSIONER OFLNCOME TAX VIS ACTIVE TRADERS (P) 214 ITR583 (CAL CUTTA) 16 ADD1.COMMISSIONER OF INCOME TAX VIS MUKUR 111 ITR 312 (GUJARAT) CORPORATION 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY PERUSED WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RUL E 18(6) OF ITAT RULES AND HAVE ALSO PERUSED THE JUDICIAL DECISIONS RELIED UPON BY BOTH THE SIDES. 11. THOUGH, THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL BY THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST THE F INDING OF LD. PR. CIT IN THE ORDER FILED U/S 263 OF THE ACT SETTING A SIDE THE ASSESSMENT ORDER TREATING IT TO BE ERRONEOUS AND SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 12. WE OBSERVE THAT THE ASSESSEE HAS SHOWN INCOME F ROM LONG TERM CAPITAL GAIN FROM SALE OF PLOT NO.29/D/F, SCHEME NO .74C, SECTOR D, SHALIGRAM BORAD 23 INDORE. TO ARRIVE AT THE CAPITAL GAIN LIABLE TO TAX , ASSESSE HAS CLAIMED SELLING EXPENSES, EXEMPTION U/S 54F(1) OF T HE ACT FOR INVESTMENT IN NEW HOUSE AND EXEMPTION U/S 54F(4) TO WARDS DEPOSIT IN CAPITAL GAIN DEPOSITS SCHEME. THE CASE OF THE AS SESSEE WAS ASSESSED U/S 143(3) OF THE ACT AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCE. LD. PR. CIT INVOKED THE PRO VISIONS U/S 263 OF THE ACT AND ISSUED SHOW CAUSE NOTICE MENTIONING THE FOLLOWING THREE REASONS : S.NO REASON FOR ISSUANCE OF THE NOTICE UNDER SECTION 263 OF THE ACT 1 GUIDELINE VALUE AT THE TIME OF SALES WAS OF RS 1, 30,20,000/- WHEREAS THE APPELLANT HAS OFFERED THE SAME AT RS 97 ,65,000/- 2 FDRS AS PREPARED FOR RS 46,13,000/- WAS ON ACCOU NT OF CAPITAL GAIN SCHEME OR NOT WAS NOT EXAMINED BY THE ASSESSIN G OFFICER 3 DEDUCTION AS CLAIMED FOR CONSTRUCTION OF HOUSE WA S NOT CORRECT FOR RS 43,31,991/-. 13. WHILE COMPLETING THE PROCEEDINGS U/S 263 OF THE ACT LD. PR. CIT WAS SATISFIED WITH THE ASSESSEES CLAIM OF DEDUCTIO N U/S 54F(4) OF THE ACT FOR THE DEPOSIT IN CAPITAL GAIN ACCOUNT SCH EME AT RS.46,13,000/- AS OBSERVED IN PARA 8 OF THE IMPUGNE D ORDER, ACCEPTING THAT DURING CURRENT PROCEEDINGS U/S 263 O F THE ACT ASSESSEE HAD DULY FURNISHED COPY OF THE CERTIFICATE FROM THE CONCERNED BANK AND SAMPLE COPY OF APPLICATION FOR W ITHDRAWAL ALL AMOUNT FROM THE CAPITAL GAIN ACCOUNT SCHEME. SINCE THE LD. PR. CIT IS SATISFIED THIS ISSUE DOES NOT REMAINS LIVE. SHALIGRAM BORAD 24 NOW, WE TAKE UP THE REMAINING TWO ISSUES 14. FIRST ISSUE IS WITH REGARD TO APPLYING OF THE G UIDELINE VALUE ON THE SALE CONSIDERATION SHOWN BY THE ASSESSEE. WE FI ND THAT THE ASSESSEE EXECUTED REGISTERED SALE AGREEMENT DATED 3 0.03.2012 FOR THE SALE OF PLOT OF LAND AT INDORE TO M/S DAKSHA HO MES P. LTD. FOR A CONSIDERATION OF RS.97,60,000/-. CONSIDERATION OF R S.37,60,000/- WAS RECEIVED ON 30.03.2012 AND RS. 60,00,000/- ON 19.12.2012. SALE DEED WAS FINALLY EXECUTED ON 26.03.2014 AND CO NSIDERATION WAS SHOWN AT RS.1,30,20,000/- AND THE PLOT WAS ULTI MATELY SOLD TO SHRI SANJAY PORWAL AND SHRI RADHEYSHYAM PORWAL BY M/S DAKSHA HOMES P. LTD. THE ENTIRE SALE CONSIDERATION OF RS.1 ,30,20,000/- WAS RECEIVED BY M/S DAKSHA HOMES PVT. LTD. THE GUID ELINE VALUE AS ON THE DATE OF REGISTERING SALE AGREEMENT I.E. 30.0 3.2012 WAS RS.97,60,000/-. THE ASSESSEE HAS OFFERED THE LONG T ERM CAPITAL GAIN DURING THE A.Y.2014-15 WHEN THE SALE DEED WAS EXECU TED BUT ADOPTED THE SALE CONSIDERATION AT RS.97,65,000/-. 15. LD. PR. CIT IN THE IMPUGNED ORDER HAS STATED TH AT THE GUIDELINE RATE TO BE ADOPTED BY THE ASSESSEE SHOULD BE RS.1,3 0,20,000/- AS THE SALE DEED WAS EXECUTED ON 26.03.3014. THIS ASPE CT HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER. 16. WE OBSERVE THAT ALMOST TOTAL CONSIDERATION AS P ER THE SALE AGREEMENT WAS RECEIVED BY THE ASSESSEE DURING THE F .Y.2011-12 AND 2012-13. THE FINAL CONSIDERATION AS MENTIONED I N THE SALE DEED DATED 26.03.2014 WAS RECEIVED BY M/S. DAKSHA HOMES PVT. LTD. ONGOING THROUGH VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR SHALIGRAM BORAD 25 THE ASSESSEE, WE FIND THAT THE ASSESSEE HAD RIGHTLY SHOWN THE SALE CONSIDERATION AT RS.97,65,000/- AND EVEN THIS ASPEC T HAS BEEN THOROUGHLY EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IN PARA 4 OF THE ASSESSM ENT ORDER, LD. AO HAS CATEGORICALLY STATED AS FOLLOWS: DURING THE ASSESSMENT YEAR THE ASSESSEE HAS SOLD UP PIECE OF LAND BEARING DESCRIPTION PLOT NO.29/D/F, SCHEME NO.74C, SEC TOR D, INDORE. THE ASSESSEE HAS TRANSACTED IN THE PROPERTY THROUGH A SALE AGREEMENT (WITHOUT POSSESSION) FOR AN AMOUNT OF RS. 97,60,000/- DATED 27 MARCH 2012 REGISTERED ON 30.3.2012. THIS PRO PERTY HAS ULTIMATELY BEEN TRANSFERRED THROUGH A SALE AGREEMENT BETWEEN THE ASSESSEE AND THE INITIAL BUYER DEKSH HOME PVT. LTD. INDORE (PAN:AADCD2378J) AND SHRI SANJAY PORWAL & RADHESHYAM PORWAL FOR A SUM OF RS.1,30,20,000/- WITH A SALE DEED DATED 26 MARCH 2014. IN COMPUTING THE CAPITAL GAINS ON SALE OF THE ASSET THE ASSESSEE HAS CLAIMED EXPENSES ON SALE OF RS.6,26,353 /-. 17. THEREFORE, SO FAR AS, THIS ISSUE RELATING TO AP PLYING OF THE GUIDELINE RATE AS ON 30.03.2012 OR 26.03.2014 IS CO NCERNED, WE FIND THAT THE ISSUE HAS BEEN THOROUGHLY EXAMINED BY THE ASSESSING OFFICER AND HAS TAKEN ONE OF THE PLAUSIBLE VIEW IN THE LIGHT OF THE SETTLED JUDICIAL PROCEEDINGS WHICH THUS LEAVE NO RO OM FOR THE PR. CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT. 18. AS REGARD THE REMAINING ISSUE OF DEDUCTION U/S 54F(1) OF THE ACT FOR THE INVESTMENT IN CONSTRUCTION OF HOUSE AT RS.43,31,991/-, WE FIND THAT THE ASSESSEE APART FROM OWNING ONE FLA T ALSO HELD ANOTHER HOUSE AT AH-28 & 29 WHICH WAS A JOINT PROPE RTY OWNED BY APPELLANT WITH HIS WIFE SMT. SUMITRA BORAD. THERE W AS A HOUSE ON AS-28 AND AH-29 WAS VACATE. THAT INITIALLY THE ENTI RE PAYMENT FOR SHALIGRAM BORAD 26 CONSTRUCTION OF THE ORIGINAL HOUSE WAS MADE BY THE APPELLANT DULY SHOWN AS THE INVESTMENT IN THE HOUSE IN THE BALANCE SHEET. DURING FINANCIAL YEAR 2014-15 RELEVANT TO A.Y. 2015-16 AGA INST THE INVESTMENT OF RS.41,56,868/- THE APPELLANT RECEIVED RS.16,81,609/- FROM HIS WIFE TOWARDS HER SHARE. THE COST OF HOUSE WAS REDUCED TO RS.24,76,259/-. THE SAID HOUSE SITUATED AT AH-28 IS CLAIMED TO BE DEMOLISHED BY ASSESSEE A.Y.2014-15 AND CONSTRUCTION OF NEW HOUSE STARTED ON BOTH PLOTS OF LAND I.E. AH-28 & AH-29 FO R WHICH NECESSARY PERMISSION WAS TAKEN FROM MUNICIPAL CORPO RATION. 19. WE FURTHER OBSERVE THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS A DETAILED QUERY LETTER WAS ISSUED TO T HE ASSESSEE TO FILE VARIOUS DETAILS AND IN REPLY TO WHICH SUBMISSIONS W ERE FILED WHICH ALSO INCLUDED THE DETAILS FOR CLAIM OF INVESTMENT I N RESIDENTIAL HOUSE U/S 54F(1) OF THE ACT. THE ASSESSEE GAVE A BR EAKUP OF THE COST OF CONSTRUCTION WHICH INCLUDED THE FOLLOWING: I. LEASE RENEWAL HOUSING BOND OF PLOT 28AH RS.12,50 0/- II. NEW CONSTRUCTION RS.2,18,994/- II. CONSTRUCTION RS.41,00,497/- TOTAL RS.43,31,991/- 20. THE ASSESSEE ALSO FILED THE CERTIFICATE ISSUED BY MUNICIPAL CORPORATION INDORE, FOR CONSTRUCTION OF HOUSE, WITH DRAWAL MAKES FROM DENA BANK UNDER CAPITAL GAIN ACCOUNT SCHEME FO R CONSTRUCTING HOUSE. 21. LD. DR FAILED TO CONTROVERT THIS FACT THAT ALL THESE DETAILS WERE VERY MUCH AVAILABLE BEFORE THE ASSESSING OFFICER FO R EXAMINATION AND SHALIGRAM BORAD 27 ARE FORMING PART OF THE ASSESSMENT RECORDS. BASED O N THESE EVIDENCES THE INCOME DISCLOSED UNDER THE HEAD OF LO NG TERM CAPITAL GAIN FROM SALE OF PLOT OF LAND WAS EXAMINED BY THE ASSESSING OFFICER AND WAS FOUND TO BE CORRECT EXCEPT FOR DISALLOWANCE OF SELLING EXPENSES AT RS.5,16,033/-. 22. SO GOING THROUGH ABOVE DISCUSSION, WE ARE OF TH E CONSIDERED VIEW THAT IT IS NOT A CASE OF NO ENQUIRY RATHER IT IS A CASE OF COMPLETE ENQUIRY BY THE LEARNED ASSESSING OFFICER WHO AFTER CALLING ALL THE NECESSARY DOCUMENTS EXAMINED THE TRANSACTION OF LON G TERM CAPITAL GAIN AND VARIOUS DEDUCTIONS CLAIMED UNDER THE PROVI SIONS OF LAW AND TOOK ONE OF THE VIEW PERMISSIBLE UNDER THE LAW AND ASSESSED THE INCOME AFTER MAKING CERTAIN DISALLOWANCE. 23. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD ., 243 ITR 83 , HAS LAID DOWN THE FOLLOWING RATIO: 'A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JUR ISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWI N CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUG HT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERES TS OF THE REVENUE. IF ONE OF THEM IS ABSENT--IF THE ORDER OF THE INCOME-T AX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE-- RECOU RSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMM ITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRON EOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN SHALIGRAM BORAD 28 INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUI REMENT OF THE ORDER BEING ERRONEOUS '. 24. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL IN DIA LTD 203 ITR 108 HAS HELD AS UNDER: THE POWER OF SUO MOTU REVISION UNDER SUBSECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXER CISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTA NCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REV ISION UNDER THIS SUB10 SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; (I I) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INT ERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. WE FIND THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM T HE LAW'. 'ERRONEOUS ASSESSMENT' REFERS TO AN ASSESSMENT THA T DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF T HE ASSESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF THE PR OPERTY. SIMILARLY, 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING T O COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAK EN VIEW OF LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES'. 12 . FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANN OT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTA IN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMI SSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD H AVE BEEN WRITTEN MORE ELABORATELY THIS SECTION DOES NOT VISUA LISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER UNLESS THE D ECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE I NCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACC OUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMST ANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING TH E ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT V EST THE SHALIGRAM BORAD 29 COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUS E THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTE D IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSION AND SU CH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY B ECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUS ION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMM ISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VI Z., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERR ONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN A LSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ER RONEOUS ORDER CANNOT BE THE SUBJECT-MATTER OF REVISION BECAUSE TH E SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SO ME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFUL LY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE R ELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. WE, THEREFORE, HOLD THAT IN O RDER TO EXERCISE POWER UNDER SUB-SECTION (1) OF SECTION 263 OF THE ACT THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CONSIDER THAT TH E ORDER PASSED BY THE INCOME-TAX OFFICER WAS ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE HAVE ALREADY HEL D WHAT IS ERRONEOUS. IT MUST BE AN ORDER WHICH IS NOT IN ACCO RDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE INCOME-TAX OFFIC ER WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. WE HAVE ALSO HELD AS TO WHAT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AN ORD ER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IT I S NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVE NUE DUE TO THE STATE HAS NOT BEEN REALISED OR CANNOT BE REALISED. TH ERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE CO MMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUI SITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION. EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CI RCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL-S ETTLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXI STENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERC ISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFORE THE COU RT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJEC TIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. THE INCOME-TAX OFFICER IN THIS CASE HAD M ADE ENQUIRIES IN SHALIGRAM BORAD 30 REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGAR D BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CAS E. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEIN G SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF TH E INCOME-TAX OFFICER CANNOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECA USE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGA RD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AF TER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, C OULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRO NEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE INCOME-TAX OFFIC ER TO RE-EXAMINE THE MATTER. THAT, IN OUR OPINION, IS NOT PERMISSIBL E. HENCE THE PROVISIONS OF SECTION 263 OF THE ACT WERE NOT APPLI CABLE TO THE INSTANT CASE AND, THEREFORE, THE COMMISSIONER WAS NOT JUSTI FIED IN SETTING ASIDE THE ASSESSMENT ORDER. 25. THE HON'BLE SUPREME COURT IN THE CASE OF MAX INDIA LTD 295 ITR 282 HAS HELD AS UNDER: IN OUR VIEW AT THE RELEVANT TIME TWO VIEWS WERE PO SSIBLE ON THE WORD 'PROFITS' IN THE PROVISO TO SECTION 80HHC(3). I T IS TRUE THAT VIDE THE 2005 AMENDMENT THE LAW HAS BEEN CLARIFIED WITH R ETROSPECTIVE EFFECT BY INSERTION OF THE WORD 'LOSS' IN THE NEW PR OVISO. WE EXPRESS NO OPINION ON THE SCOPE OF THE SAID AMENDMENT OF 20 05. SUFFICE IT TO STATE THAT IN THIS PARTICULAR CASE WHEN THE ORDER O F THE COMMISSIONER WAS PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961, TWO VIEWS ON THE SAID WORD 'PROFITS' EXISTED. IT IS NOT IN DISPUTE THAT WHEN THE ORDER OF THE COMMISSIONER WAS PASSED THERE WERE TWO VIEWS ON THE WORD 'PROFITS' IN THAT SECTION. THE PRO BLEM WITH SECTION 80HHC IS THAT IT HAS BEEN AMENDED ELEVEN TIMES. DIFFERENT V IEWS EXISTED ON THE DAY WHEN THE COMMISSIONER PASSED THE ABOVE ORDER. MOREOVER, THE MECHANICS OF THE SECTION HAVE BECOME SO COMPLICATED OVER THE YEARS THAT TWO VIEWS WERE INHERENTLY POSSI BLE. THEREFORE, SUBSEQUENT AMENDMENT IN 2005 EVEN THOUGH RETROSPECT IVE WILL NOT ATTRACT THE PROVISION OF SECTION 263 PARTICULARLY WHEN AS STATED ABOVE WE HAVE TO% TAKE INTO ACCOUNT THE POSITION OF LAW AS IT STOOD ON THE DATE WHEN THE COMMISSIONER PASSED THE ORDER DA TED MARCH 5,1997, IN PURPORTED EXERCISE OF HIS POWERS UNDER SECTION 263 OF THE INCOME TAX ACT. 3. FOR THE ABOVE REASONS, CIVIL APP EALS FILED BY THE DEPARTMENT STAND DISMISSED. SHALIGRAM BORAD 31 26. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDER S OF THE AUTHORITIES BELOW. IT IS A SETTLED POSITION OF LAW THAT POWERS U/S 263 OF THE ACT CAN BE EXERCISED BY THE PR. COMMISSIONER /COMMISSIONER ON SATISFACTION OF TWIN CONDITIONS, I.E., THE ASSES SMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BY 'ERRONEOUS' IS MEANT CONTRARY TO LAW. THUS, THIS PO WER CANNOT BE EXERCISED UNLESS THE COMMISSIONER IS ABLE TO ESTABL ISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHERE THERE ARE TWO POSSIBLE VIEWS AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSS IBLE VIEWS, NO ACTION TO EXERCISE POWERS OF REVISION CAN ARISE, NO R CAN REVISIONAL POWER BE EXERCISED FOR DIRECTING A FULLER ENQUIRY T O FIND OUT IF THE VIEW TAKEN IS ERRONEOUS. THIS POWER OF REVISION CAN BE EXERCISED ONLY WHERE NO ENQUIRY, AS REQUIRED UNDER THE LAW, I S DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADEQUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI, [2016] 71 TAXMANN.COM 272 (BOMBAY). 27. THIS VIEW IS FURTHER SUPPORTED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHRI PRAKASH BHAG CHAND KHATRI IN TAX APPEAL NO. 177 WITH TAX APPEAL NO.178 OF 2016, WHEREIN THE HON'BLE GUJARAT HIGH COURT WAS SEIZED WITH THE FOLL OWING SUBSTANTIAL QUESTION OF LAW:- ' WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS I N UPHOLDING THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT ON MERITS AND STILL STORING THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54 OF SHALIGRAM BORAD 32 THE ACT TO THE FILE OF ASSESSING OFFICER EVEN THOUG H THE WORKING OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F IS AVAILABLE IN THE ORDER UNDER SECTION 263 WHICH IS NOT DISPUTED BY THE ASSESSEE BEFORE ITAT.' 28. WE, THEREFORE, CONSIDERING THE FACTS OF THE CAS E IN TOTALITY AND IN LIGHT OF THE JUDICIAL DECISIONS DISCUSSED HEREINABO VE ARE OF THE VIEW THAT LD. PR. CIT WAS NOT JUSTIFIED IN IMPOSING HIS VIEW UPON THE ASSESSING OFFICER ON WRONG APPRECIATION OF FACTS AN D NOT CONSIDERING THE FACT THAT ISSUES RAISED IN THE SHOW CAUSE NOTIC E U/S 263 OF THE ACT WERE THOROUGHLY EXAMINED BY LD. AO AND HAS DULY APPLIED HIS MIND TAKING ONE OF THE PERMISSIBLE VIEW UNDER THE L AW. WE, THEREFORE, QUASH THE ORDER OF LD. PR. CIT U/S 263 O F THE ACT DATED 29.03.2019 AND RESTORE THAT OF THE ASSESSING OFFICE R DATED 14.12.2016 FRAMED U/S 143(3) OF THE ACT. 29. IN RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NO.625/IND/2019 IS ALLOWED. ORDER PRONOUNCED AS PER RULE 34 OF I.T.A.T. RULES, 1963 ON 30.04.2021. SD/- (MADHUMITA ROY) SD/- (MANISH BORAD) JUDICIAL MEMBER A CCOUN TANT MEMBER INDORE; DATED : 30/04/2021 PATEL/PS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE