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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश आदेश /O R D E R आदेश आदेश
PER MAHAVIR SINGH, VP:
This appeal by the Assessee is arising out of the revision order passed by the Principal Commissioner of Income Tax, Chennai – 3 in revision order No.PCIT, Chennai-3 / Revision – 263 / 100000194739 /2021; dated 25.03.2021. The original assessment was completed by the Income Tax Officer, Non-Corporate Ward – 19(2), Chennai for the relevant assessment year 2016 – 2017
:: 2 :: I.T.A No.:261/CHNY/2022 u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act”) vide order dated 26.11.2018.
At the outset, it noticed that this appeal is time barred by limitation by 337 days and the Assessee has filed a condonation petition stating the reason.
The Appellate order under challenge before the Tribunal was served to the Assessee on 25.03.2021 and the Assessee had filed the appeal before the Tribunal on 26.04.2022, thereby it means that there is a delay of 337 days, but as contended by the Assessee in the petition that the period of delay falls during the outbreak of ‘Covid-19’ pandemic. It is a fact that ‘Covid-19’ pandemic was prevalent during the period and in term of the directions issued by the Hon’ble Supreme Court in Miscellaneous Application No.21/2022 in Suo Motu Writ Petition No.3 of 2020, we condone the delay of 337 days and admit the appeal for adjudication on merits.
The only issue in this appeal of the Assessee is as regards to the order of the Principal Commissioner of :: 3 :: I.T.A No.:261/CHNY/2022 Income Tax, Chennai passed u/s.263 of the Act revising the original assessment and setting aside the assessment of the Assessing Officer to verify the transaction of the sale and claim of deduction u/s.54 and u/s.54F of the Act in respect of the capital gains arising from the sale of three properties and investment made to acquire a residential property. For this, the Assessee has raised various grounds, numbering into ten, which are argumentative and exhaustive and hence it is not needed to be reproduced.
The brief facts of the case are that the Assessee had filed his return of income on 22.02.2017 for the relevant assessment year 2016 – 2017. The Assessee’s case was selected for limited scrutiny under Computer Aided Scrutiny Selection [CASS] and accordingly a notice u/s.143(2) of the Act dated 18.09.2017 was issued and served on the Assessee. After issuing a questionnaire along with the notice u/s.142(1) of the Act, the assessment was completed u/s.143(3) of the Act, vide order dated 26.11.2018. The Assessing Officer in the original
:: 4 :: I.T.A No.:261/CHNY/2022 assessment proceedings issued the following two queries vide notice dated 18.09.2017, as under:
“Following issue(s) have been identified for examination:
(i) Whether value of consideration for computation of capital gains has been correctly shown in the return of income?
(ii) Whether deduction from capital gains has been claimed correctly?”
The Assessing Officer in the assessment order has considered these two issues and accepted the deduction of capital gains by observing in paragraph No.4, as under:
“4. In response to our notice, the Assessee submitted the documents relating to the investments made by him during the period in question.
The Assessee seems to have shown the value of consideration and also the deduction from capital gains correctly and within limits.
The explanations given by the Assessee seems to be reasonable and hence accepted. Taking into consideration the details submitted during the course of the assessment proceedings, the assessment is completed as under.”
:: 5 :: I.T.A No.:261/CHNY/2022
Subsequently, the Principal Commissioner of Income Tax issued notice u/s.263 of the Act issuing show- cause notice, as to why the deduction of capital gains claimed be not disallowed? The Principal Commissioner of Income Tax issued the following reason in paragraph Nos. 2 & 3 of the show-cause noticed dated 16.03.2021, as under:
“2. (i) On perusal of records, it is noticed that the Assessee has claimed exemption u/s.54F of the Act in respect of the capital gains on sale of the land. Since, the Assessee owns more than one residential house at the time of transfer, he is not entitled for exemption u/s.54F of the Act.
(ii) The Assessee has claimed exemption u/s.54 of the Act of Rs.83,34,683/- in respect of the sale of residential property. Since, the Assessee has not purchased the new property being flat (not constructed) within two years, he is not eligible for deduction u/s.54 of the Act. Further, the amount was not deposited in a Bank account of capital gain account scheme as specified in Section 54 of the Act.
(iii) It is noticed from the sale deed that the value adopted was Rs.7,500/- per Sq.Ft at West Park Street, Shenoy Nagar, Chennai, where as it is seen from TNREGINET.GOV.IN the guideline value of West Park Street, Shenoy Nagar is Rs.10,500 per Sq.Ft.
:: 6 :: I.T.A No.:261/CHNY/2022
3. In view of the above, the Assessment Order passed u/s.143(3) of the Income Tax Act, 1961 on 26.11.2018 is erroneous, in so far as it is prejudicial to the interests of the revenue.”
Accordingly, the Principal Commissioner of Income Tax issued a revision order directing the Assessing Officer to verify the contention of the Assessee but the Principal Commissioner of Income Tax had never said that the assessment is erroneous or prejudicial to the interests of the revenue. Aggrieved, the Assessee came in appeal before the Tribunal.
Before us, the Assessee took us through paragraph No.5 of the order of the Principal Commissioner of Income Tax which reads as under:
“5. I have considered the submission of the Assessee and had gone through the assessment records. From the submission, the claim of deduction appears to be correct but in the case of the purchasers (Shri Basheer Imthiaz Ahamad – PAN - AAEPI 0289D and Shri Haja Sameer Basheer – PAN – AJCPB 2933Q) of the property [West Park Street, Shenoy Nagar, Chennai, property mentioned above] sold by the Assessee, the :: 7 :: I.T.A No.:261/CHNY/2022
Assessment orders have been set aside u/s.263 to verify the transaction between the purchaser and the seller of the property. Accordingly, the assessment order in the Assessee’s case is set aside. The Assessing Officer is directed to verify the contention of the Assessee in his submission, as above.”
On the other hand, the learned CIT-Departmental Representative only supported the revision order passed by the Principal Commissioner of Income Tax u/s.263 of the Act.
We have heard the rival contentions and have gone through the facts and circumstances of the case. We noted that the Principal Commissioner of Income Tax himself had accepted that the claim of deduction is correct but shied away from accepting that he has issued a notice u/s.263 of the Act under wrong presumption. We noted from the findings of the Principal Commissioner of Income Tax in paragraph No.5 that the Principal Commissioner of Income Tax has accepted the claim of the Assessee and once there is no error or any prejudicial to the revenue in the :: 8 :: I.T.A No.:261/CHNY/2022 assessment order, no revision is possible. Hence, we allow the appeal of the Assessee and quash the revision order