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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY
आदेश / O R D E R
Per A.Mohan Alankamony, AM:-
The appeal by the assessee is directed against the order passed by the learned Principal Commissioner of Income Tax, Puducherry dated 8.12.2016 in C.No.91271A(113)/Pr.CIT/PDY/ 2015-16 for the assessment year 2011-12 passed U/s.263 of the Act.
The assessee has raised several grounds in his appeal however the crux of the issue is that the Ld. Principal CIT has erred in setting aside the assessment order passed by the Ld.AO by invoking the provisions of Section 263 of the Act.
The brief facts of the case are that the assessee is an individual earning salary income from M/s. Mahindra Holiday and Resorts Pvt. Ltd.. Initially the assessee had not filed his return of income for the assessment year 2011-12, however in response to the letter dated 22.07.2013 of the Ld.AO, the assessee filed his return of income on 30.12.2013. Thereafter assessment was completed U/s.143(3) r.w.s. 147 of the Act on 06.03.2015 assessing the income of the assessee based on his return of income and no additions were made.
Subsequently the Ld.PCIT invoked the provisions of Section 263 of the Act because of the following reasons:-
“iii) In his Return of Income, the assessee has admitted the Long Term Capital Gains at Rs.33,76,458/- as per the following workings:
Actual Sum Received 80,00,000 Cost of the Flat - 2485 Sq.ft. 52,27,250 Total consideration actually received 1,32,27,250 (A) Value 05 per Stamp Valuation Authority 1,86,75,000 (B) (i.e. 415 Sq. Yards x RS.45000 per Sq. Yard)
As per the provisions of Section 50C, since (8) is the higher, the sum of Rs.1,86,75,000/- was adopted for working out the Long Term Capital Gains.
Since the land measuring 90 Sq. yard was retained as undivided share and the balance measuring 325 sq. yard was only sold, the sale value was proportionately adopted at Rs.1,46,25,000/- (ie Rs. 6,75,000 x 325/415).
Sale Consideration 1,46,25,000 Indexed Cost of Acquisition of Land for 415 Sq. Yd. 8,88,750 Indexed Cost of Improvement 24,88,500 Total 33,77,250 Less: Proportionate 325 Sq. Yds. (3377250 x 325/415) 26,44,834 Long Term Capital Gain 1,19,80,166 Less: Deduction u/s 54 (Cost of Flat / Car Parking Recd.) 52,27,250 Balance: Taxable Long Term Capital Gain 67,52,916 Your Share claimed at 50% on Rs.67,52,916/- 33,76,458 iv) While completing the Assessment Proceedings, the Assessing Officer accepted the above workings without properly examining the facts. v) The assessee had shown the value of the built up area of 12425 sq.ft. @ RS.600/- per sq.ft. at Rs. 74,55,000/- and car parking 10 numbers @ Rs.40,000/- per car parking area (Rs.4,00,000/- in total) as per the value adopted under Section 50C for the purpose of payment of stamp duty for registration of P. O.A. Whereas in claiming exemption under Section 54, the assessee had taken the value of the flat at door NO.30 second floor measuring 2485 sq.ft. including car parking at Rs.52,27,250/- as per the builder certificate dated 10.01.2013 (the value of UDS of land are also included). vi) As per Section 54, exemption is available only for purchase or construction of a house. In this case the assessee and his mother received constructed area of 2485 sq.ft. of built up area @ 600 per sq.ft. and 2 car parkings @ Rs. 40, 000/- per car parking, cost as per valuation adopted for payment of stamp duty for registration of P.O.A. which worked out to Rs.15,71,000/- only and this sum only should have been claimed as deduction under Section 54 instead of Rs.52,27,250/- as claimed by the assessee in his Return of Income and accepted by the Assessing Officer. vii) Further, the Assessing Officer had not called for the assessee’s bank statements to examine the above and other transactions.”
Thereafter the Ld.PCIT remitted back the matter to the file of Ld.AO with directions to examine all the issues in the caseafresh and pass speaking order.
The Ld.AR submitted before us that the assessment order was passed by the Ld.AO after verifying the claim of the assessee with respect to exemption U/s.54 of the Act. He further submitted that the Ld.AO has recorded in his order that the assessee had filed all details with respect to his claim U/s.54 of the Act and the same was verified. It was further submitted that the Ld.PCIT erroneously observed in his order that the Assessing Officer has not called for the assessee’s bank statements in order to examine the facts of the case with respect to the transaction and the Ld.AO has accepted the computation submitted by the assessee without properly examining the facts.
He therefore argued that the order of the Ld.PCIT U/s.263 is erroneous and therefore the same may be quashed. The Ld.DR on the other hand argued in support of the Order of the Ld.PCIT.
We have heard the rival submissions and carefully perused the materials available on record. As pointed out by the Ld.AR the Ld.AO in his order has specifically recorded that the assessee had submitted all the details with respect to his claim U/s.54 of the Act and after verifying the same accepted the commutation submitted by the assessee. Therefore it is obvious that the Ld.PCIT has wrongly stated in his order that the Ld.AO has passed the order without properly verifying the details submitted by the assessee. Moreover we find the issues raised by the Ld.PCIT in his order are debatable. Section 263 of the Act stipulates that the CIT can invoke his jurisdiction if he considers any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. Explanation (a) & (b) to Section 263 of the Act further stipulates that an order passed by the Assessing Officer shall be deemed to be erroneous in so far it is prejudicial to the interest of the Revenue if in the opinion of the CIT the order is passed without making inquiry or verification or by allowing any relief without inquiring into the claim of the assessee. Therefore from the facts of the case it is apparent that the Ld.PCIT while invoking his jurisdiction U/s.263 of the Act, has not considered the provisions of the Act in the appropriate manner. From the facts of the case it is apparent that the Ld.AO has categorically mentioned in his order that the assessee had furnished all the details with respect to his claim made U/s.54 of the Act and he has passed the Order after due verification and discussions with the assessee’s representative. In this situation, we are of the view that the Ld.PCIT has wrongly invoked his jurisdiction U/s.263 of the Act. Therefore we hereby quash the order passed by the Ld.PCIT invoking his powers U/s.263 of the Act.
In the result the appeal of the assessee is allowed.
Order pronounced on the 9thFebruary, 2018 at Chennai.