Smt. Meenu Bansal, Chandigarh V. Pr.CIT-1, Chandigarh

ITA 627/CHANDI/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3969 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS MONA MOHANTY
• Keywords: Revision of order; Opportunity of being heard; Assessment record; Prejudicial to interest; Revenue expenditure; Capital expenditure
• Section: 54; 263; 63; 143(3); 54F

Judgement Text

S , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH BCHANDIGARH !, ' # $ , . .. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ITA NO. 627/CHD/2017 ASSESSMENT YEAR : 2012-13 SMT. MEENU BANSAL, HOUSE NO. 577, SECTOR 8-B, CHANDIGARH. THE PR.CIT-I, CHANDIGARH. PAN NO: AAPPB5624G APPELLANT RESPONDENT !' ASSESSEE BY : SHRI AJAY JAIN, CA #!' REVENUE BY : MRS. MONA MOHANTY, CIT-DR $ %! & DATE OF HEARING : 17.07.2018 '()*! & DATE OF PRONOUNCEMENT : 08.10.2018 ')/ ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILIN G THE CORRECTNESS OF THE ORDER DATED 29.03.2017 OF PR.CIT-I C HANDIGARH PERTAINING TO 201213 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. THAT THE ID PR COMMISSIONER OF INCOME TAX -1 CHANDI GARH HAS WRONGLY PASSED ORDER UNDER SECTION 263 OF INCOME ACT & THUS HE HAS WRONGLY CANCELLED THE ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) WHICH WAS FRAMED AFTER DUE ENQUIRY DURING THE COURSE OF ASSES SMENT. 2. THAT THE LEARNED PR COMMISSIONER OF INCOME -1 CHAND IGARH HAS WRONGLY INVOKED THE EXPLANATION 2(A) INSERTED W.E.F 1-6-2015 IN INSTANT CASE WITHOUT APPRECIATING THE FACT THAT THE ORDER P ASSED BY ASSESSING OFFICER WAS NEITHER PREJUDICIAL TO INTEREST OF REVE NUE NOR ERRONEOUS. 3. THAT THE ID PR COMMISSIONER HAS ERRED BY IGNORING T HE DOCUMENTARY EVIDENCE AVAILABLE IN ASSESSMENT RECORD & DOCUMENTS SUBMITTED DURING THE COURSE OF REVISIONARY PROCEEDINGS & WRONGLY REP LIED ON THE REPORT OF INSPECTOR & NO OPPORTUNITY TO REBUT THE REPORT WAS AFFORDED . 2. THE LD. AR REFERRING TO THE RECORD SUBMITTED THAT TH E EXERCISE OF POWER U/S 263 OF THE ACT BY THE PR. CIT WAS BAD IN LAW . INVITING ATTENTION TO THE SHOW CAUSE NOTICE DATED 24.11.2016 EXTRACTED IN P ARA 3 OF THE ORDER, IT WAS SUBMITTED THAT THE ISSUE HAD BEEN E NQUIRED INTO AT LENGTH BY THE AO IN THE SCRUTINY PROCEEDINGS. CARRYING U S THROUGH THE ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 2 OF 13 REPLY DATED 06.03.2017 OF THE ASSESSEE ALSO EXTRACTED IN THE IMPUGNED ORDER AT PARA 4 PAGES 2 TO 6, IT WAS SUBMITTED THAT TH E PR. CIT IN PARAS 6 TO 8 IGNORING THE FACT THAT THE INVESTMENT HAD BEEN MADE IN THE SHOP- CUM-FLAT BY THE ASSESSEE ON 05.10.2012 HAS SOUGHT TO UP SET THE ASSESSMENT ORDER RELYING UPON THE REPORT OF INSPECTOR CARRIED OUT PRESUMABLY MUCH AFTER THE EVENT OF INVESTMENT IN NOVEMB ER, 2016 AND THAT TOO ON A REPORT WHICH WAS NOT EVEN CONFRONTED TO THE ASSESSEE. THE EXERCISE OF POWER CONSIDERING THE FACTS AND THE RECO RD, IT WAS SUBMITTED, DESERVES TO BE QUASHED. IT WAS HIS SUBMISSION THAT THE RELEVANT FACT FOR DECIDING THE ISSUE WOULD BE WHETHER THE CAPITAL GAINS HAVE BEEN APPLIED TO RESIDENTIAL PROPERTY AND IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS MADE AN INVESTMENT IN A RESIDENT IAL PORTION PROPERTY ON 05.10.2012 I.E. THE FIRST FLOOR OF SHOP-CUM-FLAT NO.13 IN SECTOR 11D CHANDIGARH. THE SUBSEQUENT CHANGE OF USE, IF ANY OF THE SAME BY THE TENANT EVEN IF TRUE, IT WAS SUBMITTED, MAY AT BEST INVITE THE ACTION FROM THE CHANDIGARH ADMINISTRATION WHICH IS NOT A F ACT IN THE PRESENT CASE. THUS, FOR THE TAX AUTHORITIES TO GO BEYO ND THE SCOPE AND PASS ORDERS AFTER A HUGE LAPSE OF TIME CONSIDERING THE PERMISSIBLE USE OF THE SAID PROPERTY FOR DECIDING THE ISSUE OF INVESTMENT MAD E IN OCTOBER, 2012 IS DEHORSE FACTS AND LAW. THE PR. CIT-I CHANDIGARH, IT WAS SUBMITTED, HAS PASSED AN ORDER WHEREIN HE HAS FAILED TO P OINT OUT ANY ERROR COMMITTED BY THE AO AT THE TIME OF PASSING THE OR DER LET ALONE SUCH AN ERROR WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 2.1. APART FROM THESE ARGUMENTS ASSAILING THE FOUNDATION OF THE ORDER, IT WAS SUBMITTED THAT THE AO IN THE COURSE OF THE ASSE SSMENT PROCEEDINGS BEFORE PASSING THE ORDER DATED 12.09.2014 HA D SPECIFICALLY ENQUIRED INTO AND CONSIDERED THE SUBMISSIONS ON THE SAID ISSUE OF INVESTMENT. INVITING ATTENTION TO THE COPY OF THE OFFICE NO TE IN THE ASSESSMENT ORDER WHICH HAS BEEN EXTRACTED IN THE IMPUG NED ORDER IN PARA 4, IT WAS SUBMITTED THAT THE CASE OF THE ASSESSEE WAS SELECTED UNDER CASS SPECIFICALLY FOR THE REASON THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 54. REFERENCE TO THE SPECIFIC PROPERTY BE ING SOLD I.E. BOOTH NO. 36 SECTOR 8B CHANDIGARH ON 25.10.2011 FOR TOTA L CONSIDERATION OF RS. 59 LACS ON WHICH DEDUCTION U/S 54 HAD BEEN CLAIMED WAS THE SPECIFIC AND ONLY SUBJECT MATTER OF CONSID ERATION IN THE SCRUTINY PROCEEDINGS. THE INVESTMENT IN SCF 13, SECTOR 11-DEDUCTION ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 3 OF 13 WAS SPECIFICALLY LOOKED INTO. THE RELEVANT OFFICE NOTE RELIED UPON IS EXTRACTED HEREUNDER : 'THE CASE WAS SELECTED UNDER CASS FOR THE REASONS T HAT LARGE AMOUNT OF DEDUCTION U/S 54 OF THE I. T. ACT. THIS ISSUE HAS B EEN EXAMINED SPECIFICALLY ALONGWITH THE OTHER MAJOR ISSUES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS SOLD A BOOTH A/0,36, SECTOR-SB, CHANDIGARH ON 25.10.2011 FOR TOTAL SALE CONSIDERATION OF RS.59,00,000/- AND CLAIMED DEDUCTION U/S 54 OF THE I.T. ACT. 1961 ON THE AMOUNT OF LONG TERM CAPITAL GAIN AS THE ASSESSEE HA S INVESTED WHOLE OF THE AMOUNT IN THE PURCHASE OF FIRST FLOOR OF SCF, SECTO R-11D, CHANDIGARH. COPY OF TITLE DEED OF BOOTH NO. 36/86, CHANDIGARH ALONGW ITH PURCHASE DEED ALONGWITH INTERSEE AGREEMENT FOR SCF NO. 13, SECTOR -11D, CHANDIGARH HAVE ALSO OBTAINED AND EXAMINED. ' 2.2. INVITING ATTENTION TO THE PAPER BOOK FILED, ATTENTION WA S INVITED TO COPY OF THE INCOME TAX RETURN FILED FOR THE YEAR UNDER C ONSIDERATION PLACED AT PAGES 1 TO 6, COPIES OF THE REPLY FILED IN RESPON SE TO THE CLAIM OF EXEMPTION U/S 54F AVAILABLE AT PAGES 7 AND 8 WERE RELI ED UPON TO SHOW THAT THE ISSUE HAD BEEN ENQUIRED INTO BY THE AO. ATTENTION WAS INVITED TO COPY OF THE SALE DEED AVAILABLE AT PAPER BOOK P AGES 9 TO 20 WHICH CONTAINS THE COPY OF THE SAME ALSO MADE AVAILABLE TO THE AO WAS REFERRED TO. INTER-SE AGREEMENT ENTERED INTO BETWEEN SMT. SHARDA RANI W/O SHRI PAWAN KUMAR AND SMT. SUDESH BANSAL W/O SHRI SA TISH KUMAR WHICH HAD ALSO BEEN ENQUIRED INTO AND CONSIDERED BY THE AO WAS REFERRED TO. IT WAS SUBMITTED THAT IT HAD BEEN BROU GHT TO THE NOTICE OF THE AO THAT THE ASSESSEE'S PART OF THE PROPERTY WA S 33.33% AND CONSISTED OF THE ENTIRE FIRST FLOOR. THESE DOCUMENTS MADE AVAILABLE TO THE AO AT PAGES 21 AND 22 WERE CONSIDERED AND ALSO RELIED UPON. IN TH E SAID BACKGROUND, THE CONCLUSION DRAWN BY THE PR. CIT, IT W AS SUBMITTED, IS DE-HORSE FACTS AND LAW. ATTENTION WAS INVITED TO PAPER BOOK PAGES 27 TO 31 WHICH IS THE COPY OF THE REPLY FILED ON BEHALF OF THE ASSESSEE BEFORE THE PR. CIT STATING THAT THE ISSUE WHICH HAD ALREADY BEEN ENQUIRED INTO AT LENGTH IN THE SCRUTINY PROCEEDINGS BY THE AO WAS AGAIN BEING RE-EXAMINED UNDER THE 263 WHERE NO ERROR H AD BEEN POINTED OUT BY THE PR. CIT. COPY OF THE LETTER ISSUED BY THE ESTATE OFFICER, U.T. CHANDIGARH DATED 26.10.2012 SHOWING THAT THE PROPERTY PURCHASED BY THE ASSESSEE WAS SCF (SHOP-CUM-FLAT) AND T HE FIRST FLOOR OF WHICH CONSISTED OF DRAWING ROOM, DINING ROOM, KITCHEN AND TOILET WAS REFERRED TO. COPY OF THE MAP SANCTIONED BY THE CHANDIGAR H ADMINISTRATION SHOWING THAT THE FIRST FLOOR WAS RESIDENTIAL MA DE AVAILABLE TO THE AO WAS ALSO RELIED UPON. ATTENTION WAS AL SO INVITED TO THE FACT THAT VARIOUS WRITS AND CASES HAD BEEN FILED BEFOR E THE HON'BLE ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 4 OF 13 PUNJAB & HARYANA HIGH COURT IN RESPECT OF SCF ALLOTTED B Y CHANDIGARH ADMINISTRATION BY THE OWNERS WHEN NOTICES U/S 8-A OF CA PITAL OF PUNJAB (DEVELOPMENT & REGULATIONS) ACT, 1952 WHERE THE CHANDIGARH ADMINISTRATION NOTICED THAT THE RESIDENTIAL PORTION OF SCF W AS BEING USED AS COMMERCIAL CONTRARY TO PERMISSION. THE WRIT PET ITIONS, IT WAS SUBMITTED, HAD BEEN DISMISSED BY THE HON'BLE COURT HOLDI NG THAT NO COMMERCIAL ACTIVITY CAN BE DONE IN THE RESIDENTIAL PORTION O F SCF. COPY OF TRANSFER LETTER AFTER PURCHASE OF SCF 13 SECTOR 11-D CHANDIGARH AVAILABLE AT PAPER BOOK PAGE 32 ALONGWITH COPY OF APPROVE D MAP AT PAGES 33-34 WERE RELIED UPON WHEREIN IT WAS CATEGORICALL Y MENTIONED ON BEHALF OF THE CHANDIGARH ADMINISTRATION BY SUPERINTENDING ES TATE OFFICER, U.T. CHANDIGARH THE NATURE OF THE PROPERTY. NO NO TICE ALLEGING OR PENALIZING THE ASSESSEE BY THE CHANDIGARH ADMINISTRATIO N HAS BEEN REFERRED TO BY THE DEPARTMENT. ACCORDINGLY, RELYING UPO N GURCHARAN SINGH V. U.T. CHANDIGARH & ORS. CWP 9029 OF 2009 DATE OF D ECISION 06.02.2012 PUNJAB & HARYANA HIGH COURT; CHANDIGARH HOUSIN G BOARD AND OTHERS VS NARINDER KAUR MAKOL, DATE OF DECISION 13. 07 .2000 (SC) ; SHYAM LAI TANDON VS. ITO, (2014) 62 SOT 0105; MAHAVIR PRAS AD GUPTA VS. JCIT, 101 TDJ 1078; CIT VS DLF LTD 350 ITR 0555 (DELHI); CIT VS KWALITY STEEL SUPPLIERS COMPLEX 395 ITR1 SUPREME COURT ; KUMAR ENTERPRISES VS DCIT 5.1 ITR(TRIB) 320 CHANDIGARH; CIT VS MAX INDIA 295 ITR 282 ; CIT VS FINE JEWELLERY IT APPEAL NO 296 OF 2013 PAGE 41- 45; TULSI TRACOM VS CIT 161 DTR 0148, IT WAS SUBMITTED, TH AT THE 263 PROCEEDINGS MAY BE QUASHED. 3. THE LD. CIT-DR RELYING UPON THE IMPUGNED ORDER SUBMITT ED THAT THE ASSESSEE'S REPLY TO THE SHOW CAUSE NOTICE ISSUED HAS BEEN CONSIDERED AND HAS BEEN HELD TO BE NOT ACCEPTABLE. IT WAS HER SUBMISSION THAT THE DEDUCTION IS AVAILABLE TO AN ASSESSEE IF THE INVESTMENT IS MADE IN A RESIDENTIAL PROPERTY AND IN THE FA CTS OF THE PRESENT CASE, THE ASSESSEE AS PER ENQUIRY CARRIED OUT BY AN INSPECTOR WAS FOUND TO HAVE BEEN USING THE SPECIFIC PROPERTY NO DO UBT IN NOVEMBER,2016 AS A GODOWN OF THE SHOP BEING RUN ON THE GROUND FLOOR. THUS THE FACT THAT IT WAS NOT USED AS RESIDENTIAL PROPER TY DISENTITLES THE ASSESSEE TO CLAIM THE BENEFIT OF SECTION 54F. ACCORDINGLY , HEAVILY RELYING UPON THE IMPUGNED ORDER, IT WAS HER SUBMISSION T HAT THE ASSESSEE'S APPEAL MAY BE DISMISSED. ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 5 OF 13 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT IN THE FACTS OF THE PRESENT CAS E, THE ASSESSEE E- FILED HIS RETURN ON 31.03.2013 DECLARING AN INCOME OF RS. 12,8 2,260/-. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT INCOME HA S BEEN DECLARED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CAPITAL GAIN. IT IS A MATTER OF RECORD THAT THE CASE WAS SELECTED FOR SCRUTIN Y THROUGH CASS. SPECIFICALLY FOR THE FOLLOWING REASON : 'THE CASE WAS SELECTED UNDER CASS FOR THE REASONS T HAT LARGE AMOUNT OF DEDUCTION U/S 54 OF THE I. T. ACT. THIS ISSUE HAS B EEN EXAMINED SPECIFICALLY ALONGWITH THE OTHER MAJOR ISSUES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAS SOLD A BOOTH A/0,36, SECTOR-SB, CHANDIGARH ON 25.10.2011 F OR TOTAL SALE CONSIDERATION OF RS.59,00,000/- AND CLAIMED DEDUCTI ON U/S 54 OF THE I.T. ACT. 1961 ON THE AMOUNT OF LONG TERM CAPITAL GAIN A S THE ASSESSEE HAS INVESTED WHOLE OF THE AMOUNT IN THE PURCHASE OF FIR ST FLOOR OF SCF, SECTOR- 11D, CHANDIGARH. COPY OF TITLE DEED OF BOOTH NO. 36 /86, CHANDIGARH ALONGWITH PURCHASE DEED ALONGWITH INTERSEE AGREEMEN T FOR SCF NO. 13, SECTOR-11D, CHANDIGARH HAVE ALSO OBTAINED AND EXAMI NED. ' 4.1 IT IS SEEN FROM THE SCRUTINY ORDER AS NOTED BY THE AO THAT THE DETAILS REQUISITIONED VIDE QUESTIONNAIRE AS WELL AS DUR ING THE COURSE OF HEARING FROM TIME TO TIME WERE FURNISHED AND WERE EXA MINED WITH REFERENCE TO INCOME SHOWN BY THE ASSESSEE. IT IS ALSO SEEN THAT THE AO ALSO NOTES THAT THE ASSESSEE HAS DECLARED LONG TERM CA PITAL GAIN ON SALE OF BOOTH NO. 36, SECTOR 8, CHANDIGARH AND CONCLUDED THE ASSESSMENT TAKING NOTE OF THE ABOVE QUOTED OFFICE NOTE WHICH HE ALSO APPENDED IN THE ASSESSMENT ORDER. IT IS SEEN THAT THE PR. CIT EXE RCISING THE REVISIONARY POWERS U/S 263 REQUIRED THE ASSESSEE TO EXPLAIN ITS CLAIM OF DEDUCTION U/S 54F ARISING OUT OF SALE OF IMMOVABLE PROPERTY . REPLY DATED 06.03.2017 OF THE ASSESSEE EXTRACTED IN THE ORDE R IS REPRODUCED HEREUNDER AGAIN FOR READY REFERENCE : 4. IN RESPONSE TO THE SHOW CAUSE NOTICE, SH. AJAY J AIN, CHARTERED ACCOUNTANT APPEARED AND FILED A REPLY ON 06.03.2017 ON BEHALF OF THE ASSESSEE STATING THEREIN AS UNDER: ' THE ASSESSEE HAS SOLD BOOTH NO. 36, SECOTR-8B, CH ANDIGARH FOR TOTAL CONSIDERATION OF RS.59,00,000/- AND INVESTED IN RES IDENTIAL PORTION OF SHOP- CUM-FLAT NO. 13, SECTOR-11D, CHANDIGARH. THE ASSESS EE HAS CLAIMED DEDUCTION U/S 54F OF I. T. ACT AS THE SALE PROCEED HAS BEEN INVESTED IN RESIDENTIAL HOUSE. THE FACT OF SALE OF BOOTH AND CL AIMING OF EXEMPTION U/S 54F HAS BEEN DISCLOSED IN INCOME TAX RETURN FILED B Y THE ASSESSEE ON 31.03.2013. THE CASE WAS SELECTED UNDER SCRUTINY AS SESSMENT UNDER CASS FOR REASON THAT AMOUNT OF DEDUCTION U/S 54F CLAIMED BY THE ASSESSEE IN ITR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, C OPIES OF PURCHASE DEED OF SHOP-CUM-FLAT (SCF) NO. 13, SECTOR-11D, CHA NDIGARH AND INTERSEE AGREEMENT FOR SCF NO. 13, SECTOR-11D, CHANDIGARH WE RE GIVEN TO THE ASSESSING OFFICER FOR VERIFICATION OF DEDUCTION U/S 54F OF THE I. T. ACT. THE ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 6 OF 13 ASSESSING OFFICER HAS EXAMINED THE CLAIM OF THE ASS ESSEE U/S 54FOF I.T. ACT AND SAME HAS BEEN NOTED IN OFFICE NOTE WHICH RE ADS AS UNDER: 'THE CASE WAS SELECTED UNDER CASS FOR THE REASONS T HAT LARGE AMOUNT OF DEDUCTION U/S 54 OF THE I. T. ACT. THIS I SSUE HAS BEEN EXAMINED SPECIFICALLY ALONGWITH THE OTHER MAJOR ISS UES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE YEAR U NDER CONSIDERATION, THE ASSESSEE HAS SOLD A BOOTH NO.36, SECTOR-SB, CHANDIGARH ON 25.10.2011 FOR TOTAL SALE CONSIDERATI ON OF RS.59,00,000/- AND CLAIMED DEDUCTION U/S 54 OF THE I. T. ACT. 1961 ON THE AMOUNT OF LONG TERM CAPITAL GAIN AS THE ASSE SSEE HAS INVESTED WHOLE OF THE AMOUNT IN THE PURCHASE OF FIR ST FLOOR OF SCF, SECTOR-11D, CHANDIGARH. COPY OF TITLE DEED OF BOOTH NO. 36/8B, CHANDIGARH ALONGWITH PURCHASE DEED ALONGWITH INTERS EE AGREEMENT FOR SCF NO. 13, SECTOR-11D, CHANDIGARH HA VE ALSO OBTAINED AND EXAMINED. ' YOUR LD: PREDECESSOR HAS ISSUED SHOW CAUSE NOT ICE DATED 24.11.2016 AND FROM THE SHOW CAUSE NOTICE, IT IS CL EAR THAT THE DEPARTMENT IS RE-EXAMINING THE CLAIM U/S 54F OF I. T. ACT. IN THIS REGARD, WE RESPECTFULLY SUBMIT THAT THE PROCEEDINGS U/S 263 CANNOT BE INVOKED FOR SUBSTITUTING THE OPINION WHICH IS DIFFE RENT FROM THE OPINION OF THE ASSESSING OFFICER. IT IS NOT A CASE OF THE DEPARTMENT THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WHILE ALLOWING THE CLAIM OF THE ASSESSEE U/S54FOF I.T. ACT. IN THIS SHOW CAUSE NOTICE, IT WAS MENTIONED TH AT THE ASSESSEE HAS INVESTED IN COMMERCIAL PROPERTY NOT IN THE RESIDENT IAL PROPERTY AND THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTI ON U/S 54 OF I. T. ACT. IN THIS REGARD, WE RESPECTFULLY SUBMIT THAT ASSESSE S HAS INVESTED IN RESIDENTIAL PORTION OF SHOP-CUM-FLAT NO. 13 SECTOR- 11D, CHANDIGARH AND COPY OF PURCHASE DEED AND INTERSEE AGREEMENT WA S GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THESE DOCU MENTS ARE PART OF ASSESSMENT RECORD. WE ARE ALSO ENCLOSING THE COP Y OF TRANSFER LETTER ISSUED BY THE ESTATE OFFICER, U.T., CHANDIGA RH DATED 26.10.2012 WHICH CLEARLY SHOWS THAT THE PROPERTY PU RCHASED BY THE ASSESSEE WAS SCF. FURTHER, THE ASSESSEE HAS PURCHAS ED FIRST FLOOR OF SCF-13, SECTOR-11B, CHANDIGARH AND FIRST FLOOR CONS IST OF DRAWING ROOM, DINING ROOM, KITCHEN AND TOILET. WE ARE ENCLO SING THE MAP DULY SANCTIONED BY CHANDIGARH ADMINISTRATION WHICH CLEAR LY SHOWS THAT THE FIRST FLOOR IS RESIDENTIAL FLAT AND THEREFORE, THE ASSESSEE HAS RIGHTLY CLAIMED DEDUCTION U/S 54F OF I.T. ACT. THE ASSESSEE HAS NOT PURCHASED COMMERCIAL PORTION OF SHOP-CUM-FLAT AND THEREFORE, THE OBJECTION GIVEN IN SHOW CAUSE NOTICE DATED 24.11.2016 IS MISC ONCEIVED AND NOT BASED ON ANY FACT AND CIRCUMSTANCES. WE ALSO SUBMIT THAT LARGE NUMBER OF WRITS/CA SES WERE FILED BEFORE PUNJAB & HARYANA HIGH COURT IN RESPECT OF SC F ALLOTTED BY CHANDIGARH ADMINISTRATION BY THE OWNERS WHEN NOTICE S U/S 8A OF CAPITAL OF PUNJAB (DEVELOPMENT REGULATION) ACT, 1 952 WERE ISSUED BY ESTATE OFFICE, CHANDIGARH ON ACCOUNT OF C OMMERCIAL USE IN RESIDENTIAL PORTION OF SCF. THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS DISMISS ED THE WRIT PETITION OF THE OWNERS OF SCF AND HELD THAT NO COMMERCIAL ACTIVITY CAN BE DONE IN RESIDENTIAL PORTION OF SCF. WE ALSO SUBMIT THAT ASSESSEE HAS PURCHASED THE RESIDENTIAL PORTION ON 0 5.10.2012 AND CHANDIGARH ADMINISTRATION HAS SANCTIONED THE MAP. I N SANCTIONED MAP, IT IS CLEAR THAT 1 ST & 2 ND FLOOR IS RESIDENTIAL PORTION AND ASSESSEE HAS PURCHASED A RESIDENTIAL PORTION OF SCF AS PER I NTERSEE AGREEMENT BETWEEN THE CO-OWNERS. ' ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 7 OF 13 4.1 THE ASSESSEE HAS FURTHER PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN COMMISSIONER OF INCOME TAX VS. MAX INDIA LTD AND MALABAR INDUSTRIAL COMPANY LTD. VS. C OMMISSIONER OF INCOME TAX AND HAS STATED THAT THE ASSESSING OFFICE R HAS APPLIED HIS MIND AFTER DUE INQUIRY DURING THE COURSE OF ASSESSM ENT PROCEEDINGS AND ALSO ACCEPTED THE CLAIM AND THEREFORE, THE ORDE R IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. 4.2 IT IS SEEN THAT THE AFORESAID REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE PR. CIT ON ACCOUNT OF THE FOLLOWING FACTS : 5. THE REPLY FILED BY THE ASSESSEE HAS BEEN CONSID ERED. THE ASSESSEE HAS CONTESTED THAT IT HAD INVESTED THE CAP ITAL GAIN IN A RESIDENTIAL PROPERTY BEING THE 1 ST FLOOR OF SCF-13, SECTOR-HD, CHANDIGARH AND ACCORDINGLY SHE WAS ELIGIBLE FOR DED UCTION U/S 54F OF THE IT. ACT. 6. THE ASSESSEE HAD MADE INVESTMENT IN THE SHO P-CUM-FLAT WHICH PRIMARILY IS A COMMERCIAL PROPERTY. THE PROPERTY HA S BEEN PURCHASED IN THE JOINT NAME OF SMT. SHARDA RANI, SMT. SUDESH BANSAL AND SMT. MEENU BANSAL. THE SALE DEED NOWHERE SPECIFIES THE D IVISION OF PROPERTY AMONGST THE THREE CO-OWNERS. THE SALE DEED WAS REGI STERED ON 05.10.2012. THE ASSESSEE IN SUPPORT OF HER CLAIM TH AT SHE HAS PURCHASED THE 1 ST FLOOR HAS FURNISHED AN INTERSEE AGREEMENT SHOWIN G THAT SMT. SHARDA RANI AND SMT. SUDESH BANSAL ARE THE OWNERS OF 66.67% AND ARE IN POSSESSION OF GROUND AND 2 ND FLOOR OF THE SAID SCF AND THAT AS PER THE AGREEMENT, SMT. MEENU BANSAL IS THE OWNER OF 33.33% AND IS IN THE POSSESSION OF 1 ST FLOOR OF THE SAID SCF. THE AGREEMENT HAS BEEN MADE ON 12.10.2012 I.E. AFT ER THE REGISTRATION OF SALE DEED AND IS WITHOUT ANY LEGAL SANCTITY. THE PROPERTY PURCHASED I.E. THE SHOP-CUM-FLAT IS A SING LE PROPERTY AND CANNOT BE SOLD IN PARTS WHICH IS EVIDENT FROM THE C OMPOSITE SALE DEED REGISTERED WITH THE COMPETENT REGISTERING AUTH ORITY. THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT INQUIRING THE NATURE OF THE PROPERTY PURCHASED. 7. FURTHER, INQUIRIES WERE GOT CONDUCTED THROUGH T HE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, CHANDIGARH. IN THE REPORT FURNISHED BY THE INSPECTOR OF INCOME TAX WHO WAS DEPUTED BY THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, CHAN DIGARH TO CONDUCT SPOT INQUIRIES, IT HAS BEEN REPORTED THAT :- 'AS DIRECTED, I VISITED SECTOR-HD, CHANDIGARH. IN S ECTOR-11D, CHANDIGARH, THERE IS A COMMERCIAL MARKET IN WHICH S CFS (SHOP-CUM-FLAT) ARE RUNNING. PARTICULARLY IN THE CASE OF SCF-13, SE CTOR-11D, CHANDIGARH, IT WAS SEEN THAT SAID SCF IS OCCUPIED BY M/S. KALA KRITI AND RUNNING ITS BUSINESS OF LADIES SUITS. ON DISCRETE INQUIRY MADE FROM NEIGHBORS I.E. SCF- 12 (FANCY DRYCLEANER), IT WAS SEEN THAT THE UPPER F LOOR OF SCF-13 IS ALSO OCCUPIED BY M/S. KALA KRITI AND USED AS GODOWN. IN ENQUIRY FROM SALESMAN OF M/S. KALA KRITI AS WELL, IT WAS INFORME D THAT THE UPPER FLOOR OF SCF-13, SECTOR-11D, CHANDIGARH WAS USED BY THEM AS GODOWN AND THE STAIRS FOR THE UPPER FLOOR IS FROM INSIDE THE SHOW ROOM ITSELF (GROUND FLOOR) .' 8. IT IS THEREFORE, CLEAR THAT THE SCF COULD NOT HAVE BEEN SOLD PARTLY FOR RESIDENTIAL PURPOSE AND ALSO AS INDICATE D FROM THE REPORT OF THE INSPECTOR OF INCOME TAX, THE 1 ST FLOOR WAS NOT BEING USED FOR RESIDENTIAL PURPOSE. THE CLAIM OF THE ASSESSEE WAS THEREFORE, ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING ANY INQUIRI ES AND WITHOUT APPLICATION OF MIND. THE CASE LAWS RELIED UPON BY T HE ASSESSEE HAVE ALSO BEEN EXAMINED AND IT IS SEEN THAT THESE ARE CLEARLY DISTINGUISHABLE FROM ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 8 OF 13 THE FACTS OF THE PRESENT CASE. 4.3 ACCORDINGLY, THE ORDER WAS SET ASIDE HOLDING AS UNDER : 17. IT IS, THEREFORE, HELD THAT THE SAID ASSESSMENT IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE R EASONS AS DISCUSSED ABOVE IN VIEW OF THE PROVISIONS OF SECTION 263, INTER-ALI A INCLUDING EXPLANATION 2(A) INSERTED W.E.F. 01.06.2015. ACCORDINGLY, THE A SSESSMENT ORDER U/S 143(3) DATED 12.09.2014 FOR ASSESSMENT YEAR 2012-13 IS CANCELLED AND SET-ASIDE WITH A DIRECTION TO THE ASSESSING OFFICER TO PASS AN ORDER AFRESH IN ACCORDANCE WITH LAW KEEPING IN VIEW OF THE ABOVE OBSERVATIONS AND AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4.4 BEFORE WE ADDRESS THE POSITION OF LAW, WE ARE OF THE VIE W THAT ON GOING THROUGH THE RECORD WE ARE IN AGREEMENT WITH THE CLAIM OF THE ASSESSEE THAT IN THE FACTS OF THE PRESENT CASE, THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS HAS ENQUIRED INTO THE APPLICA TION OF FUNDS I.E. THE INVESTMENT MADE BY THE ASSESSEE IN THE SHOP-CUM -FLAT ACQUIRED. WE HAVE ALSO GONE THROUGH THE VARIOUS DECISIONS CITED BY THE LD. AR BEFORE US ON THE BASIS OF WHICH IT HAS BEEN CANVASSED TH AT THE CHANDIGARH HOUSING BOARD, U.T. ADMINISTRATION HAS BEEN SU FFICIENTLY ALERT AND ALIVE TO THE ABUSE OF THE TERMS OF ALLOTMENT OF FLA T OR HOUSE IN THE U.T. OF CHANDIGARH OR IN ANY OF THE URBAN ESTATES OF MOHALI OR PANCHKULA AND IN VARIOUS CASES AS CITED AND QUOTED, THE FLOUTING OF CONDITIONS OF ELIGIBILITY MENTIONED IN THE REGULATIONS OF THE CH ANDIGARH HOUSING BOARD (ALLOTMENT, MANAGEMENT AND SALE OF TENEMENT S) REGULATIONS, 1971 AND THE ADMINISTRATION HAS AGGRESSIVELY PURSUED LITIGATION NOT ONLY BEFORE THE NATIONAL CONSUMER DISPUTES & REDRESSAL COMMISSION AFTER LOOSING BEFORE THE DISTRICT CONSUMER DISPUT ES REDRESSAL COMMISSION AND HAS CARRIED THE ISSUE RIGHT UPTO THE APEX COURT AS BORNE OUT FROM THE DECISION IN THE CASE OF CHANDIGARH HOUSIN G BOARD & ANOTHER VS NARINDER KAUR MAKOL AS AVAILABLE AT PAGES 11 AND 13 OF THE PAPER BOOK FILED. IT IS ALSO SEEN THAT IN A SPAT E OF WRIT PETITIONS FILED BY VARIOUS PERSONS SEEKING QUASHING OF NOTI CES ISSUED U/S 8A OF THE CAPITAL OF PUNJAB (DEVELOPMENT & REGULATIONS) ACT, 1952, WHERE THE U.T. ADMINISTRATION, CHANDIGARH ALLEGED MISUSE OF P REMISES OWNED BY THE PETITIONERS IN THE SHOP-CUM-FLATS ALLOTTED TO THE PETITIONERS, THE PETITIONERS ALLEGEDLY HAD STARTED GUEST HOUSES/LODGES IN THE FIRST FLOOR AND SECOND FLOOR OF THE SHOP-CUM-FLATS ALLOT TED. THE ADMINISTRATION INSISTED THAT THE PETITIONERS FIRST SEEK CONV ERSION OF THE FIRST AND SECOND FLOOR PORTION FOR OFFICE PURPOSES AND SECON DLY TO SEEK PERMISSION TO USE OFFICE PORTION FOR COMMERCIAL PURPOSES AS WITHOUT ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 9 OF 13 THESE PERMISSIONS, THE USAGE WAS ALLEGED TO BE VIOLATING TH E PROVISIONS OF THE ACT. THE COURT CONSIDERING THE PROVISIONS OF THE R ESPECTIVE ACTS, CAME TO THE CONCLUSION THAT THE WRIT PETITIONS DID NOT HA VE ANY MERIT. OPPORTUNITY WAS GIVEN TO THE PETITIONERS TO SEEK CONVE RSION OF THE USE OF BUILDING IN TERMS OF THE SCHEME FRAMED UNDER THE ACT. T HE SAID POSITION OF LAW IS EVIDENT FROM THE CASE OF GURCHARAN SINGH V. U.T. CHANDIGARH & ORS. CWP 9029 OF 2009 DATE OF DECISION 06.02.2012. (COPY AVAILABLE AT PAGES 1-10). 5. ON THE BASIS OF THESE DECISIONS AMONGST OTHERS, IT HA S BEEN CANVASSED THAT AS FAR AS THE ASSESSEE IS CONCERNED, NO NOTICE FOR FLOUTING THE TERMS AND CONDITIONS OF THE SCF HAS BEEN ISS UED TO THE ASSESSEE. ADMITTEDLY IT IS ONLY THE INSPECTORS REPORT WHICH TOO HAS NOT BEEN CONFRONTED TO THE ASSESSEE. WE FIND THAT IN THE P ECULIAR FACTS OF THE PRESENT CASE, WHEN THE ABOVE FACTS IN THE LIGHT OF TH E SUBMISSIONS OF THE PARTIES AND THE RELEVANT FINDINGS IN THE ORDERS ARE T AKEN INTO CONSIDERATION, IT IS NOT IN DISPUTE THAT THE ISSUE HAS MORE THAN ADEQUATELY BEEN ENQUIRED INTO BY THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR WHICH VERY PURPOSES, THE CAS E WAS SELECTED UNDER CASS. THE ISSUE FOR CONSIDERATION IS WHETHER THE OR DER PASSED CAN BE SAID TO BE ERRONEOUS AND ERRONEOUS TO THE EXT ENT THAT IT CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AC CORDINGLY, WE NOW PROPOSE TO CONSIDER EXPLANATION 2(A) OF SECTION 263 WH ICH HAS BEEN INVOKED BY THE PR. CIT APPLICABLE TO THE FACTS OF TH E CASE AS CONSIDERED. THE RELEVANT EXTRACT IS REPRODUCED HEREUN DER FOR READY REFERENCE : 'REVISION OF ORDERS PREJUDICIAL TO REVENUE. 263. (1) ........................ EXPLANATION 1. .............. A) ....................................... B)... C) EXPLANATION 2.. (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM;- (C) THE ORDER HAS NOT BEEN MADE IN AC CORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH AN Y DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON.] ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 10 OF 13 6. WE NOTICE THAT THE ISSUES HAVE BEEN ENQUIRED INTO A ND REPLIED TO AND CONSIDERING THESE, THE ASSESSMENT ORDER WAS PASSED. TO INFER THAT NO INQUIRIES WERE MADE OR NO VERIFICATION WAS DONE, THE PR. CIT HAS JUSTIFIED HIS ACTION ON THE BASIS OF THE REPORT OF THE INSPECTOR WHICH ADMITTEDLY WAS CARRIED OUT IN NOVEMBER,2016 A ND ADMITTEDLY DOES NOT REFER TO THE POSITION AS ON 05.10.2012. T HE SUBSEQUENT USAGE OF THE PREMISES AS PER SETTLED LEGAL PRINCIPL E CANNOT BE SAID TO BE A RELEVANT FACTOR FOR DECIDING THE ISSUE. FOR T HE SAID PURPOSE, WE REFER TO THE DECISION OF CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF SHAM LAL TANDON VS ITO (2014) 39 CCH 0268 (HYD) (TRIB) AV AILABLE AT PAGES 14 TO 18 AND MAHAVIR PRASAD GUPTA VS JCIT (2005 ) 25 CCH 0676 (DELHI) (TRIB) AVAILABLE AT PAGES 19 TO 23 WHICH HAVE BEEN S PECIFICALLY RELIED. IT IS SEEN THAT IN THE CASE OF SHAM LAL TANDON, TH E CO-ORDINATE BENCH HELD THAT THE SUBSEQUENT CHANGE IN THE USE OF PR OPERTY DOES NOT DISENTITLE THE ASSESSEE TO RELIEF U/S 54F AS WHEN PROPERT Y WAS ACQUIRED, IT WAS RESIDENTIAL. THE RELEVANT EXTRACT OF THE SAID ORDER READS AS U NDER : IT IS EVIDENT FROM THE IMPUGNED ORDERS OF THE LOWE R AUTHORITIES AND OTHER MATERIAL ON RECORD THAT INTENTION OF THE PARTIES WH EN THE DEVELOPMENT AGREEMENT WAS ENTERED INTO WAS TO CONSTRUCT A RESID ENTIAL PROPERTY. MUNICIPAL PERMISSION HAD ALSO BEEN OBTAINED ONLY FO R CONSTRUCTION OF A RESIDENTIAL COMPLEX. ULTIMATELY, THE ASSESSEE HAD R ECEIVED POSSESSION OF SUCH RESIDENTIAL PROPERTY. IT MAY BE TRUE THAT THE SAID PROPERTY WAS PUT TO USE SUBSEQUENTLY FOR COMMERCIAL USE. MERELY BECAUSE OF CHANGE IN THE USE OF SUCH PROPERTY FOR NON-RESIDENTIAL PURPOSES, IT C ANNOT BE SAID THAT WHAT WAS ACQUIRED BY THE ASSESSEE WAS NOT A RESIDENTIAL PROPERTY, BUT A COMMERCIAL ONE. SUBSEQUENT CHANGE IN THE USE OF THE PROPERTY DOES NOT DISENTITLE THE ASSESSEE TO RELIEF UNDER ' S.54F OF THE ACT, AS HELD BY HYDERABAD BENCH B OF THIS TRIBUNAL IN THE CASE OF S HRI M.V. SUBRAMANYESWARA REDDY(HUF),HYDERABAD. 6.1 THE PROPOSITION OF LAW LAID DOWN IS THAT SUBSEQUENT CHANGE IN USE OF PROPERTY DOES NOT DISENTITLE ASSESSEE TO RELIE F UNDER S 54F, WHERE ASSESSEE HAD RECEIVED POSSESSION OF SUCH PROPERTY AS RESIDENTIAL PROPERTY. SIMILARLY, THE CO-ORDINATE BENCH IN THE CASE OF MAHAVIR PRASAD GUPTA (CITED SUPRA) HELD THAT, MERE NON-RESIDENTIAL USE WOULD NOT RENDER A PROPERTY INELIGIBLE FOR BENEFIT UNDER S. 54F, IF IT OTHERWISE IS A RESIDENTIAL HOUSEIF THE ASSESSEE IS FOUND TO HAVE ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 11 OF 13 CONSTRUCTED A RESIDENTIAL HOUSE, WHATEVER MIGHT BE THE USE IT HAD BEEN PUT TO, THE ASSESSEE CAN BE SAID TO HAVE FULFI LLED THE CONDITIONS ENVISAGED UNDER S. 54FNEW RESIDENTIAL H OUSE, LET OUT FOR COMMERCIAL USE, WOULD NOT LOSE EXEMPTION UNDER S. 54F . IN THE SAID BACKGROUND, IT WOULD BE APPROPRIATE TO ALSO RE FER TO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS M/S FINE JEWELLERY INDIA RENDERED ON 03.02.2015, CO PY PLACED AT PAGES 41 TO 45 RELYING UPON IDEA CELLULAR LTD. V DC IT (2008) 301 ITR 407 HAS HELD THAT IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS AND RESPONDED TO BY THE ASSESSEE, THE M ERE FACT THAT IT IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPLIED TO IT. IN THE FACTS OF THE SAID CASE I.E. M/S FINE JEWELLERY INDIA, THEIR LORD SHIPS HELD AS UNDER : 8. WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL DOES RECORD THE FACT THAT SPECIFIC QUERIES WERE MADE DURING THE ASSESSMENT PR OCEEDINGS WITH REGARD TO DETAILS OF EXPENDITURE CLAIMED UNDER THE HEAD 'MISC ELLANEOUS EXPENSES' AGGREGATING TO RS.2.94 CRORES. THE RESPONDENT-ASSES SEE HAD RESPONDED TO THE SAME AND ON CONSIDERATION OF RESPONSE OF THE RE SPONDENT-ASSESSEE, THE ASSESSING OFFICER HELD THAT OF AN AMOUNT OF RS. 17. 98 LAKHS INCURRED ON ACCOUNT OF REPAIRS AND MAINTENANCE OUT OF RS.2.94 C ORES IS CAPITAL EXPENDITURE. THIS ITSELF WOULD BE INDICATION OF APP LICATION OF MIND BY THE ASSESSING OFFICER WHILE PASSING THE IMPUGNED ORDER. THE FACT THAT THE ASSESSMENT ORDER ITSELF DOES NOT CONTAIN ANY DISCUS SION WITH REGARD TO THE BALANCE AMOUNT OF EXPENDITURE OF RS.1.76 CRORES I.E . RS.2.94 CRORES LESS RS.17.98 LAKHS CLAIMED AS REVENUE EXPENDITURE WOULD NOT BY ITSELF INDICATE NON APPLICATION OF MIND TO THIS ISSUE BY THE ASSESS ING OFFICER IN VIEW OF SPECIFIC QUERIES MADE DURING THE ASSESSMENT PROCEED INGS AND THE RESPONDENT- ASSESSEE'S RESPONSE TO IT. IN FACT THIS COURT IN TH E CASE OF 'IDEA CELLULAR LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ORS., [(200 8) 301 ITR 407 (BOM.)]HAS HELD THAT IF A QUERY IS RAISED DURING AS SESSMENT PROCEEDINGS AND RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT IT IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THA T NO MIND HAD BEEN APPLIED TO IT. 6.2 REFERENCE MAY ALSO BE MADE TO THE STRICT VIEW TAKEN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF TULSI TRACOM P.LTD. V CIT (2018) 161 DTR 0148 WHERE COURT HAS HELD; CIT(A) WHO ISSUED ORDER U/S 263 OUGHT TO HAVE BEEN FULLY SATISFIED THAT ADEQUATE OPPORTUNITY WAS GIVEN TO ASSESSEE TO CONTROVERT FACTS STATED IN NOTICE U/S 263 AND TO EXPLAIN CIRCUMSTANC ES SURROUNDING SUCH FACTSSECTION 263(2) WAS CLEAR BAR FOR ANY ORDER BE ING PASSED PURSUANT TO NOTICE U/S 263, AFTER EXPIRY OF TWO YEARS FROM END OF FINANCIAL YEAR IN WHICH ORDER SOUGHT TO BE REVISED WAS PASSED THUS, THERE WAS OUTER LIMIT IN STATUTE U/S 263 WHICH, WAS 31 ST MARCH, 2013SINCE, NO USEFUL PURPOSE WOULD BE SERVED IN GIVING OPPORTUNITY TO AP PELLANT OF BEING HEARD AT THIS STAGE, QUESTION ANSWERED IN FAVOUR OF ASSESSEEASSESSEES APPEAL ALLOWED. ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 12 OF 13 6.3 IN ORDER TO ADDRESS THE CORRECTNESS OF THE ORD ER PASSED BY THE AO IT WAS INCUMBENT UPON THE PR, CIT TO DEMONSTRATE THAT AS ON THE DATE OF INVESTMENT, PROPERTY INVESTED WAS NOT A RES IDENTIAL PROPERTY AND THE REFERENCE TO SUBSEQUENT USE OF THE PROPERTY BY A TENANT IN TERMS OF VARIOUS DECISIONS RELIED UPON AND EVEN OTH ERWISE AS NOTED IS AN IRRELEVANT FACTOR. THE FACT THAT THE SAID REPORT WAS NOT CONFRONTED TO THE ASSESSEE IN THE FACTS OF THE PRESENT CASE FO R THE PURPOSES OF PRESENT PROCEEDINGS, WE NOTE IS NOT RELEVANT FOR DE TERMINING THE ISSUE. IN ORDER TO JUSTIFY THE EXERCISE OF THE POW ER VESTED BY THE STATUTE U/S 263, IT WAS INCUMBENT UPON THE PR.CIT T O DEMONSTRATE THAT AT THE TIME OF INVESTMENT, THE PROPERTY WAS NO T A RESIDENTIAL PROPERTY AND IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT I.E. EXPLANATION 2(A), THE PR. CIT WAS REQUIRED TO DEMON STRATE THAT THE ORDER PASSED WAS WITHOUT MAKING ENQUIRIES OR INVEST IGATION. THE ORDER PASSED FAILS ON BOTH THESE COUNTS. THE ISSUE HAS BEEN ENQUIRED INTO AND NOWHERE IN THE ORDER, THE PR. CIT HE IS ABLE TO SHOW THAT THE ORDER PASSED EITHER SUFFERS FROM ANY ERROR LET ALONE SUCH AN ERROR WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE FACTS OF THE PRESENT CASE, WE HAVE NOTED THAT I T IS SUFFICIENTLY ESTABLISHED THAT AT THE TIME OF THE PURCHASE OF THE SPECIFIC PROPERTY, THE PROPERTY PURCHASED WAS A SHOP-CUM-FLAT WHEREIN ADMITTEDLY THE ASSESSEE'S SHARE WAS THE FIRST FLOOR. THE FACT THA T AS PER THE INSPECTORS REPORT, SOMETIME BETWEEN NOVEMBER,2016 AND MARCH,2017, IT IS ALLEGED THAT IT WAS BEING USED AS A GODOWN, IN THE FACE OF THE JUDICIAL PRECEDENT IS NOT RELEVANT. AD MITTEDLY AS PER THE CHANDIGARH ADMINISTRATION TOWN PLANNING, THE SPECIF IC PROPERTY IS DESCRIBED AS SCF I.E. SHOP-CUM-FLAT WHEREIN DETAILE D SHOP-CUM- RESIDENTIAL FLAT PLAN ETC. AS PER THE MAP APPROVED IS AVAILABLE. THE ISSUES HAVE BEEN ENQUIRED INTO BY THE AO IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS AS FOR THIS SPECIFIC PURPOSE , ADMITTEDLY THE CASE WAS SELECTED FOR SCRUTINY IN CASS. BEFORE THE AO, THE ASSESSEE'S EXPLANATION HAS BEEN OFFERED. THE PLAN AND THE MAP SITE ETC. HAVE ALL BEEN MADE AVAILABLE. NOTHING HAS BEE N BROUGHT OUT IN THE ORDER TO SHOW THE STATUS OF THE PROPERTY AT THE TIME OF INVESTMENT. ACCORDINGLY, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF ITA- 627/CHD/2017 A.Y. 2012-13 PAGE 13 OF 13 THE PRESENT CASE, THE EXPLANATION 2(A) OF SECTION 2 63 OF THE INCOME TAX ACT IS NOT ATTRACTED. CONSIDERING THE JUDICIAL PRECEDENT AVAILABLE, THE 263 ORDER PASSED BY THE PR. CIT CHAN DIGARH IS QUASHED AS NO ERROR LET ALONE AN ERROR WHICH CAN B E SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS BEE N MADE OUT ON RECORD. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.10.2018. SD/- SD/- ( . .. . & ) ( ! ) (DR. B.R.R. KUMAR) (DIVA SINGH) '( #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER + , (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT - 2. THE RESPONDENT - 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR