S.RAJAGOPAL,COIMBATORE vs. DCIT CORPORATE CIRCLE 2, COIMBATORE

The appeal by the assessee is directed against the order passed by the Ld. Principal Commissioner of Income Tax-1 (i/c), Chennai dated 19.03.2018 in C.No.120(19)/263/PCIT-1/CBE/2017-18 for the assessment year 2013-14 passed U/s.263 of the Act.

There is a delay of 69 days in filing the appeal by the assessee. The Ld.AR submitted before us that the assessee was unaware of the Ld.PCIT dated 19/03/2018 invoking his powers U/s.263 of the Act and his counsel had also failed to intimate the assessee regarding the same. Subsequently when the assessee learnt that the Ld.AO had passed order giving effect to the order of the Ld.PCIT U/s.263 of the Act, promptly the appeal was filed though there was a delay of 69 days in filing the appeal. It was therefore pleaded that the delay in filing the appeal had occurred due to no fault of the assessee and hence the same may be condoned. The Ld.DR objected to the submission of the Ld.AR. However, after hearing both sides, though we do not appreciate the lapse on the part of the assessee, in the interest of justice we are of the considered view that the delay in filing the appeal by the assessee is required to be condoned. Accordingly we hereby condone the delay of 69 days in filing the appeal by the assessee and proceed to hear the case on merits.

The assessee has raised several grounds in its appeal however the cruxes of the issues are that:- (i) The Ld.PCIT has erred in invoking the powers U/s.263 of the Act and directed the Ld.AO to redo the assessment since the Ld.AO had not adhered to the decision of the Hon’ble Apex Court in the case M/s. Goetze India Ltd., Vs. CIT reported in 284 ITR 324.

The brief facts of the case are that the assessee is an individual earning income from salary, house property, business and LTCG e-filed his return of income for the assessment year 2013-14 on 29.09.2013 admitting total income of Rs.26,53,240/- and subsequently filed revised return on 28.03.2014 declaring total income of Rs.40,73,130/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS and notice U/s.143(2) of the Act was issued on 03.09.2014. Finally assessment order was passed U/s.143(3) of the Act on 13.03.2016 wherein the Ld.AO made several additions and also made addition towards capital gain which was not declared in the return of income. However the Ld.AO while computing the Long Term Capital Gain, granted deduction U/s.54F of the Act for an amount of Rs.1,15,37,427/- with respect to the residential premises allotted by the Joint Developer to the assessee.

Subsequently the Ld.PCIT by relying in the decision of the Hon’ble Apex Court in the case M/s. Goetze India Ltd., Vs. CIT reported in 284 ITR 323 invoked his powers U/s.263 of the Act and set aside the order of the Ld.AO with directions to redo the assessment afresh because he was of the view that the claim of deduction has to be made by the assessee by filing a revised return and not by merely raising the issue at the time of assessment proceedings before the Ld.AO.

Before us the Ld.AR submitted that the assessee was under the bonafide belief that he is entitled for deduction U/s.54F of the Act, with respect to the long term gain earned towards joint development of the assessee’s family property and allotment of a portion of the residential property developed by the promoter and hence he did not disclosed the same in the return of income. The Ld.AR further submitted that when the matter was pointed out by the Ld.AO, the assessee furnished all the particulars and the Ld.AO computed the LTCG in accordance with the provisions of the Act and granted the benefit of deduction U/s.54F of the Act which is also as per the provisions of the Act. It was therefore pleaded that invoking of powers U/s.263 of the Act by the Ld.PCIT and withdrawing the benefit U/s.54F of the Act is not warranted because the assessee is rightfully entitled for such benifit. The Ld.DR on the other

We have heard the rival submissions and carefully perused the materials on record. In the decision of the Hon’ble Apex Court cited supra, it was specifically made clear that the Tribunal has every power to entertain any fresh claim made before it for the first time by the appellant. Further the provisions of Section 144 of the Act, also stipulates that if any person fails to furnish return of income the Assessing Officer is empowered to pass appropriate assessment order after taking into account of all relevant materials which he has gathered and after giving the assessee of sufficient opportunity of being heard. Therefore from the analogy of the provisions of Section 143 and 144 of the Act, it is mandatory for the Ld.AO to consider all the material facts which is within his knowledge or the material facts that is brought to his knowledge before framing the assessment. In the case of the assessee, the Ld.AO has complied with the same and after analyzing the issue with respect to the eligibility of deduction U/s.54F of the Act, extended the benefit of deduction to the assessee. The Ld.PCIT has not found

In the result, the appeal of the assessee is allowed.