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Income Tax Appellate Tribunal, DEHRADUN BENCH, NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in Pr. Commissioner of Income Tax, Dehradun, [hereinafter referred to as „ld. Pr. CIT‟, in short] under section [u/s] 263 for A.Y. 2015-16 dated 26.03.2021 against the order of reassessment passed u/s 143(3) rws 147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 30.10.2018 by the Assessing Officer, ITO, Ward-1(1), Dehradun (hereinafter referred to as „ld. AO‟).
2. The assessee has raised the following grounds of appeal:-
“1. That having regard to the facts and circumstances of the case, Ld. PCIT has erred in law and on facts, in holding that the assessment order for A.Y. 2015-16 dated 30.10.2018 passed u/s 147/143(3) is erroneous and also prejudicial to the interest of revenue. 2. On the facts and circumstances of the case, the Learned PCIT has based her decision to pass the Order under Section 263 on the basis of suspicions, surmises and conjectures.
Shri Abhishek Joshi 3. That in any case and in any view of the matter, action of Ld. PCIT is bad in law and against the facts and circumstances of the case, since opportunity of being heard in person not considered and without hearing the Assessee the order u/s 263 is passed.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts for not providing the copies of the documents which were required to submit justification before PCIT.
5. On the facts and circumstances of the case, the Learned PCIT has disregarded the proofs submitted regarding the existence of a residential house, by stating that all the proofs submitted were of last few months and not at the time of purchase of the property.
6. That having regard of the facts and circumstances of the case, Ld. CIT(A) has erred in law for not incorporating full reply at 14/03/2021 submitted before PCIT in the order passed u/s 263 ar 26/03/2021.”
We have heard the rival submission and perused the material available on record. The assessee is an individual deriving income from salary, capital gains and other sources. Notice u/s 148 of the Act was issued for AY 2015-16 on 08.06.2017 and in response thereto assessee filed return of income electronically on 01.07.2017 declaring total income on Rs. 1,81,270/-. The assessee sought for furnishing of reasons recorded for reopening of the assessment, which was duly furnished by the ld AO on 18.07.2017. The reasons recorded by the ld AO clearly mentioned that the assessee had sold some land for Rs. 84,37,000/- on 24.03.2015 on which long term capital gain worked out to Rs. 65,97,510/-. The reasons also mentioned that the land sold was urban agricultural land and accordingly long term capital gain thereon would be liable to be taxed in the hands of the assessee, for which the assessment was sought to be reopened. The assessee also submitted vide letter dated 08.10.2018 submitted on 15.10.2018 that he had purchased a land at Village Kandholi on Pondha Road, Dehradun on 24.07.2014 for Rs. 6,50,000/- whereas, the circle rate valuation of the land was Rs. 15,73,000/-. Accordingly, the assessee in its submission came forward to offer the difference amount of Rs. 9,23,000/- as income from other sources. The assessee also paid due taxes on the additional income offered in the sum of Rs. 9,23,000/- before it could be detected by the ld AO. Further, the assessee in the letter dated 08.10.2018 submitted on 15.10.2018 duly submitted details of purchase of residential property at Dhauru Khas vide Khatuni No. 00813, Khasra Page | 2 Shri Abhishek Joshi No. 6(k) area 1820 sq meter Dehradun for Rs. 1,03,44,600/- on 28.04.2015. The assessee had also enclosed purchase documents before the ld AO. Accordingly, he subjected that he would be entitled for exemption u/s 54F of the Act and also gave workings of Nil capital gains thereon as under:-
a. Sales consideration of urban Rs. 84,37,000/- agricultural land Index cost of acquisition Rs. 11,50,000X1024/633) Rs. 18,63,291/- b. difference capital gain Rs. 65,73,709/- exemption claimed u/s 54F of the Act 6573709/8437080/- Rs. =8060020 X10344600 Which was restricted to the extent of capital gain of Rs. 65,73,709/-.
3. It was submitted that assessee has filed Nil capital gain on sale of urban agricultural land. This contention of the assessee was duly accepted by the ld AO and finally in the reassessment order completed on 30.10.2018, the ld AO made addition of Rs. 9,23,000/- which was voluntarily offered by the assessee u/s 56(2)(vii)(b) of the Act in respect of purchase of land at Khandoli as detailed hereinabove.
This reassessment was sought to be revised by the ld PCIT by invoking his revisional jurisdictional u/s 263 of the Act on the following grounds:-
“2. Examination of the case record revealed the followings facts:- The assessee had sold a land situated at Arcadia Grant, Dehradun on 24.03.2015 for a consideration at Rs. 84,37,000/- Computation of capital gain, furnished by the assessee, is as under:- Full Value of Consideration 84,37,000/- Less: Indexed cost of acquisition 11,50,000 X 1024/632 18,63,291/ 65,73,700/- Deduction u/s 54F 65,73,700/- Long Term Capital Gains Nil • The assessee invested the sale consideration in purchase of a land for Rs. 1,03,44,600/- and thereafter, claimed to have built a cottage on it. During the course of assessment proceedings, statement of the contractor was recorded on 30.10.2018 wherein it had been stated by the contractor that a cottage was built Shri Abhishek Joshi by him and the work of which was completed in February 2019 and a bill was raised on 01.03.2018. However, the payment was made in August, 2018. • The assessee purchased aforesaid land for Rs. 1,03,44,600/- exceeding the sale value of consideration. There is nothing in the record that would explain the source of additional amount invested in the purchase of new asset. The agricultural income shown at Rs 11,81,536/- is not supported by any evidence with regard to land in possession on which agricultural activities have been carried out or expenditure incurred on agricultural operations .
In view of the above facts, the assessment order u/s 147/143(3) of the Income Tax Act, 1961 dated 30.10.2018 for the A.Y. 2015-16 appeared to be erroneous and prejudicial to the interest of revenue. Therefore, a notice dated 15.02.2021 was issued to the assessee requiring to show cause as to why an appropriate order u/s 263 of the Income Tax Act, 1961 should not be passed cancelling the assessment order and directing fresh assessment in the light of the above facts. The date of compliance was fixed on 09.03.2021.”
The assessee gave a detailed reply to its show case notice before the ld PCIT. The ld PCIT on examining the reply of the assessee agreed to the fact in respect of issue No. 1 by agreeing to the fact that the purchase of land at Kandholi of Rs. 1,03,44,600/- on 28.04.2015 falls in AY 2016-17 and hence not relevant to AY 2015-16.
However, with regard to other two issues on the long term capital gain at Rs. Nil on sale of urban agricultural land and expenses of agricultural income of Rs. 11,81,536/-, the ld PCIT held that the order passed by the ld AO to be erroneous and prejudicial to the interest of revenue.
We find that assessee had duly furnished all the requisite details before the ld PCIT and the ld PCIT in para 4.2 of his order had duly mentioned the receipt of those details. Despite that the Ld PCIT states that since the same were not verified by the ld AO, hence, the said details requires verification. This goes to prove that ld PCIT had not found any fault with any of the details submitted by the assessee. It is fact that the assessee had furnished the details of agricultural receipts, agricultural expenses, ledger accounts, details of sale of agricultural produce together with the bills before the ld PCIT. The assessee could be expected to furnish the details called for by the ld AO during the course of assessment proceedings. No doubt, if a particular item has not been examined by Shri Abhishek Joshi the ld AO, that would be fit case for ld PCIT to invoke revision jurisdiction u/s 263 of the Act. However, before proceeding to do so, it is bounden duty on the part of the ld PCIT to make preliminary enquiry with regard to the details furnished by the assessee before it. Only then, he can conclude that the order of the ld AO is erroneous. This in the instant case is conspicuously absent as is evident from the facts recorded in para 4.2 of the order of the ld PCIT. On bare perusal of para 4.2 of the order ld PCIT, it becomes evident that the ld PCIT had merely acted as post office of collecting the details from the assessee and passing it on to the ld AO for making further enquiries or verification by invoking his revision jurisdiction u/s 263 of the Act. It is trite law that the ld PCIT cannot direct the ld AO to make fishing and roving enquiries on a particular issue by invoking jurisdiction u/s 263 of the Act. Hence, we hold that the action of the ld PCIT in invoking jurisdiction u/s 263 of the Act by directing the ld AO to make verification of details filed by the assessee in respect of agricultural income, to be bad in law.
With regard to computation of capital gain on sale of agricultural land, we find that adequate enquiries were already conducted by the ld AO which is evident from the reply filed by the assessee on 04.07.2017 before the ld AO enclosed at page B of the paper book during the course of reassessment proceedings. Further, the assessee had filed another letter dated 08.10.2018 submitted on 15.10.2018 before the ld AO giving the complete works of capital gain together with the details of investment made in new property and consequential eligibility for exemption u/s 54F of the Act which was also restricted to the extent of capital gain by the assessee. The assessee had also furnished copies of purchase deed before the ld AO. The ld AO on examination of full evidences had taken a plausible view on the matter and accepted the contention of the assessee. Hence, the same cannot be subjected to revision proceeding u/s 263 of the Act merely because ld PCIT had a different view on the issue. Reliance in this regard is placed on the decision of the Hon‟ble Supreme Court in the case of Malabar Industrial Company Ltd Vs CIT reported in 243 ITR 83. Hence, the action of the ld PCIT in invoking revision jurisdiction u/s 263 of the Act by treating the order of the ld AO as erroneous for want of verification on the issue of capital gain on sale of urban Shri Abhishek Joshi agricultural land is factually incorrect and not sustainable in the eyes of law. Hence, revision order passed by the ld PCIT u/s 263 of the Act is hereby quashed. Accordingly, grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15/09/2023.