Income Tax Department vs. Shri Satyanarayan Sharma

- : 1 :- ITA No. 187/2022 IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA & HON'BLE SHRI JUSTICE RAJENDRA KUMAR (VERMA) ON THE 12th OF DECEMBER, 2022 INCOME TAX APPEAL No. 187 of 2022 BETWEEN:- INCOME TAX DEPARTMENT PRINCIPAL COMMISSIONER OF INCOME TAX AAYKAR BHAWAN NEAR WHITE CHURCH INDORE (MADHYA PRADESH) .....PETITIONER (MS. VEENA MANDLIK, LEARNED COUNSEL FOR THE APPELLANT) AND SHRI SATYANARAYAN SHARMA 11/2, SOUTH TUKOGANJ SWAPNALOK COLONY INDORE (MADHYA PRADESH) .....RESPONDENTS (NONE FOR THE RESPONDENT.)

This appeal coming on for hearing on admission this day, JUSTICE VIVEK RUSIA passed the following: ORDER

Appellant – Principal Commissioner of Income Tax-I, Indore has filed the present Income Tax Appeal u/s. 260A of the Income Tax Act, 1961 against order dated 17.1.2022 passed by the Income Tax Appellate Tribunal (ITAT) in M.A. No.09/2021, whereby order - : 2 :- ITA No. 187/2022 dated 28.12.2012 passed in ITA No.426/Ind/2018 has been recalled. The assessment year in this case is 2013-2014.

The respondent filed the Income Tax return declaring the income of 9,96,030 on 8.7.2014. The case was processed u/s. 143(1) (i/ii) of the Income Tax Act on 4.11.2014. Accordingly, notice u/s. 143(2) of the Act was issued on 31.8.2015 by the Income Tax Officer-I, Indore. In response to the said notice, Chartered Accountant (CA) of the respondent appeared and answered the query.

The assessee is having the business of trading milk and declared the sale of Rs.66,72,091 and shown a profit of Rs.5,74,111/- during the said assessment year. He sold the agricultural land for a sale consideration of Rs.1,20,00,000/- by way of registered sale-deed. The assessee claimed to have invested the amount in purchase of another agricultural land at Rs.36,40,080/- and a house property at Rs.78,36,081/- and claimed deduction u/s. 54F of the Act. The copies of the ledger and bills were produced as an evidence of investment. The Assessing Officer (AO) completed the assessment u/s. 143(3) of the Act by making additional long term capital gain of Rs.6,54,892/-.

The assessee preferred an appeal before the Principal Commissioner of Income Tax-I (PCIT), Indore. Vide order dated 26.3.2018 the learned PCIT held that the AO was required to determine the cost of new assets correctly for determining the eligible amount u/s. 54F and remanded the matter back. - : 3 :- ITA No. 187/2022

The AO u/s. 143(3) read with Section 263 of the Act completed the assessment on 10.12.2018 after making an addition of long term capital gain of Rs.20,49,395/- by allowing the deduction of Rs.61,64,265/- u/s. 54F of the Act. Being aggrieved by the aforesaid order, the assessee preferred an appeal before the Commissioner, Income Tax (CIT) against the addition of Rs.20,49,395/-. Learned CIT has affirmed the aforesaid addition. Thereafter, the assessee approached the ITAT by filing an appeal against order dated 26.3.2018 passed by the CIT. The ITAT allowed the appeal partly by holding that it is not clear that the assessee had entered into a contract with the contractor that included the cost of furniture and other fixtures for making a house habitable because only the civil construction cannot be treated as an investment in a house for residential purpose.

Being aggrieved by the aforesaid order, the assessee preferred Misc. Appeal u/s. 254(2) of the Income Tax Act before the ITAT which came to be allowed by impugned order dated 17.1.2022 whereby the ITAT has quashed the proceedings by holding that the order passed by the AO was not erroneous in nature as the AO had chosen one of the permissible view judicially accepted. Hence the present appeal before this Court proposing two substantial questions of law. However, the appellant has made a declaration that the tax effect is of Rs.6.78 Lakhs which is less than the permissible limit as per Clause 10(c) of Circular No.3/2018 dated 11.7.2018 where revenue audit objection in the case has been accepted by the - : 4 :- ITA No. 187/2022 Department. However, no such audit objection has been brought on record, whereas, the assessment order says that the case of the assessee/respondent was proceeded u/s. 143(1(i/ii) of the Act which is based on any arithmetical error in the return and an incorrect claim, if such incorrect claim is apparent from any information in the return. There is no such mention about the objection taken by the Audit Office of the Department. Therefore, this appeal is not maintainable as the tax effect is less than the permissible limit.

Even otherwise, the Department has never challenged the order passed by the AO on 23.3.2016 and 10.12.2018 and after remand by the PCIT vide order dated 26.3.2018. Vide order dated 17.1.2022 the ITAT has restored the assessment order dated 23.3.2016 on an application filed by the assessee which the Department has never challenged before the appellate authority or the Tribunal. However, the said order has been modified vide order dated 10.12.2018 by the AO by granting an addition of Rs.20,49,395/- on long term capital gain. Hence, on merit also, no case is made out.

Accordingly, this appeal fails and is hereby dismissed in limine. [ VIVEK RUSIA ] [AMAR NATH (KESHARWANI)]

JUDGE. JUDGE. Alok/- Digitally signed by ALOK GARGAV Date: 2022.12.22 11:06:41 +05'30'