PRADEEP KUMAR ROCHWANI, JODHPUR,JODHPUR vs. CIRCLE (INTL TAX), JAIPUR, JAIPUR

7. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing.

3. We find that the appeal filed by the assessee is delayed by 313 days. The assessee has filed an affidavit on stamp paper submitting therein the reasons for delay in filing the appeal and prayed for condonation of delay, which is being reproduced hereunder :- “AFFIDAVIT IN SUPPORT OF APPLICATION FOR CONDONATION OF DELAY I PRADEEP KUMAR ROCHWANI S/o Satramdas Rochwani, aged 60 years, permanently residing at 9/363 CHB, Jodhpur state on solemn affirmation as under :-

1. 1. That presently I am residing in UAE (Dubai) and maintained status of NRI as since the past 40 years, I am residing out of India.

2. That I have authorized my nephew Manish Rochwani & authorized representative CA Mr. Nilesh Chhugani to look into my Pradeep Kumar Rochwani, Jodhpur. Income tax related matters and my Income Tax portal Id & password is also maintained by him.

4. Thereafter, the department had initiated the 263 proceeding by issuing notice and also passed the order u/s 263/143(3) of the Act on 28.03.2024 as neither my brother had informed me about such proceeding nor the authorized representative has communicated such facts as his mail id was registered on my e-portal so I was completely unaware that the Income tax department had commenced revision proceeding u/s 263 r.w.s. 143(3) of the Act.

5. Subsequently on perusal of my income tax record, the authorized representative had came to know about the draft order passed u/s 144C(1) of the Act by ITO, Circle (INTL TAX), Jaipur and immediately he had taken the legal opinion from Adv. Rajendra Jain and after discussing the complete facts of the case, he had gone through and verify all the notices available on online portal and then informed to my authorized representative that the proceeding initiated and draft order u/s 144C(1) of the Act issued with reference to 263 order which was passed on 28.03.2024.

7. That after receiving my consent the legal counsel had prepared the appeal form, grounds of appeal

and other supporting documents to be submitted with appeal form. That on09.04.2024, I reached India and after discussion and due v e reification of documents, signed the appeal form etc.

8. That therewas no deliberate or malafide intention for delay in filing of appeal as due to above bonafide reason as explained above there is delay in filing of appeal. That if the delay is not condoned, great injury would be inflicted, given that the subject matter of the appeal is covered in favour of the assessee and the amount involved in the appeal is very huge. Further I humbly request kindly take a Pradeep Kumar Rochwani, Jodhpur. lenient view and dispose-off the matter based on the merits of the matter and not on the basis of technicalities. Sd/- Deponent VERIFICATION Whatever stated above are true and correct as per my information and belief. Nothing has been hided or concealed. So God help me.

Place : Jodhpur. Date: Sd/- Deponent “

6. Before us, the ld. AR of the assessee submitted written submissions in support of his case and the same are being reproduced as under :-

“ 1. That at the time of hearing the ld Departmental Representative (CIT DR) had submitted that the indexed cost of acquisition claimed by the appellant is not accordance with provision of section 48 of the Act and also referred decision. In this regard I humbly submits as under: - a. It is submitted that during the assessment proceeding the appellant had explained with evidences that the applicant had acquired the legal rights and interest on such flat on 1st December, 2009 through allotment letter. Therefore, the index cost of acquisition was considered as 2009. The complete details of same was available on record and copy of same is enclosed herewith. b. The observation made by ld PCIT in show cause notice that “it has been observed that the AO did not make proper enquiries in respect of indexation of purchase cost and allowed excess indexed cost on the basis of indexed cost calculated from the period from 25/11/2009 whereas flat purchase agreement was executed on 28/12/2012 which resulted in less payment of taxes, c. The above observation of ld PCIT is contrary to evidences and material on record as therelevant part of agreement to purchase dated 28.12.2012, the screen short of same is as under:-

.................................................................................................................... d. The Hon’ble CBDT and the decisions of various Hon’ble High Courts has settled the law on such issuethat cost of inflation indexation is to be determined from the date of allotment and not the date of registration of conveyance deed/agreement.The Hon'ble High Court of Bombay in the case of PCIT-3, Vs. Vembo Vaidyanathan (2019) 261 taxman 376 (Bom). Issue raised by the revenue in its appeal before the Hon’ble High Court was, as to whether the Tribunal was justified in reckoning the acquisition of the property from the date of letter of allotment which though did not lead to creation of any proper and effective right over the capital asset, and not from the date on which the „agreement‟ which spelled out the exact terms and conditions for acquisition was executed. It was observed by the Hon’ble High Court, that the CBDT vide its Circular No. 471, dated 15.10.1996 had clarified that when an assessee purchases a flat to be constructed by Delhi Development Authority (D.D.A) for which allotment letter is issued, date of such allotment would be the relevant date for the purpose of capital gain tax as the date of acquisition. Further, referring to the clarification issued by the CBDT, vide its Circular No. 672, dated 16.12.1993, it was observed by the Hon’ble High Court, that the Board had clarified that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions Pradeep Kumar Rochwani, Jodhpur. were similar to the terms of allotment and construction by D.D.A, then on the same basis the acquisition of the property was to be related to the date on which the allotment letter was issued. On the basis of its aforesaid observations, the Hon'ble High Court had dismissed the appeal of the revenue. In the backdrop of our aforesaid deliberations, we are of the considered view that as no infirmity emerges from the order of the CIT(A), who we find had rightly concluded that the date of acquisition of the property under consideration was to be reckoned from the date of the allotment letter i.e 03.12.1999, therefore, we uphold his order." e. Vinod Kumar Jain Vs CIT [344 ITR 501] (Punjab & Haryana High Court) In this judgement, the Punjab and Haryana High Court held that for flats allotted by the Delhi Development Authority (DDA), the holding period should be counted from the date of allotment letter. The Central Board of Direct Taxes (CBDT) also issued a circular (No. 471, dated 15th October 1986), where it has clarified that for flats under self-financing schemes of the DDA, the holding period shall begin from date of the allotment letter f. That after considering the above facts, documentary evidences, judicious decisions and CBDT circular, the Ld AO had taken judicial opinion and accepted the claim of applicant disclosed in the return of income as genuine and also in accordance with law. Therefore, the action of Ld PCIT u/s 263 is erroneous, illegal and without any jurisdiction which deserved to be quashed. g. It is further relevant to mention here that on identical and similar nature of issue the Hon’ble ITAT Jaipur Bench in the case of Ajay Agarwal, dated 08/01/2025, held as under: - 9. We have heard the rival contentions and perused the material placed on record. The assessee in this appeal has raised solitary ground challenging the directions to the ld. AO in the revision proceeding to re-compute income of the assessee considering the co-ownership of capital assets sold during the year. The brief facts of the case are that for the year under consideration assessee filed his return of income declaring total income of 1,13,290/- and claimed loss of Rs. 1,15,19,069/-. The assessee claimed to be non-resident taxpayer. That return of income so filed was selected for scrutiny through CASS for the verification of refund claimed by the assessee. Required notices were issued to the assessee and in response to the statutory notices, the assessee submitted his reply through ITBA portal on time to time. Ld. AO noted that the assessee had sold an immovable property at the sale consideration of Rs. 2,77,22,864/-. As per the 26AS details, the purchaser had deducted TDS of Rs. 98,51,320/- u/s 195 of the Act on the above sale consideration. The aforesaid immovable property was Pradeep Kumar Rochwani, Jodhpur. purchased by the assessee through an Agreement for Sale executed on dated 23/12/2010 at the purchase consideration of Rs. 2,77,22,864/-. The assessee had paid Rs. 2,77,22,864/- in instalments and that cost was claimed with indexation based on the year-on-year payment. That property was acquired by the assessee in F. Y. 2010-11 through an Agreement for Sale executed on dated 23.12.2010. Upon sale of that property the assessee claimed long-term capital loss of Rs. 1,15,19,069/- wherein the sale consideration was received by the assessee at Rs. 2,72,22864/- and indexed cost of acquisition was claimed at Rs. 3,92,41,933/- . The payment of acquisition of that property was made in installments, ld. AO verified that cost of acquisition claimed by the assessee and in that process ld. AO noted that the assessee claimed excess cost of indexation amounting of Rs. 5,81,368/- and accordingly was not allowed that much excess claim of the assessee. Thus, it was not the case of the ld. PCIT that the ld. AO had not verified the claim of cost of acquisition, but the ld. PCIT intended to get reverified the fact that the since the property was under joint name the loss claimed was attributable to the wife of the assessee or not, and for that he exercised the power under section 263 of the Act. That action of the ld. PCIT is under challenge in this appeal. While passing the impugned order ld. PCIT has not appreciated the fact that the case of the assessee was selected for limited scrutiny to examine the claim of large refund. Wherein the based on the scope ld. AO had already examined and verified the cost of acquisition including the details of the source thereof. Now what was proposed by way of direction under section 263 of the Act whereby ld. PCIT aims to expand the scope of scrutiny and same is not permitted. Not only that while passing the order the ld. PCIT has not exposed any of the clause of explanation 2 of section 263 as applicable based on the facts of the case. The assessee in the written submission serviced a land mark judgment delivered by the apex court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 832 (SC), where the highest court of the country Ajay Agarwal vs. CIT (IT) the prerequisite for the exercise of jurisdiction by the Commissioner suo-motu is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1) of the Act. It can be exercised only when an order is erroneous, section 263 will be attracted.

Pradeep Kumar Rochwani, Jodhpur. In view of aforesaid factual and legal discussions, in our considered view, the twin condition as required to revise the assessment order is not met out in the present case. Even the amendment made to explanation 2 of section 263 does not confer blind powers and it is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the explanation 2 in the facts of the present case. Before referring to that Explanation, one has to understand what the true meaning of the Explanation in the context of application of mind by a quasi-judicial authority was. Even that newly inserted Explanation 2 to Section 263 does not Ajay Agarwal vs. CIT (IT) authorize or give unfettered powers to Commissioner to revise each and every order, if in his (subjective) opinion, same has been passed without making enquiries or verification which should have been made. While passing that order ld. PCIT failed to demonstrate that which of the conditions given in that explanation 2 to section is breached by the ld. AO. Thus, in the totality of facts and circumstances, it is not at all a case where the subjected assessment order should be alleged to be erroneous in so far as prejudicial to the interests of the revenue. There is neither error of law nor of facts. There is no erroneous assumption by the AO of either the facts or of law, as alleged by the ld. PCIT and therefore, the order passed by the ld. Pr. CIT is set aside and the ground of appeal raised by the assessee is allowed. In the result, the appeal of the assessee is allowed.

2. Order passed by ld CIT is beyond the jurisdictions (limited scrutiny) a. That in the case of appellant, the appellant had claimed refund of Rs 1,20,66,130/- .as the appellant had sold the flat of amounting to Rs 11,00,00,000/- and the respective buyers had deducted the TDS/TCS amounting to Rs 2,49,81,920/- on higher rate as appellant is NRI. Therefore, the case of applicant had selected for limited security for verification of claim of refund and foreign remittance. b. The ld AO after due verification of 26AS and income disclosed and documentary evidences i.e. bank statement, purchase agreement, confirmation of builders, sale deed, photo of cheque etcfurnished by appellant had reached a conclusion that the claim of refund is genuine and also no required for any permission to complete scrutiny from higher authority and accordingly passed the assessment order and accepted the income disclosed by appellant. c. Subsequently, show notice u/s 263 issued by PCIT on the ground that “AO did not make proper enquiries in respect of indexation of purchase cost and allowed excess indexed cost…” and accordingly passed the order u/s 263 of the Act. d. It is submitted that the ld AO cannot exceed the latitude of limited scrutiny unless the scope of scrutiny is expanded or the case is converted from ‘limited scrutiny’ to ‘complete scrutiny’ with the approval of authority, as specified by the Hon’ble CBDT. The issue of genuineness of indexed cost of acquisition as claimed by assessee is outside the scope of scrutiny as the case of assessee was selected for limited scrutiny. e. That the ld CIT Dr had argued that the issue of limited security of Refund Claim was interlinked with indexed cost of acquisition was not correct and contrary to law. In this regards I rely on the decision of Hon’ble ITAT Bangalore Bench in the case of Anantula Vijay Mohan, & 2060/Bang/2024 dated 17.05.2025 “9.9 We are of the considered opinion that when the tax authorities are scrutinizing/examining whether refund claimed is justified, they should confined themselves whether the gross receipts on which the TDS credit is sought has been declared in the return or not, Whether TDS claimed are reflecting in the Form 26AS of not, whether the assessee had actually paid any excess advance tax or not & the reasons for claiming the refund. In the present case, the AO completed the assessment on the sole presumption that that the assessee has made artificial arrangements to generate the capital loss and accordingly the claim of capital loss amounting to Rs.20,24,90,717/- was disallowed & business loss of Rs. 44,91,482 was determined which in our opinion are not identified for the limited examination u/s 143(2) of the Act. Under these circumstances, in our opinion, even if some other issues comes to the notice of AO during the course of assessment proceedings, he cannot make any other addition/disallowance without obtaining prior approval from concerned PCIT/CIT as per the instruction issued by the CBDT cited (supra). In our opinion, the AO has exceeded the jurisdiction by calling for details and carrying out inquiries by issuing notice u/s 142(1) of the Act dated 5.10.2018.” f. It is further relevant to mention here that on identical and similar nature of issue the Hon’ble ITAT Jaipur Bench in the case of Ajay Agarwal, dated 08/01/2025, held as under: - 9. …………….. While passing the impugned order ld. PCIT has not appreciated the fact that the case of the assessee was selected for limited scrutiny to examine the claim of large refund. Wherein the based on the scope ld. AO had already examined and verified the cost of acquisition including the details of the source thereof. Now what was proposed by way of direction under section 263 of the Act whereby ld. PCIT aims to expand the scope of scrutiny and Pradeep Kumar Rochwani, Jodhpur. same is not permitted. Not only that while passing the order the ld. PCIT has not exposed any of the clause of explanation 2 of section 263 as applicable based on the facts of the case. g. Further also on identical facts, I relied the decision of Hon’ble ITAT Jaipur Bench, & other Bench and Hon’ble Orissa High Court which are part of paper book PB Page 2 to 35.”

1. 1.

8. We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities and the case laws cited before us. The assessee in this appeal has challenged the directions to the ld. AO in the revision proceeding to pass afresh order after verifying the payment for purchase of impugned flat and accordingly allow to indexation cost on acquisition of flat.Admittedly, the case of the assessee was selected for limited scrutiny through CASS. Notice generated under section 143(2) of IT Act, 1961 through system was sent to the assessee on email linked with ITBA portal. Further notices under section 142(1) of the IT Act, 1961 were issued to the assessee on dated 04.12.2020 and 13.01.2021 requiring the assessee to furnish certain information and documents relevant to this case. In response to the statutory notices, the assessee furnished the necessary details/information/documents etc. as required through e-proceedings from time to time which were examined by the AO and placed on record.

Pradeep Kumar Rochwani, Jodhpur. The AO noted in the assessment order that the explanation/replies of the assessee are satisfactory and no adverse inference has been drawn on the issue for which case was selected for limited scrutiny. The assessment proceedings under section 143(3) of the IT Act, 1961 were completed on 15.04.2021 at an assessed income of Rs. 5,51,68,940/- including long term capital gain of Rs. 5,45,93,893/-. While passing the impugned order ld. CIT has not appreciated the fact that the case of the assessee was selected for limited scrutiny to examine the claim of refund claim, wherein based on the scope AO had already examined and verified the cost of acquisition including the details of the source thereof. In the show cause notice it has been observed that “the AO did not make proper enquiries in respect of indexation of purchase cost and allowed excess indexed cost on the basis of indexed cost calculated from the period from 25/11/2009 whereas flat purchase agreement was executed on 28/12/2012 which resulted in less payment of taxes, thus, Assessment Order is erroneous and is prejudicial to the interest of revenue as per provisions of Section 263 of the Act.”Now what was proposed by way of direction under section 263 of the Act whereby ld. CIT aims to expand the scope of scrutiny and same is not permitted. Not only that while passing the order, the ld. CIT has not exposed any of the clause of explanation 2 of section 263 as applicable based on the facts Pradeep Kumar Rochwani, Jodhpur. of the case. The assessee in the written submission relied on the Circular issued CBDT and the decisions of various Hon’ble High Courts has settled the law on such issue that cost of inflation indexation is to be determined from the date of allotment and not the date of registration of conveyance deed/agreement. The Hon'ble High Court of Bombay in the case of PCIT-3, Vs. Vembo Vaidyanathan (2019) 261 taxman 376 (Bom), wherein the issue raised by the revenue in its appeal before the Hon’ble High Court was, as to whether the Tribunal was justified in reckoning the acquisition of the property from the date of letter of allotment which though did not lead to creation of any proper and effective right over the capital asset, and not from the date on which the “agreement‟ which spelled out the exact terms and conditions for acquisition was executed. It was observed by the Hon’ble High Court, “that the CBDT vide its Circular No. 471, dated 15.10.1996 had clarified that when an assessee purchases a flat to be constructed by Delhi Development Authority (D.D.A) for which allotment letter is issued, date of such allotment would be the relevant date for the purpose of capital gain tax as the date of acquisition. Further, referring to the clarification issued by the CBDT, vide its Circular No. 672, dated 16.12.1993, it was observed by the Hon’ble High Court, that the Board had clarified that if the terms of the schemes of allotment and construction of flats/houses by Pradeep Kumar Rochwani, Jodhpur. the co-operative societies or other institutions were similar to the terms of allotment and construction by D.D.A, then on the same basis the acquisition of the property was to be related to the date on which the allotment letter was issued. On the basis of its aforesaid observations, the Hon'ble High Court had dismissed the appeal of the revenue. In the backdrop of our aforesaid deliberations, we are of the considered view that as no infirmity emerges from the order of the CIT(A), who we find had rightly concluded that the date of acquisition of the property under consideration was to be reckoned from the date of the allotment letter i.e 03.12.1999, therefore, we uphold his order." The ld. AR further relied on the decision of Coordinate Bench of the Tribunal, Mumbai in the case of ACIT CIR 9(3) Mumbai vs. Ramprakash Bubna, Mumbai, where the Coordinate Bench dismissed the revenue’s appeal by observing in para 6 of its order as under :

“6. We have heard the rival contentions and also gone through the relevant finding of the CIT(A) as well as the Assessing Officer and the orders relied upon by the learned AR. There is no dispute regarding date of acquisition of the property and transfer of the property during the relevant assessment year. The only dispute is whether the cost of acquisition should be taken with reference to various dates of payments or with reference to the date of agreement/date of acquisition of the two properties. At the stage of assessment itself, the assessee had relied upon the decision of the ITAT Mumbai Bench in the case of Smt. Lata G. Rohira (supra), wherein the Hon’ble Members after analysing Explanation (iii) to Section 48, Section 2 (14) and various other judgments, have come to the following conclusion :-

Pradeep Kumar Rochwani, Jodhpur. “9. We have considered the submissions made by both sides, material on record and orders of authorities below. As per section 2(14) read with section 2(14)(vi) of the Act, the rights in flat, acquired by the assessee on execution of purchase agreement on 7-8-1993, come within the purview of the term ‘capital asset’. From the perusal of language used in Explanation (iii) to section 48 of the Act, which provides for manner of computation of indexed cost of acquisition, it is apparently clear that it refers only to cost of acquisition and not actual payments made by the assessee, hence, there is no merit in the alternate contention of the revenue that the benefit of indexation should be given on the basis of dates of actual payments made by the assessee. We are further of the opinion that the asset is held by the assessee from 7-8- 1993 because when the assessee sold the house property, it did not sell the same without any legal rights of the assessee as an owner thereof, and unless the rights of ownership are transferred, there cannot be any sale and, therefore, there is no merit in the contention of the assessee regarding right being intangible asset and house property being a physical asset. We also find that the issue of indexation, in such circumstances, is directly covered in favour of the assessee by the decision of the Tribunal in the case of Charanbir Singh Jolly(supra), hence, respectfully following the same, we hold that the assessment order is correct in law. Thus, on merits, the issue is covered in favour of assessee, however, regarding jurisdiction for invoking the provisions of section 263, we would like to add that the Assessing Officer has passed assessment order after taking into consideration the same, hence, merely for the reason that no specific findings have been given in the assessment order, the same cannot be said have been passed without application of mind. In this view of the matter, we cancel the order under section 263 passed by the ld. CIT.”

The ld. AR further relied on the judgment of Hon’ble Rajasthan High Court in the case of Commissioner of Income Tax vs. Ganpat Ram Bishnoi, 296 ITR 292 (Raj.). Revision – Erroneous and prejudicial order – Lack of proper enquiry – Tribunal has found that the AO framed the assessment after due application of mind and holding enquiries into all aspects which according to the CIT, have not been enquired into – Pradeep Kumar Rochwani, Jodhpur. This is a finding of fact – No presumption can be drawn that the AO had not applied his mind to various aspects of the matter – Once enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of assessment, the invocation of jurisdiction by CIT is not sustainable – Same liable to be set aside.

9.1 Thus, in the totality of facts and circumstances and respectfully following the Jurisdictional Hon’ble Rajasthan High Court in the case of CIT vs. Ganpat Ram Bishnoi (supra), no presumption can be down by the PCIT that the matter has not been enquired into by the AO. Accordingly, we hold that the invocation of jurisdiction by the CIT is not sustainable. The order passed by the CIT u/s 263 is hereby set aside.

In the result, appeal of the assessee is allowed.