SHUMA KALRA,NEW DELHI vs. PR. CIT- 12, NEW DELHI

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 4128/Del/2018 (Assessment Year: 2013-14) Shuma Kalra, Vs. Pr. CIT-12, A-28, Ashok Vihar, Phase-1, New Delhi New Delhi PAN: AAIPK8142R (Appellant) (Respondent)

Assessee by : Shri Gautam Jain, Adv Revenue by: Shri H. K. Chaoudhary, CIT DR Date of Hearing 18/06/2020 Date of pronouncement 29/06/2020

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld Pr. Commissioner of Income Tax -12, New Delhi [ The Ld PCIT] dated 28/03/2018 for the Assessment Year 2013-14 passed u/s 263 of the Income Tax Act, 1961 [ The Act] holding that the order passed by the Income Tax Officer, Ward-34(3), New Delhi [ the Ld AO ] passed u/s 143(3) of the Act on 08.06.2015 for the impugned assessment year is erroneous and prejudicial to the interest of revenue. 2. The assessee has raised in all five grounds of appeal as under:- “1. That order dated 28.3.2018 u/s 263 of the Act by learned Principal Commissioner of Income Tax, Delhi-12, New Delhi has been made without satisfying the statutory' preconditions contained in the Act and is therefore without jurisdiction and thus, deserves to be quashed as such. 2. That the learned Principal Commissioner of Income Tax has erred both in law and on facts in holding that issue as to claim of deduction u/s 54F of the Act deemed rental income in respect of M/s Unitech World, Gurgaon Property were not examined by the learned Assessing Officer is not based on correct appreciation of facts and law and therefore unsustainable. 2.1 That further even the finding that “source of investment of Rs. 1.27 crore in purchase of Rohini plot was not examined by the AO” was also not examined is factually incorrect and contrary to the evidence placed on record during the assessment proceedings and hence untenable.

2.2 That furthermore the observation that “AO should also have examined if assessee was liable for wealth tax as he was owning so many properties in AY 2013-14” is vague and arbitrary and hence unsustainable and beyond the scope of provision contained in section 263 of the Act. 2.3 That the learned Principal Commissioner of Income Tax has failed to appreciate that possible legal inferences as arrived by him in the order cannot a valid ground for a basis to regard and held that an order of assessment to be erroneous and prejudicial to the interest of revenue. 2.4 That the finding that “various issues as narrated in para 5 were not examined by AO therefore, the order passed on 8.6.2015 by the AO is erroneous and prejudicial to the interest of revenue” is not based on correct appreciation of facts on record and hence unsustainable. 2.5 That further reliance placed by the learned Commissioner of Income Tax as explanation to section 263 is also misconceived, misplaced and untenable. 2.6 That various adverse findings recorded in the impugned order are factually incorrect, legally misconceived and untenable. 3 That various findings and observations made by the learned Pr. Commissioner of Income Tax in order are vague, verbose, contradictory based on fundamental misconception of facts and law, arbitrary and unjustified and therefore untenable. 4 That the learned Principal Commissioner of Income Tax has further erred both in law and on facts in holding that claim of deduction u/s 54F of the Act is not sustainable in law. 5 That the learned Principal Commissioner of Income Tax has also erred both in law and on facts in holding that deemed rental income on M/s Unitech World, Gurgaon Property is to be taxed as income.” 3. Brief facts of the case shows that the assessee filed his return of income on 22.07.2013 declaring income of Rs. 1175710/-. The assessee is not engaged in any business activity but is having income from house property and other source such as interest on saving bank account. Assessee has sold one commercial property at Q-51, Gurgaon of Rs. 10764000/- on 11.04.2012. The above property was acquired by the assessee on 06.05.2005 at total cost of Rs. 563401/-. The same was indexed and indexed cost was arrived at Rs. 965830/-. Consequently long term capital gain of Rs. 9798170/- was earned by the assessee. In the return of income (in the computation) assessee claimed exemption u/s 54 of the Act of the of the whole of the capital gain i.e. Rs. 9798170/- as assessee invested total sales consideration of Rs. 1,2988,208/- for purchase of an open plot of land at Plot No. 287, Block and Pocket A-1, Sector 32, Rohini, Delhi including registration, stamp duty and DDA charges etc vide deed of registration dated 09.04.2011 and Rs 640335/- as construction cost of residential house property. Thus total investment in Residential house was Rs 13628643/-. 4. The ld AO mentioned that case of the assessee was selected for scrutiny under CASS for verification of large deduction claimed u/s 54F of the Income Tax Act, 1961 [We are not aware how the ld AO held so when the deduction claimed in the return by assessee is u/s 54 Page | 2

of the act]. Consequently, the ld AO issued notice u/s 143(2) of the Act on 02.09.2014. The ld AO also issued query letter on 30.04.2015 asking the assessee vide para No. 2(xi) to submit the sale and purchase deed where deduction is claim u/s 54 in the return filed by the assessee for Assessment Year 2012-13. The assessee was also asked to produce purchase deed of the property acquired. The assessee submitted that it has incurred cost of construction on plot of land including the purchase price of Rs. 1.27 crore plus other charges of registration and stamp duty etc on above plot of land for residential house amounting to Rs. 13628643/-. As the assessee has invested the sale consideration as claimed by the assessee for a new house property, deduction u/s 54 of the Act was claimed and consequently Nil capital gain was shown. 5. In response to the above letter of the ld AO, assessee filed reply on 07.05.2015 vide para No. 4 of the letter, copies of the sale deed of Gurgaon property and Rohini property was submitted. As per para no. 13 of the said letter, assessee also submitted documents relating to purchase and sale of immovable properties relating to deduction claimed u/s 54 of the Act. Vide letter dated 01.06.2015 para No. 3; assessee also submitted the purchase deed of the property. Based on the above information , ld AO passed an order on 08.06.2015 u/s 143(3) of the Act accepting the return of income of the assessee as under:-

open plot of land admeasuring 332.50 square meter and Rs. 640335/- was construction cost of the house. The assessee also submitted the vouchers of cash payment as well as cheque payment for the construction expenditure of Rs. 640335/-. Thus, assessee claimed that order passed by the ld AO is neither erroneous and nor prejudicial to the interest of revenue. On 09.11.2016 the assessee further submitted before the ld PCIT, documents in respect of investment in residential house such as copy of building plan, approval of plan and completion certificate. Assessee was also asked to submit the photographs of residential house; assessee expressed its inability to furnish. Assessee also did submit any water will or electricity bills. On 15.01.2018, the ld PCIT once again issued a show cause notice for hearing, which was replied by the assessee on 07.02.2018 and 22.02.2018. On conclusion of hearing the ld PCIT, passed an order u/s 263 of the act giving his finding at para 5 to 8 of his order as under, holding the order of the ld AO as erroneous and prejudicial to the interest of revenue. :- “5. Issues which were not examined by AO:- (a) As per discussion held on 28.03.2018 duly recorded in order sheet, main issues of the case which were not examined by AO are:- (i) Claim of deduction u/s 54F: No query was raised by AO on construction of house on bare plot of land. During the proceedings u/s 263, it was claimed that the assessee has built a residential property on the plot. In support the assessee submitted few Bills of construction material, sanitary ware and ledger A/c of property at Rohini (New property). The total cost of construction is shown at Rs. 640335/- on a plot that is bought for Rs. 1.27 Crores. Ratio of various materials! purchased clearly show that house can’t be constructed from it. It was also asked to Sh. Kapoor, whether water and electricity bills are there for such proposed new house. He said there is no water or electricity connection. He was asked to provide photograph of such house. He showed his inability. It proves that claim of deduction u/s 54F of the IT Act is not sustainable in law. (ii) Deemed Rental income. Unitech World. Gurgaon Property:- AO also did not raise any issue on what happened to property after being vacated by Bharti Axa (Gurgaon Property) & why deemed rental income was not offered to tax on such vacant property. As this is a commercial property hence provisions of section 23(4)(v) of It Act is not applicable and deemed rental income is to be taxed. (b) Other issues which were not examined by AO are:- (i) The source of investment of Rs. 1.27 Crore in purchase of Rohini plot was not examined by AO. The purchase was made from unsecured loan taken from 5 persons, as explained during proceedings u/s 263. But identity, genuineness & creditworthiness of such parties is required to be established, which is not done by assessee. The return of income of such parties, their balance sheets & copy of bank accounts were also not furnished.

(ii) AO should also have examined if assessee was liable for wealth tax as he was owning so many properties in AY-2013-14. 6. Under the circumstances, various issues as narrated in Para 5 were not examined by AO therefore, the order passed on 08.06.2015 by the AO is erroneous and prejudicial to the interest of revenue. If due to an erroneous order of the AO the revenue is losing tax lawfully payable by a person, it would be certainly prejudicial to the interest of revenue, as held in the case of CIT Vs Leisure Wear Exports Ltd. 120121 341 ITR 166 ('Del.'). It is incumbent on the officer to investigate the facts stated in the return. The order becomes erroneous if such as enquiry has not been made as held in case of Duggal & Co. V/s CIT (19961 220 ITR 456 (Del.) 7. Further, the Income Tax Act was amended and explanation 2 was introduced to Section 263 which states that: “For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue, if in the opinion of the Principle Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; ” 8. Hence, I set aside the assessment' order with the direction that the AO will decide these issues afresh after calling necessary details and conducting desired enquiries. Before completion of the set aside proceedings, the AO will give reasonable opportunity to the assessee of being heard.”

26/10/2015 was issued by the Principal Commissioner Of Income Tax, subsequent communications placed at page number 79 and 98 of the paper book are not the notice but are merely intimation of the date of hearing before The Principal Commissioner Of Income Tax. The learned authorised representative relied upon the decision of the honourable Allahabad High Court in Income Tax Appeal number 176 of 2010 dated 10-10- 2017. On careful perusal of that decision, it was found that in that case notice was issued by The Income Tax Officer (Technical) Kanpur instead of by The Commissioner Of Income Tax. Further, honourable High Court upheld the order of the coordinate bench quashing the proceedings u/s 263 of the income tax not on this issue but on the issue that the order passed by the learned assessing officer in that case was not erroneous or prejudicial to the interest of the revenue over and above the Commissioner of income tax did not apply his mind. Thus, this argument of the learned authorised representative is dismissed. 11. Adverting to ground No. 1, 2 and 3 of the appeal, he submitted that the finding of the Pr. CIT that the ld AO has not examined the issue involved is devoid of any merit and factually incorrect. He referred to the computation of total income filed by the assessee along with the return of income where the statement of long-term capital gain is provided. He also referred to the notice issued by the learned assessing officer dated 30 April 2015 wherein in para number 2 (xi), the learned assessing officer has asked about the deduction claimed by the assessee u/s 54 of the income tax act. He further referred to the reply dated 7/5/2015 of the assessee submitted to the assessing officer wherein the assessee has submitted the complete details of the purchase and sale of the movable properties as per para number 13 and copies of the sale deed of the Gurgaon and Rohini property as per para number four. He further referred to the letter dated 1/6/2015 submitted to the AO wherein in para number [4] the detail of the income from house property is furnished. He further submitted that the assessee has submitted the conveyance deed of the purchase of property at Rohini, which clearly establishes that investment was made in an eligible asset for claiming of deduction u/s 54F of the Act. Thus, he submitted that the learned assessing officer has enquired the issue in its completeness and thereafter passed the assessment order. He further referred the additional evidence placed by him. He also referred to the notice dated 26/10/2015 issued by the learned principal Commissioner of income tax on five different accounts to hold that the order passed by the learned assessing officer is erroneous and prejudicial to the interest of the revenue. He referred to the letter dated 23/2/2016 submitted by the assessee before the principal Commissioner of income tax wherein complete explanation was submitted before him submitting that the order passed by the learned AO is neither erroneous nor prejudicial to the interest of the revenue. He further submitted that the assessee has raised several legal issues Page | 9

before the learned principal Commissioner of income tax act. He submitted that Pr. CIT has failed to show that the view of the ld AO was not possible view and hence he cannot revise the order passed u/s 263 of the Act. He further submitted that 263 is not for deeper investigation. He submitted that ld AO has made „due enquiry‟ by proper application of his mind based on cogent material. Thus, It cannot be said that order is erroneous and prejudicial to the interest of revenue. He further referred to many other propositions challenging order u/s 263 order of the ld Pr. CIT. He referred to 22 propositions objecting the revisionary order. Therefore, he submitted that there is no error in the order of the ld AO hence the assumption of jurisdiction and passing of the order of 263 of the Act by the Pr. CIT is invalid. 12. The ld CIT DR vehemently supported the order of the ld Pr. CIT and submitted that the order of the ld AO is erroneous, passed without proper enquiry, without application of mind, in utter disregard of the provision of the law. He therefore, submitted that the order passed by the ld AO is in correct and has been held to be erroneous and prejudicial to the interest of revenue. He submitted that the assessee has claimed deduction u/s 54 of the Act as per computation of the Act, as per notice the ld AO was required to examine claim of deduction u/s 54 of the Act. However, on examination of the purchase and sale deed of the property and without examining or conducting any enquiry to the residential house property constructed by the assessee, he changed the deduction u/s 54F of the Act. He therefore submitted that he has neither verified the deduction u/s 54 of the act not u/s 54F of the act. He submitted the property sold by the assessee was a commercial property and on sale of commercial property, deduction u/s 54 is not allowable. Thus, the ld AO without applying his own mind changes the deduction from section 54 to 54F as submitted by the assessee before him. He further submitted that Rohini property was mere a purchase of open plot admeasuring 332.50 sq mtrs. The assessee merely incurred expenditure of Rs. 6 lakhs on the above property. The details of construction cost Rs. 6 lakhs, which is stated by the assessee being the construction cost of new house, was neither asked by the ld AO nor furnished by the assessee before him. He submitted that for the examination of the claim and six and 54F of the income tax act there are specific time limit provided there under for construction and acquisition of the residential house property and not only the open plot of land. He submitted that merely furnishing a ledger of the property, it could not be sale that the learned assessing officer has applied his mind. He further referred to the order of the learned CIT was held that the total cost of construction is shown to be ₹ 6 40335/– on a plot that has bought four ₹ 1.27 crores. Further the ratio of various material purchased clearly show that house cannot be constructed from the amount of expenditure disclosed by the assessee. He further stated that assessee could not produce the photograph of such house at that particular time expressing his Page | 10

inability to do so. He therefore submitted that the clear indication that as given by the learned principal Commissioner of income tax is that assessee has not constructed a house at all, thus assessee is not eligible for deduction u/s 54F of the Act. He referred to the balance sheet filed by the assessee stating that there is no change in the total cost of the above property as at 31.03.2012 and 31.03.2013. Thus, during the FY 2012-13 there is no construction expenditure incurred by the assessee. He submitted that the assessee sold the property of Gurgaon on 11.04.2012 and he purchased the property at Rohini on 09.04.2011. He therefore, submitted that the acquisition of residential house property by the assessee also does not fall into the time limit for claim of deduction u/s 54 of Act. He further referred to the order of the Pr. CIT stating that as the scrutiny was a false scrutiny and not a limited scrutiny because the ld AO did not examine the deemed rental income from another Gurgaon property. He submitted that despite the assessee submitting vide para No. 4 on letter dated 01.06.2015 before the ld AO that impugned property was leased out on monthly rent of Rs. 74911/- to one company which vacated the property on 01.12.2010 and thereafter because of slow down in the economy it could not be leased out till date. He therefore, submitted that the ld AO also failed to examine the taxability of deemed rental income with respect to the above property. He further stated that the ld AO also did not verify the source of investment of Rs. 1.27 crores for Rohini plot, which was purchased out of unsecured loan taken from five different entities. However, the ld AO did not raise a single question about identity, genuineness and creditworthiness of the lenders. He further submitted that despite looking at the balance sheet where assessee was having several properties the ld AO failed to look at the applicability of wealth tax in the hands of the assessee. He therefore, stated that there could not be any order then order of the ld AO in the impugned appeal, which can be held to be more erroneous and more prejudicial to the interest of revenue. He further stated that absolutely no enquiry has been made by the ld AO, there is complete non-application of mind by the ld AO to the facts of the above case and assessment is framed in total disregard of the provisions of law. He therefore submitted that the order passed by the learned principal Commissioner of income tax assuming jurisdiction u/s 263 and holding that the order passed by the learned assessing officer is erroneous and more so prejudicial to the interest of revenue. Thus, he supported the order passed u/s 263 of the Act. 13. In the rejoinder the ld AR heavily relied on the decision of the Hon‟ble Punjab and Haryana High Court in 140 ITR 490 in CIT V Jagadhri Electric Supply and Industrial co and precisely at page 502 stating that revenue cannot rely on any other ground while defending order u/s 263 of the Act then what is mentioned in 263 order. He further relied upon CIT V L F Desilva [1992] 62 Taxman 161 (Karnataka)/[1991] 192 ITR 547 (Karnataka)/[1992] 101 Page | 11

CTR 152 (Karnataka) and Jagtjit Industries LTD v ACIT [ 60 ITD 295] to support his contentions. He submitted that the order of the learned principal Commissioner of income tax is not on the issue whether the assessee is entitled to deduction u/s 54 of the act or u/s 54F of the act. He further submitted that the claim raised the ld DR about availability of deduction u/s 54 and u/s 54F was not the issue raised by the ld CIT in 263. He therefore submitted that the arguments of the learned departmental representative beyond the order passed by the learned principal Commissioner of income tax could not be considered. 14. On the merits, he submitted that construction of house property is within the time limit, and therefore, the revenue‟s argument is devoid of any merit. He submitted that even the construction may be prior to sale of property and it is eligible for deduction. He relied upon 234 ITR 743 and 165 ITR 571 for the above proposition. In view of this, he submitted that the order passed by the ld PCIT u/s 263 of the Act is not sustainable. 15. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee as per return of income filed claimed of deduction u/s 54 of the Act of the whole of the capital gain earned by the assessee on sale of property at Gurgaon. Undisputedly, the capital gain earned by assessee on the sale of property was Rs. 9798170/- whereas the assessee claimed to have constructed a residential house property amounting to Rs. 13628643/- , claimed exemption u/s 54 of the Act stating that whole of the capital gain is not chargeable to tax. The case of the assessee was selected for scrutiny under CASS for verification of large deduction claimed/s 54F etc. Thus, in the scrutiny assessment as per CASS mandate deduction claimed by the assessee though u/s 54 was to be examined. The ld AO was provided copy of the sale deed and purchase deed of the property sold on which capital gain was earned. For the claim of deduction u/s 54 the assessee submitted the copy of the purchase deed of the property of plot NO. 287, Sector 32, Rohini where by assessee purchased an open plot of land admeasuring 332.50 sq mts for a total cost of Rs. 12988308/-. On this basis, assessee claimed deduction u/s 54 as shown in the computation of total income. The assessee by various correspondence and notices before the ld AO demonstrated the claim u/s 54F of the Act to which the ld AO agreed and allowed the deduction u/s 54F of the Act. Thus notice dated 30.04.2015 the ld AO raised a query at 2(xi) about the claim of deduction u/s 54 of the Act, assessee explained vide letter dated 07.05.2015 at SL 1 to 13 about the claim of deduction u/s 54 whereas in para 2 of the assessment order the ld AO grants deduction to the assessee u/s 54F of the Act which was never contested by the assessee. However, we are not on the issue is it was also not the case of the learned principal Commissioner of income tax. We are on the issue that deduction was also allowed by the ld AO merely on the basis of the purchase deed of open plot of land whereas the provisions of Page | 12

subsection 54F refers to construction or acquisition of a residential house property. Assessee as per letter dated 07.05.2016, submitted only the purchase and sale of deed of the property. There is no information available before the ld AO for any construction carried out by the assessee of a residential house property. Before the learned PCIT, assessee did not furnish any bill of water supply to a residential house, any bill of electricity supply to the house or the photographs of the house. The learned principal Commissioner of income tax looking at these facts that a residential house property does not have a water bill, electricity bill and even photographs are not furnished, which are mandatory requirement to consider any property as a residential house property. Even otherwise, what is sold by the assessee is a „commercial property‟ in Gurgaon and admittedly, on capital gain on sale of a commercial property deduction u/s 54 is not available. Thus, the only issue was to be examined whether the assessee is eligible for deduction u/s 54F of the act or not. That is also the issue before the learned PCIT when he examines the record and this is the reason mentioned by the PCIT in his order. Thus, if the ld AO has allowed the deduction to the assessee u/s 54F of the Act, admittedly there is no discussion either in any of the submission of the assessee or in any query letter or notice issued by the ld AO about the same. The ld AO has not at all enquired into compliance with all the conditions envisaged u/s 54F of the Act. Therefore, it is apparent that the ld AO has allowed the deduction to the assessee u/s 54F of the Act without making any enquiry. It is not a case of “inadequate enquiry” as far as deduction u/s 54F is concerned, but we have no hesitation to hold that it is a case of complete „lack of enquiry‟. The notice of the PCIT u/s 263 dated 26.10.2015 clearly raise this issue. Further source of investment of Rs. 1.27 crores for purchase of the above said property which is also a subject matter of application of the capital gain by acquisition or construction of new house property, was also an issue raised by the Pr. PCIT in his 263 notice, which has not been enquired by the ld AO. Even otherwise, the deduction u/s 54F clearly provides for investment of the “net consideration” on sale of the property on which capital gain has arisen. Therefore, if the ld AO has not enquired that whether the net consideration received by the assessee is invested in the new house property, he cannot be decide on the allowability of deduction u/s 54F of the Act. The ld AO has failed to look into the source of investment of purchase of new property of Rs. 1.27 Crores, as it is also one of the requirements of the deduction u/s 54F of the act. In absence of any enquiry on that, order of the ld AO suffers from error on this point also. Assessee submitted before ld PCIT details of unsecured loan as per letter dated 07.02.2018 at Rs. 128775000/- which is placed at page 80 of the paper book that is used for financing the purchase of new property on which deduction is claimed u/s 54F of the Act. If looked into, the assessee before the ld AO clearly stated vide letter dated 07.05.2015 per Page | 13

para No. 10, that assessee has not taken any unsecured loan during the year. Therefore, the amount of Rs. 20 lakhs received from U Like Estate Pvt. Ltd and amount of Rs. 50 lakhs received from Mint India Fincap Pvt. Ltd was not at all examined by the ld AO. This is relevant because the assessee had arranged the loans for investment in the new residential house property as stated in reply to notice u/s 263 on 07.02.2018. Thus, there is clear-cut non-application of mind by the learned assessing officer as demonstrated by the learned principal Commissioner of income tax. It is the case with the income from house property. AO did not ask any question or applied his mind to the taxability of income under the head house property as well as taxability under the wealth tax act. In view of above finding of facts itself, it is clear that the order passed by the ld AO was correctly held to be erroneous and prejudicial to the interest of revenue. Therefore in nutshell we hold that a. the learned assessing officer has not examined the issues, which were raised in the reasons for selection of the scrutiny, which is mandatory. b. AO has not examine the source of investment of ₹ 1.27 crores in purchase of plot of land as assessee has claimed deduction u/s 54F of this property to examine whether the net consideration received by the assessee on the sale of property on which capital gain has been earned c. AO failed to examine chargeability of income from house property on the property owned by the assessee d. the AO also did not examine whether the wealth tax is chargeable looking to the assets owned by the assessee e. the learned AO has passed the order in has and without making any enquiry with respect to the return of income of the assessee. 16. The learned principal Commissioner of income tax held that the order passed by the learned assessing officer is erroneous and prejudicial to the interest of revenue on all the above account. We hold that there is no infirmity in his order passed on the site in 263 of the act. 17. For reaching on this decision, we have considered several judicial precedents stated by the ld Authorized Representative. However, we do not find that any of the decisions even comes anywhere near to the facts of the case of assessee. a. With respect to the decision of the Hon'ble Delhi High Court 350 ITR 555 raising the contention that in absence of any finding of the Pr. CIT to show that view formed by the ld AO was not possible but unsustainable, action u/s 263 cannot be upheld. He further referred to several judicial precedents on this proposition. We find that the ld PCIT has clearly held that the order of the ld AO is wholly unsustainable in law. It is

not the case where there is more than one view available on the facts of the case. Hence, reliance placed on such decision is merely an academic exercise. b. He further relied upon the decision of the Hon'ble Delhi High Court 341 ITR 166, 332 ITR 167, 341 ITR 547 to submit that 263 cannot be invoked to make further deeper investigation. In the present case, it is merely the basic investigation that the ld AO was required to do on the return of income filed by the assessee, which AO has failed to do. There was complete non-application of mind by the ld AO that is conclusively proved by the Pr. CIT. Thus, all these decisions do not come to the rescue of the assessee. c. The impugned case before us is not of „inadequate enquiry‟ but complete „lack of enquiry‟, therefore, reliance placed on 343 ITR 329 and 357 ITR 388 along with host of other decisions are also not helping the case of the assessee. d. Simply looking at the facts of the case, clear-cut conclusion can be drawn without any referring to the judicial precedents, the learned assessing officer did not do what he was mandated to do i.e. to look in to the large deduction under capital gain claimed by the assessee. When the AO has failed to do his duty, the learned principal Commissioner of income tax, who is vested with the power of revision u/s 263 of the income tax act, has correctly held that the order passed by the learned assessing officer is erroneous so far as it is prejudicial to the interest of revenue. Thus, there is no infirmity in the order of the Pr. CIT in holding that order of the ld AO is erroneous and prejudicial to the interest of revenue. 18. The last argument of the ld AR that revenue cannot raise any other issue, which was not, raised by the ld PCIT u/s 263 of the Act in deciding this issue. For this proposition, he relied upon decision of the honourable Punjab and Haryana High Court in 140 ITR 490. We have carefully considered the argument of the ld AR as well as the judicial precedents before us. While upholding the order of the ld PCIT we are not substituting any ground, which was not part of the order of the ld PCIT. Therefore, the above judicial precedents cited before us does not have any relevancy on the impugned appeal before us. Of course, we cannot restrict either of the party in making an argument/submission before us. However, we are duty- bound in this impugned appeal to look at the order passed u/s 263 of the income tax act only with respect to its sustainability in the eyes of law. Nothing would be supplemented or extracted to test its validity. 19. Before parting we are of the view that the assessee has submitted certain additional evidence to show that it has constructed residential house property at a cost of Rs. 640335/- on the plot of land admeasuring 332.50 sq mts purchase for Rs. 12988308/- the additional evidence Page | 15

submitted are in the form of photograph of the house and house tax bill. The evidence placed before us are of no help in holding that whether the order of the ld AO is erroneous and prejudicial to the interest of revenue or not because this evidence were not part of record when the ld Pr. CIT examined the record. For testing the validity of the order passed u/s 263 of the income tax act, we have to stop our self at the point of time when the Pr. CIT examined the records. However, in the interest of justice, we direct the ld AO to consider this evidence in the interest of justice while deciding the issue. Assessee is directed to file the same. 20. In the result, appeal of the assessee failed on all five grounds raised before us. Hence, same are dismissed. 21. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 29/06/2020. -Sd/- -Sd/- (SUDHANSHU SRIVASTAVA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29/06/2020 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi