Shri Paras Chinubhai Jani, Ahmedabad V. The Pr. CIT-5, Ahmedabad

ITA 927/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6986 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Capital asset; Opportunity of being heard; Assessment record; Set aside
• Section: 143(3); 54B; 54; 263

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 927/AHD/2017 ( ASSESSMENT YEAR : 2012-13) PARAS CHINUBHAI JANI 22 PARIKH COLONY, NR. NAVNIRMAN PARK, RANIP, AHMEDABAD - 382480 / VS. PR. COMMISSIONER OF INCOME TAX-5 1 ST FLOOR, NARAYAN CHAMBERS, AHMEDABAD ./ ./ PAN/GIR NO. : ACXPJ9045M ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HARDIK VORA, A.R. / RESPONDENT BY : SHRI O. P. SHARMA, CIT. DR DATE OF HEARING 31/01/2019 !'# / DATE OF PRONOUNCEMENT 26/04/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE SEEKING TO IMPUGN THE REVISIONAL ORDER PAS SED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX-5, AHMEDABAD ( PR.CIT IN SHORT) UNDER S. 263 OF THE INCOME TAX ACT, 1961 (TH E ACT) DATED 17.03.2017 IN CONNECTION WITH THE ASSESSMENT ORDER PASSED BY THE AO UNDER S. 143(3) OF THE ACT DATED 20.02.2015 CONCERN ING AY. 2012-13. ITA NO. 927/AHD/17 [PARAS C. JANI VS. PR.CIT] AY 2012-13 - 2 - 2. AS PER THE GROUNDS OF APPEAL, THE ESSENTIAL GRIE VANCE OF THE ASSESSEE IS THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE PR.CIT WAS NOT JUSTIFIED IN EXERCISING REVISIONARY POWERS UNDER S.263 OF THE ACT AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE ACT WITH A DIRECTION TO THE AO TO F RAME ASSESSMENT AFRESH AFTER PROPER EXAMINATION, INQUIRY AND VERIFI CATION WITH REFERENCE TO DEDUCTION UNDER S.54B OF THE ACT CLAIM ED BY THE ASSESSEE. 3. TO ADJUDICATE THE GRIEVANCE OF THE ASSESSEE, THE RELEVANT FACTS ARE TAKEN NOTE OF AS FOLLOWS: 3.1 THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2012-13 DECLARING TOTAL INCOME AT RS.21,86,120/-. THE ASSESSEE INTER ALIA CLAIMED DEDUCTION UNDER S. 54B OF THE ACT TO THE TUNE OF RS .75,94,273/- AGAINST THE SALE OF CERTAIN PARCELS OF LAND. THE RETURN FI LED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMENT AND ASSESSMENT ORDER WAS FRAMED UNDER S.143(3) OF THE ACT DATED 20.02.2015 WHEREIN THE AO INTER ALIA REVISED THE QUANTUM OF CHARGEABLE CAPITAL GAINS. T HE AO ALSO DISALLOWED AN AMOUNT OF RS.23,06,723/- AS EXCESS CL AIM OF DEDUCTION UNDER S.54B OF THE ACT. 3.2 THE ASSESSMENT SO FRAMED BY THE AO UNDER S.143( 3) OF THE ACT WAS SOUGHT TO BE MODIFIED BY THE PR.CIT IN THE PROC EEDINGS UNDER S.263 OF THE ACT. A SHOW CAUSE NOTICE DATED 22.02. 2017 WAS ISSUED TO THE ASSESSEE IN THIS REGARD ALLEGING THE AFORESAID ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE RELEVANT PORTION OF THE SHOW CAUSE NOTICE IS REPROD UCED HEREUNDER: ON VERIFICATION OF THE ASSESSMENT RECORDS, IT IS NOTICED THAT YOU HAVE CLAIMED DEDUCTION OF RS.41,09,160/- [RS.29,75, 580/- + RS.11,33,580/-] U/S. 54B OF THE ACT, AGAINST THE PR OPERTIES PURCHASED ON 02/12/2011 AND 01/12/2011. IT IS FURTHER SEEN F ROM THE RECORDS THAT THE CAPITAL ASSETS WERE SOLD ON 21/02/2012 FRO M WHICH THE GAIN AROSE. THE PROVISIONS OF SECTION 54B OF THE ACT PRO VIDES THAT THE ITA NO. 927/AHD/17 [PARAS C. JANI VS. PR.CIT] AY 2012-13 - 3 - EXEMPTION IS AVAILABLE UNDER THIS SECTION IF THE AS SET IS PURCHASED AFTER THE DATE OF SALE OF ASSET FROM WHICH THE CAPI TAL GAIN AROSE. AS STATED ABOVE, YOU HAVE PURCHASED THE ASSETS PRIOR T O THE SALE OF LAND AND HENCE THE EXEMPTION CLAIMED BY YOU IS NOT ALLOW ABLE. FAILURE TO DISALLOW YOUR CLAIM OF RS.41,09,160/- IS INCORRECT. FROM THE ABOVE DISCUSSIONS, IT APPEARS THAT THE SAI D ASSESSMENT ORDER DATED 20/02/2015 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE TO THE EXTENT MENTIONED ABOVE. YOU ARE, THEREFORE, REQUESTED TO SHOW CAUSE AS TO WHY THE TOTAL INCOME ASSESSED U/S. 143(3) OF THE ACT SHOULD NOT BE ENHANCED OR MODIFIE D U/S. 263 OF THE ACT 3.3 THE ASSESSEE FILED A REPLY THERETO CONTESTING T HE SHOW CAUSE NOTICE AND ALSO CHALLENGED THE FOUNDATION OF JURISD ICTION UNDER S.263 OF THE ACT SOUGHT TO BE ASSUMED BY THE PR.CIT. FRO M THE CASE RECORD, IT APPEARS THAT THE AO MADE AN ADDITION TO THE LONG TERM CAPITAL GAINS OF RS.49,55,300/-. THE AO ALSO VERIFIED THE CLAIM O F DEDUCTION UNDER S.54B OF THE ACT AGAINST THE AFORESAID CAPITAL GAIN . THE AO SCALED DOWN THE DEDUCTION UNDER S.54B OF THE ACT FROM RS.7 5,94,273/- TO RS.52,87,673/- AND CONSEQUENTLY, DISALLOWED THE DED UCTION UNDER S.54B OF THE ACT TO THE EXTENT OF RS.23,06,723/- IN RESPECT OF INVESTMENT IN ONE OF THE PARCELS OF THE LAND MADE A FTER THE DUE DATE OF FILING OF RETURN. 3.4 THE PR.CIT NOTED THAT THE ASSESSEE HAS PURCHASE D FOLLOWING PROPERTY AND HAD CLAIMED EXEMPTION UNDER S.54B OF T HE ACT THEREON: SI. NO. SURVEY NO. PURCHASE VALUE (IN RS.) STAMP DUTY (IN RS.) REGN. CHARGES (IN RS.) TOTAL (IN RS.) SHARE OF THE ASSESSEE DATE OF PURCHASE EXEMPTION CLAIMED (IN RS.) 1. 1369/1, PRANTIJ 55,00,000 3,96,000 55,160 59,51,160 50% 2/12/2011 2 9,75,580 2. 1369/2, PRANTIJ 23,06,600 26,900 23,280 23,56,780 50% 27/9/2012 11, 78,390 3. 1369/3, PRANTIJ 21,00,000 1,46,000 21,160 22,67,160 50% 1/12/2011 1 1,33,580 4. 921, PRANTIJ 65,00,000 3,55,000 65,170 69,20,170 33.33% 13/5/201 3 23,06,723 TOTAL 75,94,273 3.5 FROM THE ABOVE TABULATED STATEMENT, THE PR.CIT OBSERVED THAT WHILE THE AO HAS RIGHTLY DISALLOWED INVESTMENT IN L AND AMOUNTING TO ITA NO. 927/AHD/17 [PARAS C. JANI VS. PR.CIT] AY 2012-13 - 4 - RS.23,06,723/- FOR CONTRAVENTION OF SECTION 54B(2) OF THE ACT, THE AO HAS FAILED TO DISALLOW DEDUCTION UNDER S.54B OF THE ACT IN RESPECT OF PURCHASE OF LAND (AS PER ITEM NOS. 1 & 3 TABULATED ABOVE) WHERE THE PURCHASE OF LAND HAS OCCURRED PRIOR TO TRANSFER OF CAPITAL ASSET FOR THE PURPOSES OF SECTION 54B(1) OF THE ACT. THE PR.CIT OBSERVED THAT SECTION 54B(1) OF THE ACT ENJOINS UPON THE ASSESSEE TO PURCHASE OF LAND FOR AGRICULTURAL PURPOSES AFTER THE DATE OF TR ANSFER OF THE ORIGINAL CAPITAL ASSET IN ORDER TO AVAIL THE EXEMPTION CONTE MPLATED UNDER S.54B OF THE ACT. BUT IN THE INSTANT CASE, THE ASSESSEE HAS PURCHASED THE ASSET PRIOR TO THE DATE OF TRANSFER OF THE ORIGINAL CAPITAL ASSET TO THE TUNE OF RS.41,09,160/-. THE PR.CIT ALLEGED THAT TH E AO HAS NOT LOOKED INTO THIS CRUCIAL ASPECT AND FINALIZED THE ASSESSME NT PROCEEDINGS UNDER S.143(3) OF THE ACT WITHOUT DUE DILIGENCE. THE PR. CIT, IN ESSENCE, ALLEGED THAT THE ASSESSMENT ORDER IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE OWING TO BREACH OF CONDITIONS SPECIFIED UNDER S.54(1) OF THE ACT RELAT ING IN EXCESS DEDUCTION TO THE EXTENT OF RS.41,09,160/-. THE PR. CIT TOOK NOTE OF VARIOUS SUBMISSIONS MADE BY THE ASSESSEE IN ITS DEF ENSE BUT WAS NOT IMPRESSED. THE PR.CIT ACCORDINGLY SET ASIDE THE AS SESSMENT ORDER AND DIRECTED THE AO TO LOOK INTO THE AFORESAID DECISION AFRESH IN ACCORDANCE WITH LAW. 4. AGGRIEVED BY THE AFORESAID ACTION OF THE PR.CIT, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 4.1 THE LEARNED AR FOR THE ASSESSEE REITERATED VARI OUS SUBMISSIONS MADE BEFORE THE PR.CIT AS NOTED IN ITS ORDER AND PO INTED OUT THAT THE JURISDICTION ASSUMED BY THE PR.CIT IS NOT PROPER. THE LEARNED AR SOUGHT TO CONTEND THAT THE ASSESSMENT ORDER PASSED BY THE AO IS AFTER DUE APPLICATION OF MIND. THE AO IN FACT HAS DISALL OWED A PORTION OF THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE UNDER S .54B OF THE ACT ITA NO. 927/AHD/17 [PARAS C. JANI VS. PR.CIT] AY 2012-13 - 5 - AND THEREFORE LACK OF DUE DILIGENCE CANNOT BE ALLEG ED. IT WAS CONTENDED THAT THE AO HAS TAKEN ONE OF THE TWO POSS IBLE VIEWS AND THEREFORE, ASSESSMENT ORDER IS NEITHER ERRONEOUS NO R PREJUDICIAL TO THE REVENUE. 4.2 THE LEARNED AR THUS URGED FOR CANCELLATION OF T HE ORDER PASSED UNDER 263 OF THE ACT. 4.3 THE LEARNED DR FOR THE REVENUE, ON THE OTHER HA ND, RELIED UPON THE ORDER OF THE PR.CIT. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE REVISIONAL ORDER PASSED BY THE PR.CIT UNDER S.2 63 OF THE ACT AS WELL AS OTHER MATERIALS REFERRED TO AND RELIED UPON BY THE RESPECTIVE PARTIES AND CASE LAWS CITED. 5.1 SUPERVISORY JURISDICTION VESTED UNDER SECTION 2 63 OF THE ACT ENABLES THE CONCERNED PR.CIT/CIT TO REVIEW THE RECO RDS OF ANY PROCEEDINGS AND ORDER PASSED THEREIN BY THE AO. IT EMPOWERS THE REVISIONAL COMMISSIONER CONCERNED TO CALL FOR AND E XAMINE THE RECORDS OF ANOTHER PROCEEDING UNDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEN HE MAY (AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY), PAS S SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, I NCLUDING THE ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING AFRESH ASSESSMENT. THUS, THE REVISIO NAL POWERS CONFERRED ON THE PR.CIT/CIT UNDER S.263 OF THE ACT ARE OF VERY WIDE AMPLITUDE WITH A VIEW TO ADDRESS THE REVENUE RISKS WHICH ARE OBJECTIVELY JUSTIFIABLE. ITA NO. 927/AHD/17 [PARAS C. JANI VS. PR.CIT] AY 2012-13 - 6 - 5.2 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SUBSTANTIVE ISSUE THAT EMERGES FOR ADJUDICATION IS WHETHER THE PR.CIT UNDER THE UMBRELLA OF REVISONARY POWERS IS ENTITLED TO UPSET THE FINAL ITY OF ASSESSMENT PROCEEDINGS BEFORE THE AO WHERE THE AO HAS ALLEGEDL Y COMMITTED ERROR IN PASSING ASSESSMENT ORDER WITHOUT PROPER VE RIFICATION OF DEDUCTIONS CLAIMED. 5.3 IT IS THE CASE OF THE PR.CIT THAT AS PER SECTIO N 54B(1) OF THE ACT THE DEDUCTION IS PERMISSIBLE ONLY WHERE CAPITAL GAI N IS UTILIZED FOR PURCHASE OF LAND AFTER THE TRANSFER OF A CAPITAL ASSET. THE PR.CIT ACCORDINGLY TOOK A VIEW THAT THE DEDUCTION/EXAMINAT ION TO THE EXTENT OF RS.41,90,160/- ATTRIBUTABLE TO THE LAND ACQUIRED PRIOR TO TRANSFER IS ALLOWED IN EXCESS OF THE PARAMETERS LAID DOWN. 5.4 WE FIND THAT THE CONTROVERSY IS PLAIN AND SIMPL E AND IS NOT CAPABLE OF ANY DEBATE HAVING REGARD TO EXPRESS STAT UTORY LANGUAGE. THE AO HAS NOT GIVEN ANY REASON AS TO HOW PURCHASE OF LAND PRIOR TO TRANSFER OF CAPITAL ASSET IS ELIGIBLE FOR CLAIM OF DEDUCTION UNDER S.54B(1) OF THE ACT. THUS, AS A COROLLARY, THE AO HAS ACCEPTED THE CLAIM OF DEDUCTION BY OVERSIGHT AND WITHOUT ANY APP LICATION OF MIND IN THIS REGARD. NO EVIDENCE HAS BEEN ADDUCED BEFOR E US TO SHOW THAT THE ISSUE WAS PRESENT TO THE MIND OF THE AO. A WRO NG ACCEPTANCE OF CLAIM OF DEDUCTION WOULD NOT GIVEN INFERENCE TOWARD S APPLICATION OF MIND. SECONDLY, THE ELIGIBILITY OF DEDUCTION UNDER S.54B OF THE ACT IN RESPECT OF LAND ACQUIRED PRIOR TO TRANSFER OF CAPIT AL ASSET IS CLEARLY OPPOSED TO THE PLAIN PROVISION OF THE ACT AND THUS APPARENTLY NOT SUSTAINABLE HAVING REGARD TO EXPRESS THE PROVISION OF THE STATUTE. THE LEGISLATURE IN ITS OWN WISDOM HAS USED THE EXPRESSI ON BEFORE THE TRANSFER OF LONG TERM ASSET AS WELL AS AFTER THE TR ANSFER OF CAPITAL ASSET AT APPROPRIATE PLACES VIZ. SECTION 54 OF THE ACT. THE INTENTION OF THE LEGISLATURE IS THUS QUITE CLEAR. THEREFORE, CLAIM OF DEDUCTION ACCEPTED ITA NO. 927/AHD/17 [PARAS C. JANI VS. PR.CIT] AY 2012-13 - 7 - BY THE AO DESPITE UNEQUIVOCAL LANGUAGE OF THE ACT, IN OUR VIEW, IS ERRONEOUS AS CONTEMPLATED UNDER S. 263 OF THE ACT. SUCH ERROR ON THE PART OF THE AO HAS CAUSED DEFINITE PREJUDICE TO THE INTEREST OF THE REVENUE. THE ACTION OF THE PR.CIT IS THUS WITHIN T HE REALM OF POWERS VESTED UNDER S.263 OF THE ACT. THE PR.CIT HAS DIST INGUISHED THE CASE LAWS CITED WHICH IS FOUND TO BE IN ORDER. WE DO NO T SEE IRREGULARITY IN THE ASSUMPTION OF JURISDICTION BY THE PR.CIT UNDER S.263 OF THE ACT. WE THEREFORE DECLINE TO INTERFERE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 26/04/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 26/04/201 9