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Income Tax Appellate Tribunal, JABALPUR BENCH, JABALPUR
Before: SHRI A. D. JAIN & SHRI T. S. KAPOOR
IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA No.90/JAB/2018 Assessment Year:2013-14 Shri Naresh Kumar Golchha v. Pr. C.I.T.-2 C/o Samapat Lal and Sons Jabalpur Raghunath Ganj Katni TAN/PAN:AFHPG3398F (Appellant) (Respondent) Appellant by: Dr. H. S. Modh, Advocate Respondent by: Shri P. D. Chougale, D.R. Date of hearing: 02 04 2019 Date of pronouncement: 03 04 2019
O R D E R PER A. D. JAIN, V.P.: This is assessee’s appeal against the order dated 21/3/2018 passed by the ld. Pr. C.I.T.-2, Jabalpur u/s. 263 of the Income Tax Act, taking the following grounds: 1. That the Ld. Pr. CIT has grossly erred in facts and circumstances of the case to set aside the Assessment order passed U/s 143(3) of IT Act, 1961 without appreciating the facts properly. 2. That the reasons mentioned for set aside the Assessment order that the Assessing Officer has passed the order without making verifications which should have been made, is not justified. 3. That the Assessment completed after due enquiry cannot be considered as order pass by the Assessing Officer is erroneous and prejudicial to the interest of the revenue.
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As per the order under challenge, on examination of the assessment records for the year under consideration, it is noticed that the A.O. had allowed deduction of Rs.34,88,000/- u/s 54EC of the Act on the capital gain of Rs.34,88,000/- computed, based on the actual sale consideration of Rs.43,40,000/- recorded in the sale deed instead of on the capital gain required to be computed under section 48 of the Act by adopting the stamp duty value of Rs.91,21,800/- as per provisions of Section 50C of the Act. Accordingly, the Pr. C.I.T. issued show cause notice under sub-section (1) of Section 263 of the Act on 22/02/2018 as under: "Shri Naresh Kumar Golcha, M/s Sampatlal & Sons, Raghunathganj, Katni. . . Sub: Notice u/s. 263 of the Income tax Act for Asstt. Year 2013- 14- regarding. It is noticed from the order passed u/s 143(3) dated 13/07/2015 by the ITO Ward-1, Katni that while allowing deduction u/s 54EC of the Act he failed to compute the capital gain as per provisions of Section 48 read with section 50C of the Income tax Act and therefore the above order is erroneous, in so far as it is prejudicial to the interests of revenue in terms of sub Section .(1) of Section 263 of the Income tax Act, 1961. 2. In view of the above, an opportunity of being heard as required u/s 263(1) of the Income tax Act is provided to show cause as to why the capital gain should not be computed as per the provisions of Section 48 read with Section 50C of the Act. 3. You may represent the case personally or through your authorized representative on 13/03/2018 at 11.30 AM at above
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address. Written submission will be treated as sufficient compliance of the notice. In absence of compliance to this notice, it will be presumed that you do not have any objection to the revision u/s 263 as proposed above.”
The Pr. C.I.T. has held that even though net capital gain based on the registered sale value is Rs.34,88,000/-, the investment in the capital gain Bond specified u/s. 54EC of the Act is Rs.43,40,000/- and based on the full value of the consideration computed as per section 50C, the capital gain, after allowing the index cost of the acquisition works out to Rs.82,69,800/-; that the assessee is eligible for deduction of Rs.43,40,000/- u/s. 54EC of the Act, which is more than the capital gain of Rs.34,88,000/- worked out on the actual sale consideration; that the plots from which the capital gain accrued, was sold of Rs.43,40,000/-, as against the value adopted by the Stamp Valuation authorities, at Rs.91,21,800/-; that the index cost of acquisition of the plots worked out to Rs.8,52,000/-. The Pr. C.I.T. observed that the taxable capital gain worked out to Rs.39,29,800/-, and that the A.O. had gone wrong in determining the same at Nil. 4. As before the Pr. C.I.T., the assessee has placed reliance on ‘Prakash Karnawat vs. ITO', 49 SOT 160 (Jaipur-Trib.). It has been contended that the Pr. C.I.T. has erred in holding that the decision of the Hon'ble Karnataka High Court in the case of ‘Gouli Mahadevappa vs. ITO', 356 ITR 90 (Karn) is applicable and not that of the Jaipur Bench of the Tribunal (supra), itself shows that there are two views possible in the matter and that as such, ipso facto, the provisions of section 263 of the Act ought not to have been invoked in the matter. The reliance has been placed on ‘CIT vs. Max India Limited’ [2007] 295 ITR 282 (SC), wherein it has been held that where two views are possible and the
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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. 5. The assessee has also contended that the addition apart, the Pr. C.I.T. has, in the impugned order, made out only one of the two ingredients of section 263 to be applicable, i.e., the alleged error in the assessment order; and that there is nothing regarding any prejudice being caused to the Revenue by the passing of the assessment order. It has been contended that both these ingredients of section 263 go hand in hand and they are not mutually exclusive and that no order passed in the assessment can be termed either erroneous or prejudicial and further that both these requirements must be concurrently fulfilled so as to enable the provisions of section 263 to be applicable. 6. We find the grievance of the assessee on both the above counts to be justified. Apropos the first objection regarding existence of two views in the matter, the decision of the Jaipur Bench of the Tribunal (supra) and that of the Hon'ble Karnataka High Court (supra) itself shows that there are two divergent judicial views prevailing. Just because the earlier decision is that rendered by the Tribunal and the later one is that handed down by the Hon'ble High Court, that of the Hon'ble Karnataka High Court, which, incidentally, is also not jurisdictional qua the assessee, does not change the situation. Had the decision of the Hon'ble High Court been of the jurisdictional High Court, could it have been possible to say that there were no two opposite views existing. This, however, is not the case. 7. The assessee is also justified in his other grievance inasmuch as the impugned order does not state the assessment order to be both the erroneous as well as prejudicial to the interests of the Revenue.
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This, though, is the primary requirement of invokeability of the provisions of section 263 of the Act. It is trite that in order to term an assessment order to be revisable under the provisions of section 263 of the Act, such assessment order must be shown by the C.I.T. to be both the erroneous as well as prejudicial to the interest of the Revenue. In the present case, however, at page 5 of the impugned order, the Pr. C.I.T. has specifically stated that ‘the A.O. has committed an error in accepting the claim of the assessee………’ Towards the end of the order, the terminology employed is ‘erroneous insofar as it is prejudicial to the interest of the revenue’. However, as to how the assessment order is prejudicial to the interest of the Revenue, does not stand made out. 8. Accordingly, on both the counts, in our considered opinion, the assessee is bound to succeed. He so succeeds. 9. In view of the above, the order under appeal is found to be unsustainable and it is set aside and cancelled. The assessment order is revived. 10. In the result, the appeal is allowed. Order pronounced in the open Court on 03/04/2019.
Sd/- Sd/- [T. S. KAPOOR] [A. D. JAIN] ACCOUNTANT MEMBER VICE PRESIDENT DATED:03/04/2019 JJ:0204 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR