Pr. Commissioner of Income Tax-1, Surat V. Rajendrabhai Ramanlal Desai, Surat

MA 15/SRT/2022

AI Insights

The case involves the Principal Commissioner of Income Tax (PCIT) Surat vs. Rajendrabhai Ramanlal Desai, concerning the assessment year 2015-16. The Revenue filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, claiming that the Tribunal's earlier decision contained a mistake apparent from the record. The Revenue argued that the Tribunal failed to recognize that the Assessing Officer did not make necessary inquiries as required under clause (a) of explanation 2 of Section 263 of the Act. The Tribunal, however, found that the Assessing Officer had indeed conducted adequate inquiries and that the original assessment order was not erroneous or prejudicial to the interests of the Revenue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301703 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 02-03-2022
• Other Referred Cases: Plastic Concern vs. ACIT [61 TTJ 87 (Cal)], CIT v. Sunbeam Auto Ltd. [(2010) 332 ITR 167], Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Cost of acquisition; Fair market value; Valuation report
• Section: 263; 2; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM Miscellaneous Application No.15/SRT/2022 [Arising out of ITA No.56/SRT/2021] Assessment Year: (2015-16) (Virtual Court Hearing) The PCIT-1, Surat. Vs. Rajendrabhai Ramanlal Desai, At & Post: Mota Varachha, Vasi Falis, Mota Varachha, Surat-395006, Gujarat. (Appellant)/(Revenue) (Respondent)/(Assessee) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AFUPD3826L Assessee by Shri Ashwin K. Parekh, AR Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 27/02/2023 Date of Pronouncement 30/03/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: By way of the captioned Miscellaneous Application, the Revenue has sought to point out that a mistake apparent from record within the meaning of section 254(2) of the Income Tax Act, 1961( in short ‘ the Act’) has crept in the order of the Tribunal dated 11/11/2021, in ITA No.56/SRT/2021 for AY.2015-16. 2. At the outset, Ld. Departmental Representative (Ld. DR) for the Revenue argued that the contentions raised by the Revenue in this Miscellaneous Application is that the Hon’ble ITAT failed to appreciate the fact that clause (a) of the explanation 2 of Section 263 of I.T. Act is clearly applicable in this case as AO passed the assessment order without making inquiries or verification which should have been made in the case. From the facts as discussed above, it is quite clear that findings of Hon’ble ITAT is incorrect in holding that both the valuation report were before the Assessing Officer during the assessment stage. 3. On the other hand, Learned Counsel for the assessee submitted that Tribunal has considered the entire facts and adjudicated the issue in accordance with law, hence there is no mistake apparent on record. Page | 2 MA.15/SRT/2022/AY.2015-16 Rajendrabhai Ramanlal Desai 4. We have heard both the parties. We note that Tribunal has concluded the issue, observing as follows: “14. We note that since, Fair Market Value as on 01.04.1981 determined by Registered Valuer for nearby land and Fair Market Value determined by Valuation Officer for land in same Town Planning Scheme where land sold by assessee is situated are higher than Fair Market Value claimed by assessee, therefore, ld Counsel prays that Fair Market Value of Rs. 123/- per Sq. Meter, is acceptable.The ld Counsel submits before us that assessee had claimed a lower value as Cost of Acquisition from sale consideration in the working of Long Term Capital Gain. The lowest value determined by Valuation Officer in this area of land is Rs. 130 per Sq. Mts. The assessee claimed 5% lower value than this lowest value to avoid any issue of litigation on Cost of Acquisition. The ld Counsel further states that Assessing Officer had a number of cases involving the issue of Long Term Capital Gain in respect of land situated at T.P. 24 and T.P. 25 of Mota Varachha and the claim of assessee at Rs. 123/- per Sq. Mts. as Fair Market Value as on 01.04.1981 is the lowest claim among all cases and therefore, the Assessing Officer did not refer the issue to DVO for determining Fair Market Value of land as on 01.04.1981 and accepted the evidences submitted by assessee to allow the claim of Indexed Cost of Acquisition. 15. We note that in assessee`s case under consideration, it is vivid from the above narrated facts that assessing officer conducted sufficient inquiry. To gather more information and then prove the claim of the assessee wrong is not the object of section 263 of the Act. The object of section 263 is to examine whether order passed by the AO is erroneous as well as prejudicial to the interest of revenue. Therefore, based on this factual position, the order passed by the AO under section 143(3) should not be erroneous. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal) has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. We note that Ld. A.O. having examined both the valuation reports and having satisfied himself about the correctness of the same and explanation of the assessee in regard to the indexed cost of acquisition as on 01.04.1981, completed the assessment and, therefore, there cannot be a reason to say that the A.O. has failed to conduct necessary enquiry before accepting the claim of the assessee. 16. We note that Ld. Pr. C.I.T. on analysis of assessment records derived satisfaction for issuing the impugned show-cause notice u/s 263 of the Act. The expression ‘record’ as used in section 263 of the Act is comprehensive enough to include the whole record of evidence on which the original assessment order is based. At the same time, if any information asked for by the assessing authority from the assessee or from others to whom he referred the matter during the course of assessment proceeding was not received but received subsequent to the completion of the assessment, in that situation the assessment order passed without receiving such report may appear to be erroneous within the meaning of section 263 of the Act. In the case of the assessee, there is no denying the fact, as detailed above and acknowledged in the assessment order u/s. 143(3) dated 26.12.2017, that in response to notices u/s. 143(2)/142(1) and further requisitions Page | 3 MA.15/SRT/2022/AY.2015-16 Rajendrabhai Ramanlal Desai made during the course of assessment proceeding, the A/R of the assessee appeared from time to time and produced/ submitted necessary details/documents as per requisitions in relation to the issues raised by the Ld. Pr. C.I.T., which were examined by Assessing Officer. Therefore, it is the appraisal of the same records which are already with the Ld. A.O. and the Ld. Pr. C.I.T. took a different view than adopted by the A.O. on the same set of facts, which is not permissible u/s 263 of the Act. In the above circumstances, the view taken by the A.O. was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. 17. It is settled law that there is difference between ‘Lack of enquiry’ and ‘inadequate enquiry’. It is for the AO to decide the extent of enquiry to be made as it is his satisfaction as what is required under law. Reliance is placed on the decision of CIT v. Sunbeam Auto Ltd. [(2010) 332 ITR 167], wherein Hon’ble Delhi High Court has held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by AO. Further, it was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 of the Act. In other words, the Ld. Pr. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have examined the fair market value as on 01.04.1981, as explained above, and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below: “The phrase “prejudicial to the interests of the Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law”. 18. Therefore, we note that certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. For the reasons set out in the foregoing para of our order we are therefore, unable to agree with the Ld. Pr. CIT’s finding in the impugned order Page | 4 MA.15/SRT/2022/AY.2015-16 Rajendrabhai Ramanlal Desai that no enquiry was conducted by assessing officer and no evidence was furnished before assessing officer satisfying the claim raised by the assessee in respect of indexed cost of acquisition as on 01.04.1981, is not tenable and, therefore, we find that the jurisdiction invoked for exercising his revision jurisdiction is not tenable in the eyes of law and, therefore, we have no hesitation in quashing the impugned order passed by the Ld. Pr. CIT. Therefore, the ground of appeal of assessee is allowed. 19. In the result, the appeal filed by the assessee is allowed.” 5. We have gone through the above findings of the Tribunal order and noted that Assessing Officer made enquiry during the assessment stage in respect of the issue raised by Ld. PCIT by issuing notice under section 142(1) of the Act. The assessee also submitted its reply before Assessing Officer. The Assessing Officer after having examined the reply of the assessee, has applied his mind and pass the assessment order. Therefore, we note that there is no mistake apparent from record in the above findings of the Tribunal, hence, we dismiss the Miscellaneous Application filed by Revenue. 6. In the result, Miscellaneous Application filed by Revenue is dismissed. Order is pronounced on 30/03/2023 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 30/03/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat