SHRI PRINCEPREETJIT SINGH,RANJIT NAGAR V. PR.CIT-1, CHANDIGARH

ITA 54/CHANDI/2021

AI Insights

The case revolves around an appeal by Shri Princepreetjit Singh against the order of the PCIT, Chandigarh-1, which pertained to the Assessment Year 2015-16. The PCIT had set aside the original assessment order, claiming that the AO had not conducted sufficient inquiries and that certain deductions under Sections 54B and 54F were incorrectly allowed. The Tribunal examined the issues raised by the PCIT and found that the AO had indeed conducted thorough inquiries and that the deductions were in accordance with the law. The Tribunal's decision was influenced by various precedents and interpretations of the relevant sections of the Income Tax Act, particularly focusing on the timing and conditions under which deductions for reinvestment in agricultural land and residential property can be claimed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126114 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Other Referred Cases: Sanjeev Lal vs. CIT, Kishorebhai Harjibhai Patel vs. ITO, Inderjit Singh Mann v. ACIT, DCIT v Assa Singh, Ramesh Narhari Jakhadi Vs. ITO, ACIT Vs. Dr. S. Balasundarm, CIT-II Pune Vs. Subhash Vinayak Supnekar, Ms. Parveen P. Bharucha v. DCIT, Louis Dreyfus Company Asia Pte. Ltd. vs. CIT(IT), Vedanta Resources vs ACIT, Sahara Hospitality Ltd. Vs CIT, Malabar Industrial Co. Ltd. vs CIT, CIT vs Sunbeam Auto Ltd., ITO vs DG Housing Projects Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRAJIT SINGH; VIRTUAL
• Assessee Lawyers: PARIKSHIT AGGARWAL; C.A
• Keywords: Set aside; Capital asset; Opportunity of being heard; Cost of acquisition; Period of limitation; Capital Gains; Competent authority; Validity of assessment; Time period of passing order; Revision of order; Benefit of exemption
• Section: 143(3); 143(2); 263; 54B; 54F; 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM ITA NO. 54/Chd/2021 Assessment Year :2015-16 Shri Princepreetjit Singh C/o Parikshit Aggarwal, Chartered Accountant H.No 1238, Sector 22B, Chandigarh Vs. Pr. CIT Chandigarh-1 PAN NO: CUUPS4144K Appellant Respondent Assessee by : Shri Parikshit Aggarwal, C.A Revenue by : Shri Chandrajit Singh, CIT, DR(Virtual) Date of Hearing : 22/01/2025 Date of Pronouncement : 21/04/2025 Order PER KRINWANT SAHAY, A.M. : This is an appeal filed by the Assessee against the order of the Ld. Pr. CIT, Chandigarh -1 dt. 11/03/2021 pertaining to Assessment Year 2015-16. 2. In the present appeal Assessee has raised the following grounds; 1. That on law, facts & circumstances of the case, the Worthy Pr. CIT has grossly erred assuming jurisdiction u/s 263 even when: 2 1.1. The original assessment order passed u/s 143(3) did not satisfy the twin conditions of being an 'erroneous order' and 'prejudicial to the interest of revenue'. 1.2. The Worthy Pr. CIT has erred in setting aside the assessment order u/s 143(3) and in directing the AO to make assessment afresh on the ground that AO had not conducted worthwhile enquiries during the assessment proceeding even when the AO had conducted thorough enquiries and also most importantly the Pr. CIT failed to carry our any enquiry himself and also failed to demonstrate which most necessary enquiry the Ld. AO failed to carry out. 1.3. The Worthy Pr. CIT failed to appreciate that inadequate inquiry does not amount to lack of inquiry so as to assume valid jurisdiction u/s 263. 1.4. The Worthy Pr. CIT, vide Para 11 of her order, has erred in holding that the assessment order requires to be revised u/s 263 since the Girdawari of agricultural land furnished by the assessee was not signed / stamped by the competent authority and it was never subjected to verification even when the facts are otherwise. 1.5. The Worthy Pr. CIT has erred in holding that the deduction u/s 54F has been wrongly computed by the assessee and by allowing the same Ld. AO has also erred, even when the same was correctly computed and the issue was outside the ambit of s. 263. 1.6. The Worthy Pr. CIT has erred in holding that the deduction u/s 54B cannot be allowed in respect of agricultural land purchased from advance received against sale of agricultural land and the period of one year prior has to be reckoned from the date of execution of sale deed of land sold by the appellant even when this contention of the Worthy Pr. CIT is not correct and in any case was outside the ambit of s. 263. 1.7. The Worthy Pr. CIT has conducted the impugned proceedings u/s 263 in extreme haste and without 3 affording reasonable opportunity of being heard to the appellant. 2. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same. 3. Briefly the facts of the case are that the assessee, along with his father, Daljit Singh Bassi, co-owned agricultural land in village Ballomajra, Kharar, Mohali, which had been used for agriculture for over two years. In 2013, they agreed to sell 40 Kanal, 6 Marla, and 6 Sarsai of this land to M/s Gillco Developers and Builders Pvt. Ltd. The assessee received advance payments of Rs. 75,00,000/- on 04/09/2013, and Rs. 72,66,375/- on 16/09/2013, while his father received Rs. 1.50 crore on 10/09/2013. However, after nearly a year, M/s Gillco Developers and Builders Pvt. Ltd. failed to make further payments. Upon the assessee’s insistence, M/s Gillco Developers and Builders Pvt. Ltd proposed executing a sale deed for a portion of the land, measuring 29 Kanal, 0 Marla, and 6 Sarsai, and agreed to pay the full amount for this portion while adjusting the earlier advance against the remaining land. The sale deed was then executed for 29 Kanals land on 14.08.2014 against the total payment of Rs. 16,33,12,500/-. Assessee received Rs. 3,23,43,750/- towards his share and the said amount was credited to his bank on 16.08.2014, 19.08.2014 & 29.08.2014 with Rs. 1,00,00,000/-, Rs 1,23,43,750/- & Rs 1,00,00,000/- respectively.. The assessee declared this sale consideration in his ITR for AY 2015-16 under capital gains, claiming deductions under Sections 54B and 54F. 4 3.1 Subsequently, as part of the composite deal, the sale deed for the remaining 11 Kanal and 6 Marla was executed on 01/02/2016, for a total consideration of Rs. 3,53,12,500/-, with the assessee’s share being Rs. 1,84,37,500/-. Of this, Rs. 1,47,66,375, received as an advance in September 2013, was adjusted, and the balance of Rs. 36,71,125/- was paid to the assessee on 02/02/2016. The capital gain from this transaction was reported in the ITR for AY 2016-17. 3.2 Out of the advance amount of Rs. 1,47,66,375/- received in September 2013 against his share in the sale portion of land, the assessee invested Rs. 1,35,08,500 in the purchase of agricultural land prior to the execution of the sale deed on 14.08.2014. Additionally, he purchased agricultural land worth Rs. 1,43,60,310 after the execution of the sale deed on 14.08.2014 and incurred development expenses amounting to Rs. 4,37,900 on the land. The assessee claimed deduction under Section 54B in respect of both categories of agricultural land purchases against the capital gains arising from the sale of land, for which the deed was executed on 14.08.2014. The capital gain was duly declared in the ITR for Assessment Year 2015–16. 3.3 The assessments for AY 2015-16 and AY 2016-17 for both the assessee and his father were scrutinized under Section 143(3). Notably, for AY 2015-16, a notice under Section 143(2) for limited scrutiny was issued by the non-jurisdictional AO, Ward-2(3)(1), Kanpur. The case was later transferred to the jurisdictional AO, Circle 6(1), Mohali, on 04/10/2016, without an order under Section 127 or 5 providing the assessee a reasonable opportunity to be heard, violating mandatory transfer procedures. 3.4 During the assessment, the AO questioned the substantial deductions claimed under Sections 54B, 54F, and 54EC. The assessee provided detailed explanations and supporting documents, and after thorough inquiry, the AO accepted the returns as filed. However, the PCIT, Chandigarh, initiated revisionary proceedings under Section 263, issuing a show-cause notice on 13/03/2020, regarding the deductions under Sections 54B and 54F. Despite the assessee’s detailed submissions, the PCIT passed an order on 11/03/2021, under Section 263. 4. Against the order of the Ld. PCIT, the assessee came up in appeal before us. 5. During the course of the hearing, the Learned Ld. AR filed written arguments, the contents of which are summarized as follows: 1. Issues raised in order passed u/s 263 1.1. Investment Prior to 14.08.2013 in Agricultural land Claimed u/s 54B 1.1.1. Vide para 9.1 at page 12 of the order passed u/s 263, the Worthy PCIT raised issue that deduction u/s 54B can not be allowed in respect of lands purchased before the execution of sale deed on 14.08.2014 and further that advance received in Sep. 2013 having been adjusted against sale deed executed later in Feb 2016, the benefit of deduction u/s 54B against gain on sale deed executed on 14.08.2014 should not have been allowed by AO. 1.1.2. In regard to this, it is submitted that the core of the issue raised by the Worthy PCIT is that ‘A’ claimed deduction u/s 54B for investment in agricultural land made prior to the execution of the sale deed dated 14.08.2014. However, the Ld. PCIT failed to 6 appreciate that ‘A’, along with his father, entered into a composite sale agreement with the buyer for their jointly owned agricultural land measuring 40 Kanal 6 Marla 6 Sarsai for which ‘A’ received advance of Rs. 1,47,66,375/- in Sep. 2013 i.e. before the execution of sale deed. From this amount, ‘A’ invested Rs. 1,35,08,500/- towards purchase of agricultural lands and this investment is before execution of sale deed on 14.08.2014. The Ld. PCIT failed to appreciate that it was a composite deal for entire land, the buyer had given advance for entire composite deal, the 2 sale deeds one in Aug 2014 and other in Feb 2016 are to same buyer, there was no reason to adjust the earlier advance in deed executed in Feb 2016 and therefore, this also shows that it was a composite sale and not 2 separate sales. Therefore, the transaction of sale deed happening in Aug 2014 started much earlier with receipt of advance in Sep 2013 and that receipt of advance can not be viewed as only for sale deed executed in Feb 2016. Further, the buyer had also confirmed these facts via his duly sworn and attested affidavit. Copy of the same is at the page no 34 of Vol-I of PB. 1.1.3. Factually, based on above, the Worthy PCIT has erred in holding that the 2 sale deeds are not composite and advance received in Sep 2013 can not be linked with sale deed executed in Aug 2014 which is in question in year under consideration. This finding of the Ld. PCIT deserves to be reversed. 1.1.4. Another question, which is purely legal, that was raised by the Ld. PCIT was that deduction u/s 54B can not be allowed in respect of land purchased prior to execution of sale deed. For this, she held that s. 54B permits deduction in respect of land purchased “after” sale. Now the question is whether such investment made after the agreement to sell and receipt of advance but prior to the formal sale deed, qualifies u/s 54B. It is settled law that starting point for eligible investment u/s 54B is to be taken from the date of receipt of advance or agreement and the Ld. PCIT has erred in holding it otherwise. The Hon’ble Supreme Court in Sanjeev Lal vs. CIT [(2014) 365 ITR 389 (SC)] laid down that the date of transfer is to be reckoned from the date of agreement to sell, especially where substantial rights are transferred and possession or part payment has occurred. Similarly, 7 the Hon’ble Gujarat High Court in KishorebhaiHarjibhai Patel vs. ITO [(2019) 414 ITR 182 (Guj.)] reaffirmed and ruled that for computing the eligible window u/s 54F, the date of agreement to sell (if followed by part performance) is to be considered as the date of transfer. 1.1.5. Since the facts of the case clearly establish a composite deal with part performance in 2013, the investment made by ‘A’ post- receipt of advance in September 2013 squarely qualifies for exemption u/s 54B. The ld. AO had examined this claim in detail during the scrutiny assessment u/s 143(3) and accepted the same after due verification. Therefore, the finding of the Worthy PCIT that the deduction was erroneously allowed is contrary to both facts and law. 1.1.6. For the purpose of eligibility of assessee for claiming deduction u/s 54B for investment made in agricultural land prior to execution of sale deed but after the execution of agreement or after receipt of advance amount, there is a direct decision of Hon’ble ITAT, Chandigarh in the case of Inderjit Singh Mann v. ACIT (ITA No. 1136/CHD/2014, order dated 16.03.2017), (Copy attached at Page 15-28 of this synopsis) wherein the Hon’ble Tribunal allowed the claim of the assessee based on the interpretation of CBDT Circular No. 359 dated 10.05.1983 (Copy attached at 29 of this synopsis) , which clarified that the legislative intent of capital gains exemption provisions (such as s. 54, 54B, and 54EC) is to permit relief where the investment is made out of earnest money or advance received before the actual date of transfer. The Circular, though originally issued in the context of s. 54E, was held by the Tribunal to be equally applicable to s. 54B, as the purpose and spirit of both sections are identical—ensuring that where capital gains are reinvested in qualifying assets, the benefit of exemption should be granted, even if such reinvestment occurs before formal execution of the transfer deed. This interpretation has received judicial recognition in multiple cases, including:  DCIT v Assa Singh in ITA No. 26/Asr/2015 dated 11.3.2016, ITAT Amritsar.  Ramesh Narhari Jakhadi Vs. ITO in (1992) 11 CCH 0081, ITAT Pune.  ACIT Vs. Dr. S. Balasundarm in (2013) 36 CCH 107, ITAT Chennai.  CIT-II Pune Vs. Subhash Vinayak Supnekar in Income Tax Appeal No. 1009 of 2014 dated 14.12.2016, Bombay HC. 8  Ms. Parveen P. Bharucha v. DCIT, 348 ITR 325, Bombay HC 1.1.7. Hence, the investment in agricultural land made by ‘A’ after the receipt of advance consideration but prior to the execution of the sale deed was eligible for deduction u/s 54B and the Worthy PCIT has erred in objecting on the same in the order u/s 263. 2. InvestmentPrior to 14.08.2013 in Residential Plot claimed u/s 54F 2.1. Through para 10 of page no. 14 of the order passed u/s 263, the Worthy PCIT raised question about the advance received in regard to sale of property made on 14.08.2014 and deduction claimed u/s 54F for the purchase of residential property before the date of execution of sale deed. Copy of purchase deed of residential property purchased is appended at page no. 42 to 47 of the Vol-1 of PB. 2.2. As stated above, the date of transfer, for the purposes of s. 54B and 54F, is not rigidly tied to the date of sale deed but rather to the date on which rights in the property are extinguished. ‘A’ had received substantial advance towards the composite sale as early as September 2013 and invested part of that amount in a residential plot, followed by construction. The law, as interpreted in KishorebhaiHarjibhai Patel (supra), holds that if a residential property is purchased within one year prior to the date of transfer, the exemption u/s 54F is allowable. Applying this principle, ‘A’’s investment was within one year from the date of “transfer” (i.e., agreement to sell / receipt of consideration). The purchase deed of house having been executed on 03.04.2013, it falls within one year prior window from date of receipt of biana of agricultural land in Sep 2013. 2.3. Thus, the investment made by ‘A’ in purchase/ construction of the house property prior to the date of sale deed but within permissible period counted from receipt of advance qualifies for deduction u/s 54F as it is well within one year before the date of receipt of said advance. The said deduction was rightfully allowed u/s 143(3) after due verification and should not have been objected by the Ld. PCIT in order u/s 263. 3. Agricultural use of Land 9 3.1. At page 14 of the order passed u/s 263, it has been stated that the land sold by the ‘A’ was not in agriculture use for a period of more than 2 years prior to sale. 3.2. During the assessment proceedings, the ld. AO comprehensively examined the said issue as ‘A’ submitted copies of Girdawari records from the revenue authorities evidencing the use of land for agricultural purposes for more than two years prior to the date of sale. These documents were accepted by the ld. AO. Copy of the Girdawri records are appended at page no. 37 to 38 of the Vol-I of PB. 3.3. It is pertinent to mention that the sale deed executed on 14.08.2014 was co-owned by the ‘A’ and his father (Daljit Singh Bassi) for a total consideration of Rs. 16,33,12,500/- which was used for the agriculture purpose for more than 2 years prior to the sale and the same was substantiated by providing the copy of Girdawri records stating that the said land in question was being used for agriculture purpose. 3.4. Similar issue was raised in the case of the ‘A’s father in revisionary proceedings u/s 263 and the same was challenged before the Hon'ble ITAT and order was passed in the favor of the assessee's father (Copy of ITAT order of Daljit Singh Bassi (assesse's father) is appended at the page no. 23 to 38 of Vol-1 of compilation of Judgements) wherein it was held that: \"We have also gone through the various documents filed by the assessee before us and we agree with the contention of the Ld. AR that the assessee had filed voluminous evidences in support of his claim of exemption u/s 54B of the Act by filing the copies of the purchase deeds, sale deeds as well as copies of Girdawari and Sarsai. There is also a certificate of 'Patwari' on record and from the said documents, it is very much evident that the lands in question were of agricultural in nature.\" 3.5. It is evident from the above that the land sold by the ‘A’ was agricultural land and was being used for agricultural purposes 2 years prior to sale. The Hon’ble Tribunal confirms the genuineness of agricultural use of the same land in question and the allowability of deduction thereafter. Therefore, the Worthy PCIT's objection on this count is unsustainable. Hence, the claim of deduction u/s 54B was rightly allowed by the ld. AO. 4. Wrong Computation of deduction u/s 54F 10 4.1. ‘A’ has computed deduction u/s 54F on proportionate basis only. The net sale consideration was Rs. 3,23,43,750. After deducting indexed cost (Rs. 8,75,192/-), the net LTCG came to Rs. 3,14,68,558/-. Out of this, Rs. 38,18,260/- was invested in a residential house, and ‘A’ claimed proportionate exemption of Rs. 37,14,941/- u/s 54F. The computation carried out by ‘A’ during the course of Assessment Proceedings and allowed by the ld. AO in order passed u/s 143(3). The total exemptions claimed u/s 54B and 54F amounted to Rs. 3,20,21,651, leaving no taxable LTCG is as under: 4.2. There is no error in the calculation of the deduction claimed u/s 54F. The deduction u/s 54F is to be computed when a capital asset is sold and part of capital gain amount is invested and claimed as deduction under provisions of s. 54, it has been laid in numerous judgements that when there are 2 alternative provisions available, the choice of the provision which casts lesser burden can be elected and the assesse is justified in electing to be governed as he has computed the deduction u/s 54F. For this proposition, we rely upon:  CIT vs. Bosotto Brothers Ltd., [(1940) 8 ITR 41(Madras HC)]  C.S. Mathur vs. CBDT [(1999) 235 ITR 769 (Delhi HC)] 4.3. Therefore, the allegation of the PCIT that the entire amount was wrongly allowed without applying the proportionate formula is incorrect and contrary to the record. 5. CashInvestment in construction not supported by bills The ‘A’ has made investment in the residential house and claimed the deduction u/s 54F for the purchase/construction of property on Particulars Calculation Amount Net Consideration (1) Rs 3,23,43,750 Indexed Cost of Acquisition (2) Rs 8,75,192 Long Term Capital Gain (point 2) (3) (1)-(2) Rs 3,14,68,558 Amount invested in purchase of agricultural land and allowable as deduction u/s 54B (4) Rs 2,83,06,710 Amount invested in 54F (point 3) (5) Rs 38,18,260 Amount Eligible for Exemption u/s 54F (6) (3) ∗(5) (1) Rs 37,14,941 Total Exemption (7) (4)+(6) Rs 3,20,21,651 Net Long Term Capital Gain (8) (3)-(7) Nil 11 a proportionate basis. Thereafter, ‘A’ carried out the construction on the property purchased and the map was also approved for the construction. The investment in construction was modest, and ‘A’ submitted sufficient documentary evidence including construction bills and approved building map. Copy of construction bills are appended at page no 82 to 121 of Vol-1 of PB and Copy of map is appended at page no. 49 to 52 of Vol-I of PB. The ld. AO, after examining the above documents, accepted the construction cost as genuine. Further, it is submitted that there is no finding that any claim was inflated, fictitious, or unsupported. Even if some portion of the construction expenditure involved cash payments (as is common in local construction), the same does not disqualify the claim as long as the investment is genuine. In absence of any specific finding of misrepresentation, the disallowance of the deduction on this ground is unwarranted. Arguments on Legality of assessment: 6. Transferring the case from one AO to another AO without following the mandatory procedure laid down u/s 127 of the Act makes the whole assessment proceedings invalid. The case of the ‘A’ was selected for the limited scrutiny by issuing the statutory notice u/s 143(2) of the Act on 19.09.2016 by the Ld. AO Ward-2(3)(1), Kanpur who did not have jurisdiction over ‘A’. Later on, the case was transferred to the Ld. AO, Circle 6(1), Mohali where the jurisdiction of the ‘A’ is vested. Such transferring of case from non-jurisdictional AO to the jurisdictional AO was carried out without issuing the mandatory order u/s 127 of the Act and without providing the reasonable opportunity of being heard to the ‘A’. Therefore, procedure laid down in s. 127 for transferring case from one AO to another AO is not followed and no valid order u/s 127 was passed. Hence, the assumption of jurisdiction by the Ld. AO Circle 6(1) Mohali and the consequential passing of the impugned assessment order was bad in law deserving to be quashed. For all these propositions, we rely upon the ratio of following judgements:  Louis Dreyfus Company Asia Pte. Ltd. vs. CIT(IT) (2022) 114 CCH 132 (Del HC)  Vedanta Resources vs ACIT WP(C) No. 6372 of 2022 dtd. 09.03.2023 (Orissa HC)  Sahara Hospitality Ltd. Vs CIT (2013) 352 ITR 38 (Bom HC) 7. Mandatory Notice u/s 143(2) not issued by the Jurisdictional AO within the stipulated time period. 12 The notice u/s 143(2) is a statutory notice to be issued for framing the assessment u/s 143(3) of the Act. In the present case, the notice u/s 143(2) was issued by the non jurisdictional AO. However, on subsequent transfer of the case to the jurisdictional AC, notice u/s 143(2) was issued by the jurisdictional AO on 08.10.2017. Copy of above notice attached at page no.73 to 74 of Voll of PB. The absence of valid notice u/s 143(2) before prescribed time is not a curable defect. Therefore, the issuance of notice by the ITO, Circle 6(1), Mohali after the limitation period for issuance of statutory notice u/s 143(2) makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid. The identical facts came before the Hon'ble ITAT, Kolkata in the case of Shri Sukumar Chandra Sahoo vs ACIT (ITA No. 2073/Kol/2016) dtd. 27.09.2017 wherein it was held: \"It is settled law that serving of notice u/s. 143(2) of the Act is a sine qua non for an assessment to be made u/s 143(3) of the Act. In this case, notice u/s. 14.3(2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice he duly transferred the file to the ACIT, Circle-27, Haldia on 24.09. 2014 when the ACIT issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACID, Circle 27. Haldia after the limitation period for issuance of statutory notice u/s 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assesseeneed not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed. 7. In the result, appeal of assessee is allowed.\" 8. Challenging the validity of primary proceedings concluded u/s 143(3) in appeal on a collateral proceedings u/s 263. 13 The assessment for the year in question was completed u/s 143(3) and the Ld. AO duly accepted the claim of the ‘A’ in regard to deduction claimed u/s 54B and 54F and accepted the returned income of the ‘A’. Thereafter, the Worthy Pr. CIT conducted proceedings u/s 263 and held that the relief allowed by the Ld. AO on merits of the issue of deduction claimed under capital gains requires reconsideration. Against this order u/s 263, the ‘A’ filed appeal before the Hon'ble ITAT. Furthermore, apart from various angles on which the ‘A’ is of the view that the jurisdiction u/s 263 has been wrongly assumed, one tangent in the challenge is that the \"When primary proceedings conducted u/s 143(3) were invalid, then collateral proceedings u/s 263 also cannot survive\". We are arguing that the invalidity in such primary proceedings can be challenged in appeal against collateral proceedings also. For this proposition, we rely upon the following judgements:  PCIT . M/s Westlife Development Ltd. ITA No. 1168/2017 (Bom. HC)  PCIT vs Badal Prakash Jindal ITA No. 8,7,96 10 of 2023 dtd. 02.03.2023 (Orissa HC)  M/s Vision Promoters & Builders (P) Ltd. (2017) 190 TTJ 398 ITAT Chd. CIT Arguments on Merits of assessment: 9. Wrong assumption of Jurisdiction u/s 263 9.1. The Worthy Pr. CIT has erred in setting aside the original assessment order passed u/s 143(3). In regard to this, it submitted that all these issues were already raised by the Ld. AO and he has enquired about all the issues during the assessment proceedings. ‘A’ replied to all those issues supported with the documentary evidences and only after due enquiry and verification the Ld. AO accepted the claim of the ‘A’ Thus, the twin condition for initiation revisionary proceedings is not fulfilled. 9.2. Moreover, it is a settled law that when the issue is thoroughly enquired and examined by the Ld.AO in the original assessment framed u/s 143(3) revisionary proceedings are not maintainable. For this proposition we, rely upon the following judgements:  Malabar Industrial Co. Ltd. vs CIT (2000) 243 ITR 83 (SC)  CIT vs Sunbeam Auto Ltd. 332 ITR 167 (Del HC)  ITO vs DG Housing Projects Ltd. 343 ITR 329 (Del HC) 14 10. In view of above, it is therefore prayed that the impugned order passed u/s 263 may please be quashed. We shall be highly obliged. 6. Per contra, the Ld. DR relied on the order of the Ld. PCIT. 7. We have heard the rival contention of both the parties and also perused the material available on the record. We find that the Ld. PCIT has set aside the assessment order passed under section 143(3) assuming jurisdiction under section 263 on the ground that the deduction under section 54B cannot be allowed in respect of agriculture land purchased from advance received against sale of agriculture land. He also held that the period of one year prior has to be reckoned / counted from the date of execution of sale deed of land sold by the Assessee. 7.1 During the proceedings before us the Ld. Counsel for the Assessee argued at length bringing to our notice various case laws on the same issue in his favour, while the Ld. DR heavily relied on the order of the Ld. PCIT. We find that the Hon’ble Supreme Court in the case of Sanjeev Lal vs. CIT (supra) has clearly laid down that the date of transfer has to be reckoned from the date of agreement to sell, specially where substantial rights are transferred and possession or part payment has occurred. The Ld. Counsel for the Assessee has also brought to our notice the case laws decided by Hon’ble Gujarat High Court in the case of Kishorebhai Harjibhai Patel vs. ITO(supra) wherein the Hon’ble High Court reaffirmed and ruled that for computing the eligible window u/s 54F, the date of agreement to 15 sell (if followed by part performance) is to be considered as the date of transfer. We find that the assessee’s present appeal against order passed under section 263 by the Ld. PCIT is squarely covered by the abovementioned case laws, therefore respectfully following the decision of Hon’ble Apex Court in the case of Sanjiv Lal Vs. CIT(supra) as well as decision of Gujarat High Court in the case of Kishorebhai Harjibhai Patel vs. ITO(supra), the appeal of the assessee on this issue is allowed. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 21/04/2025. Sd/- Sd/- (RAJPAL YADAV) (KRINWANT SAHAY) VICE PRESIDENT ACCOUNTANT MEMBER AG Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, CHANDIGARH 6. Guard File By order, Assistant Registrar "