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Income Tax Appellate Tribunal, BANGALORE ‘A’ BENCH, BANGALORE
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAO
PER SHRI INTURI RAMA RAO, AM :
This appeal filed by the assessee is directed against the order of the ld.
Principal Commissioner of Income-tax (Appeals), Bangalore dated 30-0-2013
passed u/s 263 of the IT Act, 1961 for the assessment year : 2009-10.
The assesee raised the following grounds in its appeal;
“1. The ld.CIT, exercising revision u/s263 of the Act is without jurisdiction, illegal and arbitrary since the order of the assessment is neither erroneous nor prejudicial to the interest of revenue.
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. 2. It is further submitted that the order should be erroneous and prejudicial to the interest of revenue in order to invoke revision jurisdiction. The satisfaction of the aforesaid twin conditions is a pre-requisite to justify revision u/s 263 of the Act. 3. It is submitted that the order of the assessing authority in allowing the benefit of sec.54F of the Act is supported with the judgment of the jurisdictional high Court and hence it is nota erroneous 4. It is well settled la that where the AO had adopted one of the course permissible in law when two views are possible and merely because the respondent does not agree with the view, such an order of the AO cannot be treated as erroneous and thus not prejudicial to the interest of revenue. 5. The decision of the ld.assessing authority in allowing the claim of sec.54F I in accordance with law laid down by the jurisdictional High Court in the case of CIT Vs Sambandam Uday Kumar reported in 345 ITR 389(Kar.) and tht of the Madras High Court in CIT Vs Sardarmal Kothari reported in (2008) 302 ITR 286. The decision of Madras High Court has attained finality in view of the dismissal of the SLP filed by the department.
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6.The ld. CIT(A) erred in not appreciating the case law relied upon by the assessee. 7. For these and other grounds that may be urged at the time of hearing, the assessee prays that the appeal be allowed.
Brief facts of the case are that the assessee is an individual. The
return of income for the assessment year 2007-08 was filed declaring an
income of Rs.1,89,742/- on 30-07-2007. Against the said return of income
there was no scrutiny assessment proceedings. Subsequently, when the AO
came to know that the assessee had entered into Joint Development
Agreement (JDA) with m/s Tetra Grand Constructions Pvt.Ltd. in order to
assess the capital gains issued notice u/s 148 of the Act, 1961 on 20-01-
2012. In response to the said notice, assessee had submitted a letter dated
15-02-2012 where the copy of the original return of income was enclosed.
Subsequently, after issue of notice u/s 142(1) the assessment was completed
at a total income of Rs.24,42,571/- after making several disallowances.
Against the said order an appeal as preferred before the ld.CIT(A) which is
pending for disposal.
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While the matter stood thus, a notice u/s 263 of the Act was issued
by the ld. Prl.CIT(A), Bangalore proposing to revise the assessment order on
the ground that the AO had failed to examine while granting exemption u/s
54F of the Act of Rs.25,881,560/- whether the construction of house was
completed within the period of three years from the date of entering in to joint
development agreement and also failed to bring it to tax the additional
compensation of Rs.10,27,400/- received from the builder. In response to the
show cause notice assessee contended that for the purpose of computing the
capital gains the date of JDA cannot be taken as the date of transfer of capital
asset, but is only from date on which the possession was handed over to the
builder i.e from the FY 2007-08 and placed reliance on the decision of the
jurisdictional High Court in the case of CIT Vs Sambandam Uday Kumar
(Supra) and submitted that the AO adopted one of the possible views and
therefore, the assessments cannot be revised u/s 263 by the CIT. The ld.CIT
brushing aside, the contention of the assessee held that the assesee had
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transferred the property to the builder on the day of entering into JDA i.e 30-
12-2006 and in this regard placed reliance on the decision of the Hon’ble
Karnataka High Court in the case of CIT Vs Dr.T.K.Dayalu (2011) 202
Taxmann 531 (Kar.) and directed the AO to make fresh assessment after
giving the assessee reasonable opportunity of being heard in this regard.
The learned counsel reiterated the submissions which were advanced
before the CIT during the course of proceedings u/s 263 of the Act and
submitted that the revision order passed u/s 263 should be set aside, as the
AO took one of the possible view and placed reliance in the case of Malabar
Ind.Co.243 ITR 83.
On the other hand, learned Sr.DR placed reliance on the order
passed u/s 263 of the Act.
We have heard the rival submissions and perused the material on
record.
6.1 In this appeal the issue is about the validity of assumption of
jurisdiction by the learned CIT under the provisions of sec.263 of the Act.
The order of CIT passed u/s 263 of the Act, makes it explicitly clear that the
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revision power was exercised as the AO failed to examine the issue whether
the construction of house was completed within period of three years from the
date of entering into JDA and failed to bring to tax additional compensation
Rs,10,27,400/- received from the builder. The learned counsel for the
assessee could not demonstrate before us that the AO had examined these
issues during the course of assessment proceedings. Therefore, the
irresistible conclusion is that the AO had failed to examine these issues
during the course of assessment proceedings. No doubt, the issue of
completion of construction of house within the specified period is a material
issue while granting exemption u/s 54F of the IT Act, 1961. The issue as to
whether the capital gains had arisen i.e on the date of entering into JDA, as it
is not the subject matter of revision under the provisions of sec.263 of the IT
Act. When the AO had failed to examine the issues, it cannot be said that
the AO took one of the possible views as held by the Hon’ble Apex Court in the
case of Malabar Ind.Co. (supra). The failure of the AO to examine certain
issues confers valid jurisdiction on the CIT under the provisions of sec.263
and therefore, we are of the considered opinion that the CIT is justified in
assuming the jurisdiction u/s 263 of the IT Act, 1961. In view of the above,
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we set aside the order of assessment to the file of the AO for fresh
consideration.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on the 13th January, 2016.
Sd/- SD/- (VIJAYPAL RAO) (INTURI RAMARAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Bangalore D a t e d : 13-01-2016 am* Copy to : 1 Appellant 2 Respondent 3 CIT(A)-II Bangalore 4 CIT 5 DR, ITAT, Bangalore. 6 Guard file By order, AR,ITAT, Bangalore