PARVINDER KAUR, JAIPUR V. PCIT-1, JAIPUR

ITA 64/JPR/2021

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 1199 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 15-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Revision of order; Valuation report; Capital Gains
• Section: 54; 263; 139; 143(3); 54B; 54F; 192; 139(1); 139(4)

Judgement Text

vk;dj vk;djvk;dj vk;dj vihyh; vf/kdj.k] t;iqj vihyh; vf/kdj.k] t;iqjvihyh; vf/kdj.k] t;iqj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj U;k;ihB] t;iqjU;k;ihB] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR MkWa MkWaMkWa MkWa- -- - ,e ,e,e ,e- -- - ,y ,y,y ,y- -- - ehuk] ys[kk lnL; ehuk] ys[kk lnL;ehuk] ys[kk lnL; ehuk] ys[kk lnL; ,oa ,oa,oa ,oa MkWa MkWaMkWa MkWa- -- - , ,, ,l ll l- -- -lhrk lhrklhrk lhrk y{eh y{ehy{eh y{eh] U;kf;d ] U;kf;d] U;kf;d ] U;kf;d lnL; ds le{k lnL; ds le{klnL; ds le{k lnL; ds le{k BEFORE: DR. M.L. MEENA, AM & DR. S. SEETHALAKSHMI, J. M. vk;dj vk;djvk;dj vk;dj vihy la vihy lavihy la vihy la- -- -@ @@ @I.T.(I.T.)A. No. 64/JP/2021 fu/kZkj.ko fu/kZkj.kofu/kZkj.ko fu/kZkj.ko"k "k"k "kZ@ Z@Z@ Z@Assessment Year: 2016-17 Parvinder Kaur, S-6, Hotel Taran, Adinath Nagar, Opp. GENPACT, JLN Marg, Jaipur cuke Vs. Pr. CIT-1, Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGNPK 3495L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Rajeev Sogani, C.A.& Miss. Shivangi Samdhani, CA jktLo dh vksjls@Revenue by: Sh. Sanjay Dhariwal, CIT lquokbZ dh rkjh[k@Date of Hearing :16/06/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 01/08/2022 vkns'k@ vkns'k@vkns'k@ vkns'k@ORDER Per Dr. Mitha Lal Meena, A.M.: The present appeal has been filed by the assessee against the order dated 09.03.2021 passed by the ld. Pr. CIT, Jaipur-1 (hereinafter referred to as the ‘PCIT’) u/s 263 of the Income Tax Act, 1961, arising out of the assessment order passed by the AO, on verification of claim of deduction u/s 54F,in respect of the Assessment Year 2015-16, 2. The assessee has raised the following grounds of appeal: 2 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT “1. That the Learned Pr. CIT was not justified in initiating proceedings u/s 263 of the I.T. Act. Initiation of proceedings is illegal and unjustified. 2. That the learned Pr. CIT has erred in holding that the A.O. failed to verify the claim of deduction u/s 54F during the course of assessment proceedings. The said finding is illegal and unjustified. 3. That the learned Pr. CIT has erred in holding that no supporting documents were filed in respect of claim of Rs.54.3 lakhs spent on construction upto the date of filing of return. The said finding is illegal and unjustified. 4. That the learned Pr. CIT has erred in holding that A.O. made no queries and material evidences were not brought on record before allowing claim u/s 54F. The said finding is illegal and unjustified. 5. That the learned Pr. CIT has erred in holding that the order passed by the A.O. on 23.11.2017 is held to be erroneous and prejudicial to the interest of revenue under section 263 of the Act and setting aside the same. The said act is illegal and unjustified and the order passed u/s 263 deserves to be cancelled.” 3. The appellant assessee’s case was selected under limited scrutiny on the specific issue of deduction of claim u/s 54B to 54GB of the Act. During the course of scrutiny, the AO has made enquiries and completed the assessment order u/s 143(3) vide assessment order dated 23.11.2017 by accepting the return income filed by the assessee. The ld. Pr. CIT invoked the provisions of section 263 of the Act, and held the assessment order to be erroneous and prejudicial to the interest of the Revenue by observing that the assessee’s claim u/s 54F of the Act was allowed by the AO without verification. 4. Being aggrieved, with the order passed u/s 263 of the Pr. CIT, the assessee filed this appeal before us. The ld. counsel submitted that the ld. 3 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT PCIT was not justified to initiate the proceedings u/s 263 of the Act in holding that the AO failed to verify the claim of deduction u/s 54F during the course of assessment proceedings; that no supporting documents were filed in respect of claim of Rs. 54.3 lakhs spent on construction. The ld. AR argued that the AO had made quarries and necessary verification before allowing claim u/s 54.3 lakhs. The counsel has filed a written synopsis which reads as under: “1. The case of the assessee was selected for limited scrutiny and out of the two reasons for selection under limited scrutiny, one of the reasons was large deduction claimed under section 54B to 54GB [PB 64]. 2. Ld. AO was, therefore, expected to examine a specific issue in depth. He issued two specific notices [PB 63-64, 51] for examining the claim of deduction u/s 54F. The assessee submitted relevant details to explain her deduction [PB 31-50 and 52-60], 3. The assessee substantiated her deduction with the help of following documents: 3.1. Purchase Deed of new property 3.2. Detailed ledger for construction [PB 32-42] 3.3. Bank Statement evidencing payments [PB 53-55] 3.4. Valuation Report of a Registered Valuer [PB 43-50] 4. Therefore, there cannot arise any dispute regarding the fact that Id. AO did not conduct any enquiry or there was lack of proper enquiry on the issue for which the case was selected for limited scrutiny. Only on being satisfied with the elaborate submissions of the assessee, supported with relevant documents, claim of the assessee was allowed. 5. It is submitted that the provisions of section 263 can be invoked only if the assessment order is found erroneous as well as prejudicial to the interest of revenue. If there was no lack of enquiry, revisionary proceedings could not be resorted merely to substitute the views of Id. 4 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT PCIT. Reliance is placed on the decision of Hon’ble ITAT Jaipur Bench in the case of Lata Phulwani vs PCIT- ITA No. 246/JP/2020 [CLC 83- 104]. 6. Reliance is also placed on the decisions of Hon’ble Rajasthan High Court in the case of CIT vs Ganpat Ram Vishnoi- 296 ITR 292 (Raj) [CLC 105-108]wherein it was held that jurisdiction u/s 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. 7. In view of above legal and factual position it is submitted thatlt is not a case of lack of enquiry. Therefore, the provisions of section 263 have been wrongly invoked.” 8. Without prejudice to above, on merits, it is submitted that Id. PCIT has held that the assessee is not eligible to claim deduction u/s 54F because of the following facts: A. Amount not deposited in Capital Gain Account Scheme B. The assessee failed to provide evidences for supporting investment in the new property before filing of the return and thereafter. C. The assessee was owning more than 1 residential house property on the date of sale. 9. Point by point rebuttal is as under: A. Amount not deposited in capital Gain Account Scheme A1. Section 54F provides that if the amount of net consideration received on sale of asset is not appropriated towards purchase of new asset before the date of furnishing of return of income u/s 139 then the assessee is required to deposit the unutilized amount under capital gain account scheme before the due date of filing of return u/s 139(1). A2. It is submitted that section 139 includes section 139(4) also. Therefore, under the law, only if it is apprehended that the amount shall not be appropriated till the due date specified u/s 139(4) then the assessee is required to deposit the amount in capital gain account scheme. 5 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT A3. Reliance is placed on the following decision: • Hon’ble Gauhati High Court in the case of CIT vs Rajesh Kumar Jalan [2006] 157 TAXMAN 398 (GAU.) [CLC 146-157]: “..6. From a plain reading of sub-section (2) of section 54 of the Income-tax Act, 1961, it is clear that only section 139 of the Income- tax Act, 1961, is mentioned in section 54(2) in the context that the unutilised portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income-tax under section 139 of the Income-tax Act. Section 139 of the Income-tax Act, 1961, cannot be meant only section 139(1) but it means all sub-sections of section 139 of the Income-tax Act, 1961. Under sub-section (4) of section 139 of the Income-tax Act, any person who has not furnished a return within the time allowed to him under sub-section (1) of section 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year whichever is earlier. Such being the situation, it is the case of the respondent/assessee that the respondent/assessee could fulfil the requirement under section 54 of the Income-tax Act for exemption of the capital gain from being charged to income-tax on the sale of property used for residence up to 30-3-1998, inasmuch as the return of income-tax for the assessment year 1997-98 could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier under sub-section (4) of section 139 of the Income-tax Act, 1961..." [CLC156] • Hon’ble ITAT Bangalore Bench in case of Nipun Mehrotra vs ACIT [2008] 110 ITD 520 (Bangalore) [CLC 1-7]: “Headnote- Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house - Assessment year 2000-01 - Whether under section 54F, assessee has to utilize amount for purchase or construction of new asset before date of furnishing return of income under section 139, and in absence of any mention of any sub-section of section 139, it cannot be interpreted that section 139 should be read as section 139(1) - Held, yes - Assessee claimed deduction under section 54F of longterm capital gain earned by him on sale of shares - Undisputedly, sale consideration had been utilized by assessee before date of filing of return under section 139(4) - Whether in view of decision of Gauhati High Court in case ofCIT v. Rajesh Kumar Jalan [2006] 286 ITR 274/ 157 Taxman 398, wherein it was held that section 139 6 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT mentioned in section 54F will not only include section 139(1) but willalso include all sub-sections of section 139, assessee was entitled to deduction claimed - Held, yes” [CLC 1 -2] A4. For the year under consideration return u/s 139(4) could be filed uptill one year from the end of assessment year. Hence, in the case of the assessee, return u/s 139(4) could be filed till 31 st March, 2017 i.e. 1 year from the end of A.Y. 2015-16. A5. As per the planning of the assessee, construction was expected to be completed before 31 st March, 2017. Hence, no amount was deposited in Capital Gain Account Scheme and under some misconception incorrect wordings were used in computation of income. A6. It is submitted that inspite of the fact that construction was suspended for some time, the construction of the house was completed on 30 th June, 2017 [PB 31-42], Admittedly, the completion of construction took place after 3 months from the due date of filing of return u/s 139(4), However, almost complete investment, i.e. Rs. 99,51,879 out of Rs. 1,00,00,000, took place uptill due date of filing of return u/s 139(4) i.e. 31 st March, 2017 [PB41]. Hence, such technical lapse due to disputes should not be viewed adversely. A7.AII the requisite compliances of making investment were duly made before the stipulated time i.e. 3 years from the date of sale, therefore, the deduction of the beneficial provision should not be denied. A8. The chronology of events is as under: S.No. Particulars Date/ Amount PB 1. Date of Sale of Plot 11 th June, 2014 2. Amount of Sale Consideration 1,00,00,000 3. Due date of filing of Return of Income u/s 139(1) 31 st July, 2015 4. Due date of filing of Return of Income u/s 139(4) 31 st March, 2017 7 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT 5. Investment in Residential House Property till 31 st March, 2017 99,51,879 41 6. Completion of Investment in Residential House Property 30 th June, 2017 31-42 7. Amount of total Investment in Residential House Property till 30 th June, 2017 1,00,52,076 42 A9. Hon’ble Supreme Court in the case of Bajaj Tempo Ltd vs CIT [1992] 62 Taxman 480 (SC) [CLC 8-22] held that the beneficial provisions should be construed liberally. The relevant extract of the order is as under: “..5. The section, read as a whole,was a provision directed towards encourag- ing industrialisation by permitting an assessee setting up a new undertaking to claim benefit of not paying tax to the extent of six per cent in a year on the capital employed. But the Legislature took care to restrict such benefit only to those undertakings which were new in form and substance, by providing that the undertaking should not be, 'formed'in any manner provided in clause (i) of subsection (2) of section 15C. Each of these requirements, namely, formation of the undertaking by splitting up or reconstruction of an existing business or transfer to the undertaking of building, raw material or plant used in any previous business, results in denial of the benefit contemplated under subsection (1). Since a provision intended for promoting economic growth has to be interpreted liberally, the restriction on it, too, has to be construed so as to advance the objective of the section and not to frustrate it. But that turned out to be the unintended consequence of construing the clause literally, aswas done by the High Court for which if cannot be blamed, as the provision is susceptible to such construction if the purpose behind its enactment, the objective it sought to achieve and the mischief it intended to control, is lost sight of. One way of reading it is that the clause excludes any undertaking formed by transfer to it of any building, plant or machinery used previously in any other business. No objection could have been taken to such reading but when the result of reading in such plain and simple manner is analysed, then it appears that literal construction would not be proper..." [CLC 16] A10. It is undisputed that substantive and mandatory requirements of section 54F being making investment in residential house property and holding the same for atleast 3 years were fulfilled. 8 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT A11.Ld. PCIT has erred in placing reliance on the decisions which are as under: a. Hon’ble Karnataka High Court in the case of CIT vs K Ramachandra Rao [2015] 277 CTR 522 (Kar) [CLC 134-145] In the said case the assessee had not deposited any amount in Capital Gain Account Scheme, however, within 3 years invested the entire sale consideration in residential house. The court decided the matter in the favour of the assessee and did not adversely view non deposition of amount in capital gain account scheme. The facts of the case of assessee are exactly same and, therefore, the decision have been wrongly interpreted by Id. PCIT. b. Hon’ble Bombay High Court in the case of Humayun Suleman Merchant vs CCIT [2016] 387 ITR 421 (Bom) [CLC 109-133] In the said case the assessee had not deposited any amount in Capital Gain Account Scheme, however, ultimately invested the entire sale consideration in residential house. The court decided the matter against the assessee. The facts of the case of assessee are exactly same. However, as is evident from the above there are two views possible and there are conflicting judgments of different High Courts. As has been held by Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), view which is favorable to the assessee has to be adopted. Hence, no adverse inference can be drawn. A12. It is submitted that the view adopted by Id. AO is a legal view (Ref para A. 11 (a), hence, there is no error in the order of Id. AO and jurisdiction u/s 263 has been wrongly invoked. B. The assessee failed to provide evidences for supporting investment in thenew property before filing of the return and thereafter. B1.The assessee had duly placed on record the following evidences: a. Purchase Deed of new property b. Detailed ledger for construction [PB 32-42] c. Bank Statement evidencing payments [PB 53-55] 9 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT d. Valuation Report of a Registered Valuer [PB 43-50] Ld. PCIT failed to appreciate the same in correct perspective. The same is evident from the fact that in Para 3 at Page 3 of the Id. PCIT order, PCIT questioned the payment to Vijendra Kumar who was the seller of the property in which the assessee invested. Hence, Id. PCIT overlooked that any payment to him was directly related to the investment in the new property. B2. Ld. PCIT without finding any defect in the Valuation Report held that AO fell in error in placing reliance on it. C. The assessee was owning more than 1 residential house property on thedate of sale. C1.lt was categorically submitted before Id. PCIT that assessee was having only one residential property. The property situated at Raghunandan Vihar was just a plot of land. The same was let out to the neighbor for storing in building material. Copy of Conveyance Deed being Gift Deed in favour of the assessee was duly placed before Id. PCIT [PB 4-17], Further, the photographs of the property evidencing the fact that such property was merely a plot of land was placed on record [PB 65-68], C2.lt is submitted that as per clause (b) of Explanation 1 to section 263, such evidences being Gift Deed and Photograph, furnished for the first time before Id PCIT, became part of record as the same were available at the time of examination by PCIT. Therefore, the same shall be considered for deciding whether the order of Id. AO was erroneous or not. Reliance is placed on the following decisions: • Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC) [CLC 23-37] • Prakashwati [2005] 144 Taxman 313 (Allahabad) [CLC 38-40] • Vallabhdas Vithaldas [2005] 56 Taxman 300 (Gujarat) [CLC 41- 71] • Daga Entrade (P) Ltd [2010] 327 ITR 467 (Gauhati) [CLC 72-82] C3. Since such evidences prove that the property at Raghunandan Vihar was just a plot of land and, hence, the assessee was owning only one house property and, therefore, the order of Id. AO cannot be held to be erroneous. C4. Further, no evidence against the assessee was found to be available on record and the plea of the assessee was rejected only because she could not furnish rent agreement. It is submitted that since the land was given for a temporary period for 10 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT keeping building material no agreement was executed. Further, Id. PCIT failed to conduct enquiry which she was duty bound to. Hence, no adverse inference can be drawn. C5.lt was also held that since deduction u/s 24(a) was allowed the said property cannot be land. In this regard it is submitted that since the case of the assessee was selected for limited scrutiny claim of deduction u/s 24(a) was never examined. Hence, no conclusion can be drawn on the basis of the same. C6. It is pertinent to note that the property at Raghunandan Vihar was gifted to the assessee by her husband [PB 1Ato 17]. Such gift was not given in connection with an agreement to live apart. Hence, any income which was earned on such property was to be clubbed in the husband’s income as per the provisions of section 64(1) (iv). Therefore, because of this reason also the assessee cannot be denied benefit of section 54F. In view of above the order of ld. PCIT is illegal, and, therefore, deserves to be quashed.” 5. Per contra, Ld. CIT (DR) stands by the impugned order. The ld. D/R has submitted that the assessee has failed to furnish corroborative documentary evidences in support of the income before the ld. PCIT. The Ld DR submitted that the view taken by Hon’ble Guahati High Court in the case of Rajesh Kumar Jalan [2016] 157 Taxmann 398 Guwahati, is not the correct view and he emphasized on the view taken by Honorable Karnataka High Court in the case of K Ramachandra Rao [2016] 2707 ITR 522 Karnataka. He referred to the judgment of Honorable Bombay High Court in the case of Mayor Suleman merchant 2016 3807 ITR 421 Bombay, where both these judgments are considered that is a good Law. 11 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT 6. The learned AR, in the rejoinder, submitted that the appeal was filed against invoking of the jurisdiction under section 263 of the act. The issue for consideration before the honorable bench is whether there was any error in the order of the AO. The learned AR submitted that it is a settled position of law that if two views are possible and the AO has adopted one of those possible views, that can’t be held to be an error on the part of the AO. The learned AR further submitted that the decision of the Bombay High Court in the case of Humayun Suleman merchant ‘s supra can’t be taken as reversing the decision of Gauhati High Court and Karnataka High Court orders and those were still having force and the AO could adopt that. 7. We have heard the rival contentions, perused the material available on record, assessment order, impugned order and the case laws cited before us. Admittedly, it is not disputed that the AO did not conduct any enquiry or there was lack of proper enquiry on the issue for which the case was selected for limited scrutiny. The AO being satisfied with the elaborate submissions of the assessee, duly supported with relevant documents, allowed the claim of the assessee, although he has not elaborated the indexation, references of the submission of the individual document in the assessment order. Merely not mentioning, the details of the submissions of the documentary evidences filed and verified during scrutiny proceeding do 12 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT not amount to no verification of inadequate enquiry by the AO in arriving at his satisfaction while allowing the claim of the assessee. 8. The Ld. AR argued that the provisions of section 263 can be invoked only if the assessment order is found erroneous as well as prejudicial to the interest of revenue. We concur with the contention of the Ld. AR that in the present case, there was no lack of enquiry, and therefore the revisionary proceedings could not be invoked merely to enforce the views of Ld. PCIT as held by Hon’ble ITAT Jaipur Bench in the case of Lata Phulwani vs PCIT(Supra).Again, the Jurisdictional Hon’ble Rajasthan High Court in the case of CIT vs Ganpat Ram Vishnoi (Supra) held that jurisdiction u/s 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted. 9. The Ld. PCIT has misplaced reliance on Hon’ble Karnataka High Court in the case of CIT vs K Ramachandra Rao (Supra) wherein it is held that the assessee had not deposited any amount in Capital Gain Account Scheme, however, within 3 years invested the entire sale consideration in residential house. However, as it is evident from the above that there are two views possible and there are conflicting judgments of different High Courts relied 13 I.T.(I.T.)A. No. 64/JP/2021 Parvinder Kaur v. PCIT by the Ld. AR and the Ld. DR. It has been held by Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), view which is favorable to the assessee has to be adopted. Hence, no adverse inference can be drawn. 10. In the above view, considering the legal and factual matrix of the case, we hold that it is not a case of lack of enquiry. Therefore, invoking the revisionary action by the Ld. PCIT U/s 263 of the Act, is illegal and unjustified and as such, the order passed u/s 263 quashed. 14. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 01/08/2022 Sd/- Sd/- ¼MkWa- ,l-lhrky{eh ½ ¼MkWa- ,e- ,y- ehuk ½ (Dr. S. Seethalakshmi) (Dr. M.L. Meena) U;kf;dlnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 01/08/2022 *GP/Sr./PS* vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Anjala Goyal, New York 999999 Foreign, India 2. izR;FkhZ@ The Respondent- DCIT, Circle (International Taxation) Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (IT(IT)A No. 01/JP/2022) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar