SH. MAHESH CHUGH,CHANDIGARH vs. PR.CIT-2, CHANDIGARH

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च�डीगढ़ �यायपीठ आयकर अपीलीय अिधकरण च�डीगढ़ �यायपीठ च�डीगढ़ �यायपीठ ‘‘बी च�डीगढ़ �यायपीठ बी.’’, च�डीगढ़ च�डीगढ़ च�डीगढ़ च�डीगढ़ बी बी IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील अपील संसंसंसं./ ITA No. 104/CHD/2021 आयकर आयकर आयकर अपील अपील Assessment Year : 2015-16 Shri Mahesh Chug, The Pr. CIT-I, बनाम # 3113, Sector 28-D, Chandigarh-2. VS Chandigarh. �थायी लेखा सं./PAN /TAN No: ACZPC8060H अपीलाथ�/Appellant ��यथ�/Respondent िनधा�रती क� ओर से/Assessee by : Shri Tejmohan Singh, Advocate राज�व क� ओर से/ Revenue by : Shri Sarabjeet Singh, CIT-DR तारीख/Date of Hearing : 09.03.2022 उदघोषणा क� तारीख/Date of Pronouncement : 21.04.2022 HEARING VIA WEBEX AND PHYSICAL COURT आदेश आदेश/ORDER आदेश आदेश PER DIVA SINGH

The present appeal has been filed by the assessee assailing the correctness of the order dated 20.03.2020 of Pr.CIT-2, Chandigarh pertaining to 2015-16 assessment year on the following grounds :

ITA 104 /CHD/2021 A.Y. 2015-16 Page 2 of 25 3. That the Ld. Commissioner of Income Tax has erred in failing to consider the various replies and submissions placed on record in proceedings before her in the correct perspective which is arbitrary and unjustified. 4. That the evidence placed before the Ld. Principal Commissioner of Income Tax has not been looked into by the PCIT himself and the matter cannot be sent back to the Assessing Officer without making any enquiry which renders the order illegal, arbitrary and unjustified. 5. That the assessment order having been passed by the Assessing Officer after due application of mind and taking into consideration the various replies and material on record, the action resorted to by the Commissioner of Income Tax is unwarranted and uncalled for. 6. That the order of Commissioner of Income tax is erroneous, arbitrary, opposed to the facts of the case and is unsustainable in law.

on 02.02.2022 on which date the ld. AR and the ld. DR more

or less made their complete submissions on facts and law,

however, the submissions of the ld. DR were incomplete to

the extent that he sought time to verify properly from the

record the calculations made available by the ld. AR.

Accordingly, time was granted and the appeal was adjourned

to 09.02.2022. On the said date, due to medical reasons,

the counsel was unable to represent. The appeal stood

adjourned accordingly to 23.02.2022 however, on account of

the ongoing strike of Electricity Department, there were

multiple connectivity issues in the hearing conducted via

Webex. Accordingly, the hearing was adjourned to

02.03.2022. Since on the said date, physical hearing had

started and both the sides remained busy before the other

Court, the hearing ultimately concluded on 09.03.2022 in

the physical Court.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 3 of 25

assessee, it is pertinent to address the delay of 355 days

pointed out by the Registry. The ld. AR in the hearing via

Webex had invited attention to the Affidavit filed by the

assessee. Relying on the same, he made a prayer that the

delay may be condoned in view of the extra-ordinary

prevailing Pandemic conditions. For ready reference, the

Affidavit of the assessee relied upon by the ld. AR is

extracted hereunder :

Affidavit

I. Mahesh Chugh son of Late Jatinder Lai Chugh, age 54 years resident of House No. 3420, Sector 27D, Chandigarh do hereby solemnly affirm and declare as under: - 1. That I have received the order of Commissioner of Income Tax - 2, Chandigarh on 31.03.2020 for the assessment year 2015-16 against which an appeal was to be filed by 30.05.2020. 2. That the appeal was filed on 20.05.2021 which is late by 355 days as per show cause notice issued by the ITAT. 3. That the order was received by the Counsel during the lockdown period which was imposed due to Covid - 19 Pandemic and as such the appeal could not be filed in time. 4. That in view of the raging pandemic, the Supreme Court of India Suo moto in "Cognizance for Extension of Limitation" reported in 432 ITR 206 has extended the timelines for filing appeals under all laws, including the Income Tax in the case. Accordingly, the original deadline of 60 days for filing appeal, which was expiring on 30.05.2020 stands extended. 5. That the period from Marchl5 2020 till March 14 2021 stand excluded as per the decision of the Hon'ble Supreme Court. As such, the instant appeal was to be filed by 12th of May 2021. Thus there was a delay of only 8 days. 6. That unfortunately my Counsel Sh. Arvind Mehta Advocate expired due to Covid- 19 on the 05.05.2021 after being hospitalized for almost a month. Copy of the death certificate has not been issued till date because of Covid. 7. That one of his office staff looking after Income Tax Matters Sh. Vinod also expired in the month of April 2021.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 4 of 25

3.1. Accordingly, placing heavy reliance on the aggravating

circumstances as set out in the aforesaid application and

affidavit, it was his prayer that the delay may be condoned.

3.2. The ld.CIT-DR considering the contents of the

application and the record posed no objection in case the

delay is condoned.

3.3. In the light of the submissions of the parties before

the Bench, considering the peculiar circumstances as

brought on record which are not in dispute and the position

of law as relied upon we deem it appropriate to condone the

delay. Satisfied by the explanation offered, the delay is,

accordingly, condoned. Ordered accordingly.

grievance of the assessee in the appeal filed. On behalf of

the assessee, it was submitted at the outset that the

assessee does not wish to specifically press ground No. 2 as

the issue would stand addressed by the other grounds.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 5 of 25

on behalf of the assessee vide Ground Nos. 1,3,4,5 and 6,

the ld. AR carrying the Bench through the assessment order

dated 08.12.2017 passed u/s 143(3) and the impugned order

under challenge of the ld. PCIT-II Chandigarh submitted that

in the facts and circumstances of the present case, there is

no error let alone an error which can be considered to be

prejudicial to the interests of the Revenue. It was his

submission that complete facts have been taken into

consideration by the AO and have been fully addressed by

the assessee. The facts are fully addressed again by the

assessee before the ld. PCIT. The Show Cause Notice issued

by the ld. PCIT, it was submitted, has been extracted in the

impugned order itself, copy of the same, it was submitted,

has also been separately filed at Paper Book pages 25 to 27.

It was his submission that this show cause notice has been

replied to by the assessee. This reply is appended at page

28 to 30 of the Paper Book. Part of the same, it was

submitted, has been extracted in the impugned order itself.

Considering the same, the ld. PCIT ultimately concluded that

to the extent of to Rs. 10.15 lacs i.e. the renovation

expenses claimed for deduction u/s 54F was such an error

which was prejudicial to the interests of the Revenue. In the

said background, carrying the Bench through para 3 and 3.1

ITA 104 /CHD/2021 A.Y. 2015-16 Page 6 of 25

of the impugned order, it was submitted that all these

details were before the AO and were considered. Without

prejudice to the said argument, it was submitted that even if

for a moment it is considered that these were not before AO,

the fact on record is that these were filed before ld. PCIT.

No error in these details of construction cost made available

to the Revenue has been brought on record. Attention was

invited to the facts. The assessee represented by its counsel

Shri Arvind Mehta as noted by the ld. PCIT himself in his

order attended the proceedings and filed details of expenses

for construction/renovation of house No. 3113 Sector 28D,

Chandigarh. It was submitted that though the ld. PCIT

records that these were not filed during the assessment

proceedings which issue is disputed by the assessee,

however, since the counsel who was appearing has expired,

no affidavits etc. can be now filed. It was argued that the

fact remains that these were made available to the ld. PCIT

and the ld. PCIT does not fault any of these details. He does

not point out to any error in the claim of the assessee. The

supporting claim, it was submitted, is based on facts and

evidences and co-related with payments by cheque from the

banks to a large extent. The ld. PCIT ignoring the evidences

made available merely proceeds to cancel and set aside the

validly passed assessment order for consideration afresh

ITA 104 /CHD/2021 A.Y. 2015-16 Page 7 of 25

without pointing to any error justifying the suspicion. It

was his submission that the said action of the ld. PCIT was

contrary to the settled legal position as has been variously

addressed by the Courts. The power to set aside the

assessment order u/s 263, it was submitted, is vested with

the ld. PCIT for a specific purpose. It was his submission

that as per law, it was to be exercised with due care and

caution pointing out to the error in the order sought to be

set aside and the error should be of such magnitude which

can be said to be prejudicial to the interests of the Revenue.

The Courts have variously held that this power should be

exercised clearly pointing out the error, it cannot be

exercised whimsically or arbitrarily. Addressing the legal

position on the issue, it was submitted that the Courts have

repeatedly held that it is incumbent upon the ld. PCIT to

specifically point out the error. It was argued that merely

because there is a suspicion that some more details were not

called forth by the AO, that itself cannot be a ground to set

aside the order. The details were available to the AO and

were also filed before the ld. PCIT. It was conceded that

today he is not in a position to categorically state whether

these details were shown to the AO or not as Shri Arvind

Mehta, CA who was taking care of the assessee's case before

the AO and appeared before AO as well as before the ld. PCIT

ITA 104 /CHD/2021 A.Y. 2015-16 Page 8 of 25

unfortunately is no more as he passed away in the COVID

times. As a result of this unfortunate fact, he would not be

in a position to categorically state that the evidences were

available to the AO. However, the suspicion that the issues

had not been enquired into by the AO, it was argued, is

unfounded.

5.1 Attention was invited to Paper Book page 1 and 2 which

is questionnaire dated 05.12.2016 issued by the AO in the

course of the assessment proceedings. It was argued that the

issue was fully looked into by the AO who being satisfied

with the answers to the queries raised in the assessment

proceedings accepted the claim which concluded in an order

passed u/s 143(3) dated 08.12.2017. Referring to the

questionnaire dated 05.12.2016, specific attention was

invited to question 4 and 5 of the same. For ready

reference, the same is extracted hereunder :

No.ITO/Ward-5(1) /CHD/2 015-16 Office of the Income Tax Officer, Ward-5(1), Room No.619, Aayakar Bhawan, Sector-17, Chandigarh. Dated:05-12-2016 To SH. MAHESH CHUGH, H.NO. 3420,SECTOR27-D, CHANDIGARH. PAN: ACZPC8060H Sir, Sub. : Assessment for the assessment year 2015-16- Regarding- Please refer to the assessment proceedings in your case for the above mentioned assessment year.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 9 of 25

5.2. Referring to the above queries, it was submitted, that

there can be no doubt that the issue was fully examined by

the AO. When considered with the construction details made

available to the ld. PCIT wherein no fault has been pointed

out, it was argued that the exercise of powers is whimsical

and arbitrary.

5.3 Reverting to the record, attention was invited to reply

of the assessee appended thereto at Paper Book pages 3 to 5.

Copy of the return filed alongwith the computation, it was

submitted, is at pages 6 to 11. Specific attention was invited

to the sale consideration received for plot No. 182/49,

Industrial Area, Phase-I wherein the assessee had 50%

share, value of which u/s 50C was Rs.1.55 Crores. After

reducing the purchase cost and the Index Cost etc., the

deduction u/s 54F of Rs. 1,28,91,083/- was claimed. The

investment in house property u/s 54F was made to the tune

of Rs. 1,55,00,000.00. This was a Bay shop No. 13-14 Sector

ITA 104 /CHD/2021 A.Y. 2015-16 Page 10 of 25

27-D. Considering the value u/s 50C and the share of the

assessee, minus Index Cost and the purchase cost,

deduction claimed u/s 54F referring to page 10 of the Paper

Book, it was submitted, was Rs.56,94,658/-. The

investment in house property u/s 54F, it was submitted, was

of Rs. 72,50,000/-. Inviting attention to copy of the

Purchase Deed appended at pages 12 to 23 of House No.

3113, Sector 28D. It was submitted that these were filed

before the AO as well as the PCIT.

5.4. In the said background, in the hearings which

continued before the AO, the following reply advanced on

behalf of the assessee appended at Paper Book page 24, it

was submitted would show that the claim justified on facts

before the AO was allowed after properly considering the

evidences. The reply before AO was also filed before the ld.

PCIT also and is completely supported by evidences wherein

no infirmity has been pointed out by the ld. PCIT except a

suspicion. For ready reference, it is extracted hereunder :

To The Income Tax Officer Ward-5(1) Chandigarh Subject: Regarding assessment u/s 143(2) of the Income Tax Act, 1961 in the case of Sh. Mahesh Chugh, H.No-3420, Sector-27C, Chandigarh for A.Y 2015-16 PAN: ACZPC8060H. Sir This is in continuation to the assessment proceedings in the case cited above as subject matter . A detailed reply letter furnished as per the directions issued by your office. Further your office made observations related to deduction claimed under section 54 F of the Income Tax Act 1961.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 11 of 25

It is submitted that the assessee sold capital assets during the relevant financial year i.e. 2014-2015 . The total consideration amount further reinvested in a residential house and claimed deduction under section 54F of the Income Tax Act 1961 . The assessee is having only one residential house No. 3420, Sector-27-C Chandigarh , during the relevant financial year in question i.e. his place of residence declared in his income tax return for the A.Y 2015-16. There is no other residential house in his name. Therefore the assessee has correctly claimed deduction under section 54F of the Income Tax Act 1961 . It is requested to acknowledge the above stated fact and in light of above do the needful in the interest of justice. Regards (On behalf of Mahesh Chugh) Sd/- (Arvind Mehta) Advocate Counsel

5.5. The reply at page 28-30 of the Paper Book to the Show

Cause Notice issued by the ld. PCIT extracted in the

impugned order appended at Paper Book page 24-25 was

referred to. It was his submission that the reply was more

or less as submitted before the AO. It has been made

available on behalf of the assessee by Shri Arvind Mehta.

Details of the expenses of construction/renovation of House

No.3113 Sector 28D alongwith evidences is available at

pages 31 to 45. Linking these with the Index of specific

party/nature of work etc. at pages 31, it was his submission

that all details were available and most of the payments were

made by cheques. Copy of the bank account is appended at

pages 32 to 39, Paper Book page 40, it was highlighted is

copy of the ledger account of Topsell Agencies from where

certain purchases for the material used were made

amounting to Rs. 1,33,040/-. Referring to the said page, it

ITA 104 /CHD/2021 A.Y. 2015-16 Page 12 of 25

was submitted that it clearly mentions the sales bill, VAT

amounts. Similarly Paper Book page 41 is payments made for

purchase of ceramic tiles, bill raised by Vishal Trading on

21.09.2014 and 14.01.2015 (Paper Book page 41-42).

Payments made for plumbing and labour thereon amounting

to Rs. 1,15,000/- paid is supported by document available at

page 43. Payment is made to “Papu” whose Mobile No. is

9417084590. Similarly at Paper Book page 44, the payment

made for the person who has laid down the tiles. The

Contractor’s name is “Shambhu Prajapati” with his Mobile

No. 9653125313 as mentioned therein. Payment made of

Rs.1,72,000/- for civil work to “Rahul Kumar” where his UP

Mobile numbers as 8968262987 and 6239561207 are given

to the ld. PCIT. The bills for purchase of material from J.S.

Building Store, Rajiv Bros., Sarmukh Iron Store and Manish

Iron Store are available as payments going through these

bank accounts. The ld. PCIT, it was submitted, does not

fault any of these evidences, does not care to examine

anyone of these persons and straight away arbitrarily on

suspicion proceeds to setting aside a validly passed

assessment order without caring to point out any error, let

alone such an error which is prejudicial to the interests of

the Revenue.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 13 of 25

5.6 Arguing alternatively it was submitted, as per record

assessee claimed the benefit of only Rs.2.11 Crore as against

the entitled benefit of Rs.2.17 Crore and all of it was applied

for the new purchase. Hence, in whatever manner the

department wants to argue the claim on facts was allowable

and has been allowed after due enquiry. No infirmity in the

same is pointed out except for suspicions, those also not

based on any facts.

decisions including the case of Hari Iron Trading Co. vs. CIT

263 ITR 437(P&H), ITO vs. D.G. Housing Projects Ltd. 343

ITR 239 (Delhi), Director of Income Tax vs. Jyoti

Foundation357 ITR 388 (Delhi), PCIT vs. Delhi Airport Merto

Express (P.)Ltd. 398 ITR 8 (Delhi) Abhimanyu Gupta vs. Pr.

CIT ITA No. 771/Chandi/2017 to support the prayer that the

order may be quashed.

6.1. Specific attention was invited to the decision of the

Hon'ble Delhi High Court in the case of Delhi Airport Metro

Express Pvt. Ltd. (supra) specifically for the proposition

that in order to set aside the asse ssment order exercising

the powers vested by Section 263 of the Act, it is

incumbent upon the ld. PCIT to point out the errors in the

order. Referring to the said decision specifically and the

ITA 104 /CHD/2021 A.Y. 2015-16 Page 14 of 25

other decisions cited, it was submitted that this power

cannot be exercised carelessly and whimsically.

6.2 Attention was also invited to the decision of the

Hon'ble Delhi High Court in the case of D.G. Housing

Projects Ltd. (supra) for the proposition that the ld. PCIT

considering the evidence has to upset the same and When

all the evidences are available before the ld. PCIT, he

cannot whimsically direct that further enquiries be made.

It was argued that the law requires the ld. PCIT to address

the evidences and not proceed on suspicions. It was

questioned what stops the PCIT from carrying out an

enquiry and point out what is wrong in the evidence

available. The order, it was submitted, is contrary to law

and facts.

6.3 Decision of the Hon'ble Delhi High Court relied

upon at Sr.No. 3 in the case of Jyoti Foundation (supra)

was cited. It was submitted that even in a case where the

ld. PCIT makes out a case that it is possibly a case of

inadequate enquiry which in the facts of the present case,

it is not so, even then the ld. PCIT for exercising the

powers u/s 263 is duty bound to point out what is the

error which has occurred on account of inadequate

enquiry, if so alleged.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 15 of 25

6.4 The decision of the Chandigarh Bench in the case of

Abhimanyu Gupta (cited supra)referred to at Sr.No. 5, it

was submitted, is also relied upon again for a similar

proposition.

6.5 It was his submission that in case the Revenue seeks

to support the order on the reasoning that the AO has not

discussed the specific facts in the order. For the said

purposes, it was his submission that he would re ly upon

decision of the jurisdictional High Court in the case of

Hari Iron Trading Co. 263 ITR 437 and drew specific

attention to page 444 of the same.

law, the order passed by the PCIT may be set aside.

the order passed by the ld. PCIT after considering the

facts and circumstances is a valid order in the eyes of

law. Details of expenses sought to be relied upon by the

assessee before the PCIT, it was submitted, need to be

taken into consideration and verified. The AO, it was

submitted, is empowered and has adequate support to

carry out enquiries and merely be cause the order is set

aside, no grievance can be said to be caused to the

assessee as whatever the assessee wants to say, he is still

ITA 104 /CHD/2021 A.Y. 2015-16 Page 16 of 25

at liberty to argue and place its case before the AO. The

ld. CIT-DR further submitted that the case law relied upon

is not relevant as facts have not been considered and

discussed in the assessment orde r. It is seen on record

that some calculations have been made available by the

Revenue as per letter dated 16.09.2021 whe rein the

following calculation is given :

8.1. The ld. CIT-DR sought time to verify the calculations

and consult from the field as to what is the exact figure in

dispute; he submitted that arguments of the Revenue are

concluded; however, time for factual verification was

sought.

behalf of the Revenue :

ITA 104 /CHD/2021 A.Y. 2015-16 Page 17 of 25

Feb. 2. 2022 The Hon'ble Members Chandigarh "B" Bench Chandigarh Sir/madam, Reg, M/s Mahesh Chugh ITA No. 104/Chd/2021 AY 2015-16 The above case was part heard today {2.2.2022}, and now fixed on 9.2.22, the undersigned would like to furnish capital gains calculations for ready reference. The same is as under:

Sr. no. Property ID Capital Sales Cost of gains/loss consideration Acquisition (Rs.) Indexation (Rs) (Rs.) 1 Plot F-264 45,00 000 (-)364223 4864223 2 Plot 182/49 155,00,000 12891083 2608917 3 Shop no. 13-14 96 25 000 7560150 2064850

Not included for the time being, the matter will be taken separately. Net consideration from Property 2&3 above : 2,51,25,000 (1,55,00,000)+ 96,25.000) Capital gains : 2,04,51,233 (1,28,91,083 + 75,60,150) {A} Investment in residential property (3113) : 2,27,50,000 (including 10,15,000 renovation

Deduction eligibility : Investment in residential property x capital gains/net consideration

Here : 2,27,50.000x2.04,51,233/2,51,75,000 = 1,85,18,031 Capital gains of property 2&3 after deduction : 19,33,202 (2,04,51,233-1,85,18,031) Net capital gains after deducting loss of Property no, 1 : 15,68,979 (19,33,202-3,64,223) Claim of Assessee in his computation : 15.01,269 Difference : 67,710 (assessee may correct the figure) (B) Investment in resl. Property (3113) taken at Rs. 2,17,35,000 (without renovation claim of 10,15,000)

Deduction eligibility : 2,17,35,000x2,04,51,233/2,51,25,000=1,76,91,842 Difference between A and B=8,26,189 (1,85,18,031-1,76,91,842) The above calculation is without prejudice to other issues raised by the Department in the assessment and appellate proceedings. Yours faithfully Sd/- CIT-DR-1, ITAT, Chandigarh

(emphasis supplied)

10.1. The case, thereafter came to be fixed on various

dates, however, at times, due to connectivity issues; or

both the parties remaining busy; and paucity of time etc.,

the hearing ultimately concluded on 09.03.2022.

ITA 104 /CHD/2021 A.Y. 2015-16 Page 18 of 25

relied on the above calculations.

submitted that he is very grateful to ld. CIT-DR who has

considering the calculations finalized that there was a

difference of Rs. 8,26,189/- and not Rs.10,15,000/- as

considered in the impugned order. It was his submission

that even if the higher figure of Rs. 10,15,000/- as

noticed by the ld.PCIT is taken the fact remains that there

is no error in the order which can be considered to be

erroneous and prejudicial to the interests of the Revenue

as the calculations provided above are not considering the

renovation claim of Rs.10,15,000/- which the Revenue

seeks to look into in the set aside proceedings. The

argument that it was seen by the AO, even if it remains

unproved on account of unavailability of the Affidavit of

late Mr. Mehta. The fact re mains that these calculations

were always available to the Re venue as these have

indisputably been filed before the ld. PCIT and are on

record. It is argued that these have not been faulted. The

Revenue, it was submitted, may not be allowed to exercise

the Revisionary powers casually and whimsically. It was

argued that the law requires that error on examining the

evidences filed has to be pointed out by the ld. PCIT and

ITA 104 /CHD/2021 A.Y. 2015-16 Page 19 of 25

this exercise cannot be avoided Such an action is lacking

in the present proceedings as no error, let alone an error

which is prejudicial to the interests of the Revenue has

been pointed out by the ld. PCIT.

material available on record. It is seen that in the facts

of the present case the assessee filed its return on

08.09.2015 declaring income of Rs. 15,09,350/-. In the

return filed, claim of deduction u/s 54F was made. The

AO after issuance of notice and raising certain queries

considering the reply filed etc. passed the assessment

order under question. It is pertinent to note that the

assessee was represented before the AO by Shri Arvind

Mehta. The said order passed was sought to be set aside

by the ld. PCIT on account of the facts which were set out

in the Show Cause Notice dated 29.02.2020 issued to the

assessee. The contents of the same have been extracted

in the impugned order and for the sake of comple teness

are reproduced he reunder :

ITA 104 /CHD/2021 A.Y. 2015-16 Page 20 of 25

As per share ratio, your share in purchasing of house comes to Rs. 2,17,35,000/- 3. As per deduction u/s 54F(1)(b) of the IT Act, allowable to the assessee, "If the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net asset bears to the net consideration, shall not be charged under section 45" The complete details of the commercial properties sold during the F.Y. 2014-15 and eligible/allowable deduction u/s 54F is as under:- Particulars Property No. 1 Property No. Property No. 3, Bay Total Plot No. F- 2, Plot No. Shop No. 13-14, 264 Phase-8, 182/49, Indl. Sector 27-D, Mohali Area, Phase-1, Chd (17.5%) Chd Value u/s 50C Rs. 4500000.00 Rs. 15500000.00 Rs. 9625000.00 Rs. 29625000.00 Less: Transfer Exp. Rs.00 Rs.00 Rs.00 Rs.00 Net Consideration Rs. 4500000.00 Rs. 15500000.00 Rs. 9625000.00 Rs. 29625000.00 Less: Indexed Cost Rs. 4864223.00 Rs. 2608917.00 Rs. 2064850.00 Rs. 9537990.00 Long Term Capital Rs. 12891083.00 Rs. 7560150.00 Rs. 20087010.00 (-) 364223.00 Gain/Loss Amount invested in Rs. 21735000.00 purchase of house property @ 75% share of the assessee Therefore allowable deduction u/s 54F of the IT Act is calculated as under:- Long Term Capital Gain (2,00,87.010) X amount invested to purchase new asset (2.17.35.000) Net Consideration(2,96,25,000) = 1,47,37,254/-

13.1 The reply of the assessee to the ld.PCIT has also been

extracted in the impugned order. For ready reference, same

is reproduced hereunder :

I.That it is an admitted fact that the assessee has sold three Nos of immovable properties (Capital assets other than residential) for total consideration amount

ITA 104 /CHD/2021 A.Y. 2015-16 Page 21 of 25 of Rs. 2,96,25,000/- as declared in the Income Tax return for the assessment year 2015-16. As a matter of fact sales consideration amount of Rs. 45,00,000/- received against sale of Plot No. F-264, Phase-8, Mohali (Pb.) bears net capital loss of Rs. (-) 3,64,223/-. Hence the total consideration amount i.e. 45,000/- is not declared for the purposes of claim of deduction under section 54F of the Income tax Act, 1961. Hence it needs to be executed from total consideration of Rs. 2,96,25,000/-. 2. That apart from above stated amount assessee sold capital assets (not being residential house) i.e. Plot No. 182/49, Industrial Area, Phase-1, Chandigarh for total consideration of Rs. 1,55,00,000/- (vide sale deed dated 123.06.2014) & Bay Shop No. 13-14, Sector 27-D, Chandigarh for total consideration of Rs. 96,25,000/- (vide sale deed dated 12.08.2014). The total amount received and stands eligible to claim deduction under section 54F of the IT. Act, 1961 from above assets is Rs. 2,51,25,000/-. The assessee purchased a residential House No. 3113, Sector 28-D, Chandigarh for total consideration of Rs. 2,89,80,000/- inclusive of (Purchase amount & Stamp Duty) having share of 75% i.e. Rs. 2,17,35,000/- only. He further invested Rs. 10,15,000/- on construction/renovation of the said house and claimed total deduction under section 54 of the Act amounting to Rs. 2,11,94,658/- (Rs. 1,55,00,000/- + 56,94,658/-). 3. That the total eligible to claim deduction under section 54(1 )(b) of the Income Tax Act, 1961 comes to Rs. 2,17,35,000/- and assessee has claimed deduction of Rs. 2,11,94,658/- only, which is less than the amount of deduction assessee is entitled for. It is pertinent to mention here that the assessee has declared differential capital gains amount to tax and deposited long term capital gains tax of Rs. 2,15,358/-. Therefore the assessment framed under section 143(3) of the Act is not erroneous. The assessee has claimed correct deduction u/s 5 F(1) (b) of the Income Tax Act, 1961 and deposited the long term capital gains tax as per provision of the Act. It is therefore requested to knowledge the facts stated above and shall not invoke provision of section 263 of the Income Tax Act, 1961 in the interest of Justice and Oblige. (emphasis supplied)

13.2 Considering this, the ld. PCIT passed the following

order on facts:

ITA 104 /CHD/2021 A.Y. 2015-16 Page 22 of 25 deduction u/s 54F on the sale of Plot No. 182/49, Indl. Area, Phase-I, Chandigarh. Further investment of Rs. 72,50,000/- was claimed in house property for claiming deduction u/s 54F from the sale of Bay Shop No. 13-14, Sector 27- D. Chandigarh. Thus the total investment in residential properties have been claimed at Rs. 2,27,50,000/- whereas the actual investment was Rs. 2,17,35,000/-. During the course of hearing the counsel of the assessee was asked to explain the excess investment claimed in new property amounting to Rs. 10.15 lacs and to show cause as to why the excess claim should not be disallowed. On the request of the counsel, the case was adjourned to 11.03.2020. 3.1 Sh. Arvind Mehta, Counsel of the assessee attended the proceedings on 11.03.2020 and filed details of expenses for construction/renovation of House No. 3113, Sector 28-D, Chandigarh. From the records, it is seen that these details were neither called for during the assessment proceedings by the assessing officer nor the details were provided by the assessee of his own.

13.3 Relying upon the decision of the Hon'ble Delhi High

Court in the case of Nagesh Knitwear Pvt. Ltd. (2012) 345

ITR 135 and decision of the Apex Court in the case of

Amitabh Bachchan, the order was set aside holding as

under:

13.4 In the light of these facts, submissions and position of

record, we find that the order passed cannot be upheld.

Having given our serious consideration to the lengthy

arguments on the calculations available on record and as

argued by the respective parties before us including the

ITA 104 /CHD/2021 A.Y. 2015-16 Page 23 of 25

detailed submissions recorded in the respective orders, we

find that the ld. PCIT at best can be said to have entertained

a suspicion, however, he has failed to point out any infirmity

in the order. On the contrary, considering the replies of the

assessee on record including the submissions as advanced

before the ld. PCIT himself, we find that the claim allowed by

the AO is fully supported on facts and evidences. The order

under challenge fails to point out any error let alone such an

error which can be said to be erroneous and prejudicial to

the interests of the Revenue. The fact that the construction

cost details were actually provided on query to the AO or not

as they do not find any mention in the assessment order, we

find in the peculiar facts is neither here nor there. The fact

remains that these were provided to the ld. PCIT. We do not

need to cite any decisions to address the well accepted

position that the assessee cannot be faulted on how the

assessment orders are written. The writing of assessment

orders are exclusively in the hands and the domain of the

Revenue and merely because facts on which the AO is

satisfied are not found mentioned in the order, the absence

of discussion thereon shall not by itself be an indicator of

the fact that the AO has failed to examine the issue. Such

an inference cannot be drawn. We have seen the queries

raised in the course of the assessment proceedings. We have

ITA 104 /CHD/2021 A.Y. 2015-16 Page 24 of 25

seen the responses given thereto. No doubt that the

assessee is faced with a handicap that the counsel

representing before the AO and before the ld. PCIT has

passed away in the COVID times, however, the fact which

remains to be demonstrated by the Revenue is the error and

that too such an error which is prejudicial to the interests of

the Revenue. These requirements cannot be said to have

been met by the absence of discussion on facts on which the

AO was satisfied after having raised the queries and

considered the replies. How the assessment orders are to be

written cannot be dictated to by the assessee. The remedy

at best lies in providing better training, if so deemed fit to

the Revenue officers and hence, lies in-house with the

Revenue itself. The suspicion that it was possibly not seen

by the AO cannot be the backbone of exercising the powers

u/s 263 of the Act. The fact remains that these calculations

were provided to the ld. PCIT. It is seen that he has failed to

find any infirmity in the claim. The ld. PCIT, instead has set

aside the order u/s 143(3)/148 in order to grant one more

inning to the Revenue to find some shortcoming in the claim

on the suspicion that possibly the AO has missed something

in the first round. Such an action cannot be supported.

Powers u/s 263 of the Income Tax Act are not on the Statute

for such whimsical and arbitrary actions. The powers are

ITA 104 /CHD/2021 A.Y. 2015-16 Page 25 of 25

expected to be necessarily exercised by pointing out clearly

the error in the order passed which is sought to be set aside

exercising the Revisionary powers and that too, such an

error which is prejudicial to the interests of the Revenue.

13.5 We have given our due consideration to the entirety

of the submissions of the parties and examined the claims of

the parties from the various perspectives and possibilities

which arise on facts and find that the order passed u/s 263

deserves to fail. Accordingly, the order is directed to be

quashed allowing the grounds of the assessee. Ordered

accordingly.

Order pronounced on 21 s t April,2022.

Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा सद�य सद�य/ Accountant Member �याियक �याियक सद�य सद�य/ Judicial Member लेखा लेखा लेखा सद�य सद�य �याियक �याियक सद�य सद�य “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2.��यथ�/ The Respondent 3.आयकर आयु�/ CIT4.आयकर आयु� (अपील)/ The CIT(A)5.िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH6.गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar