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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: Ms. MADHUMITA ROY & SHRI BHAGIRATH MAL BIYANI
The instant appeal filed by the Revenue is directed against the order dated 11.07.2018 passed by the Ld. CIT(A), Ujjain (M.P.) arising out of the order dated 22.12.2017 passed by the ITO-Agar, Malwa under Section 143(3) r.w.s. 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2012-13 whereby and whereunder the addition to the tune of Rs. 18,50,916/- under Section 54F made by the AO has been deleted.
The short case made out by the assessee is this that the assessee that the original assessment was completed for the year under consideration under Section 143(3) upon due verification made by the Ld. AO and the deduction claim under Section 54F was allowed. Subsequently, objection by the audit
ITO vs. Shri Vardhman Gadia Asst.Year –2012-13 - 2 – party to this effect that the land in question is an agricultural one and deduction under Section 54F is not allowable on land purchases and, thus, the same AO changed her opinion and reopened the case under Section 148 of the Act which culminated into disallowance of deduction claimed under Section 54F on the count that on enquiry from neighbours of Patwari no house construction was found at the plot. The Ld. CIT(A) deleted such disallowance made by the Ld. AO. Hence, the instant appeal before us.
It was further submitted by the assessee that the enquiry was never confronted to the appellant. Moreso, the surrounding plots are vacant, on the plot of appellant are duly constructed house exist. A certificate to that effect issued by Panchayat and the Patwari as well have been place before the authorities below. Merely, on surmise and conjecture the Ld. AO in the pressure of the Audit Department changed her opinion and reopened assessment culminating into addition of Rs. 18,50,916/- under Section 54F of the Act.
The Ld. D.R. supported the case made out by the Revenue on the point that the land is not an agricultural and does not deserves to be allowed the claim made under Section 54F of the Act.
On the other hand, the case of the assessee before the First Appellate Authority is this that upon due consideration of the entire set of records the original assessment order was passed by the same AO under Section 143(3) of the Act allowing deduction claimed under Section 54F of the Act. In fact, even before the re-assessment proceeding when the notice was served upon the assessee which was received by the family members of the assessee, as he was out of station for treatment of his 85 years old mother, and by the time he came
ITO vs. Shri Vardhman Gadia Asst.Year –2012-13 - 3 – back to his place, the order has already been passed by the AO disallowing deduction. Further that once the claim of the assessee under Section 54F was allowed after due verification of the records placed before the AO under Section 143(3) of the Act, the re-opening made by the same AO on a different basis which is ex facie doubtful. The re-opening is not permissible. In fact, it is nothing but a mere change of opinion and, thus, liable to be quashed. The assessee, as we find, relied upon several judicial pronouncement on this point and finally taking into consideration the entire aspect of the matter the Ld. CIT(A) deleted the addition with the following observation: Ground No.1 & 2:- Through these grounds of appeal the appellant “4.1 has challenged the addition of Rs.18,50,916/- by disallowing claim u/s. 54 of the I.T. Act. The Assessing Officer disallowed the deduction claimed u/s54F for construction of new house of which full details including Purchase Deed of land, diversion Order, permission by Panchayat for construction of house etc. were furnished and was duly allowed by the same Assessing Officer in original Assessment Order. The appellant's case was selected for scrutiny for the Assessment Year 2012-2013 and the Assessment was completed u/s 143(3) after due verification by the same Assessing Officer allowing the deduction claimed u/s54F. The AO re-opened the case on the ground that the land in question was agricultural land and deduction u/s54F is not allowable on land purchases. The Assessing Officer changed her opinion and re- Assessment proceedings, disallowed the deduction claimed u/s54F that on enquiry from neighbours and Patwari, no house construction was found on the plot. This enquiry report was never confronted to the appellant. As a matter of fact, the surrounding plots are vacant and on the plot of appellant a duly constructed house exist. A Certificate from Panchayat as well as Patwari as to the fact of construction as well as the date of which is existed has been filed by the appellant as a proof of construction of house during the course of assessment proceedings. The Assessing Officer disallowed the deduction u/s54F which was originally allowed by her in original Assessment after verification of all the facts. Therefore, the AO is not justified in disallowing the claim of the appellant. Therefore, the addition made by the AO amounting to Rs.18,50,916/- is Deleted. Therefore, the appeal on these grounds is Allowed.”
6. It is an admitted position that the assessee has disclosed all primary facts with corroborative evidences beyond doubt and the AO had drawn the conclusion upon examining the entire facts and documents. In that view of the ITO vs. Shri Vardhman Gadia Asst.Year –2012-13 - 4 – matter the assessment cannot be re-opened merely on the basis of the change of opinion. In fact, during the original assessment the assessee’s claim was processed at length and after calling for detail explanation from him the same was accepted. Merely because a certain element or angle was not in the mind of the AO while accepting such a claim, cannot be a valid ground to re-open the assessment proceeding. We have further considered the fact of issuance of certificate of the Panchayat and the Patwari of existence of construction on the plot in question and such proof of construction of house cannot be neglected at all. In fact, upon considering the entire aspect of the matter and upon examining the records and documents filed before the AO, the original assessment order was finalized under Section 143(3) granting relief to the assessee by accepting the claim of deduction made under Section 54F of the Act. Hence, we do not find any justification in disallowance the said claim by the same AO which has been rightly taken into consideration in its proper perspective by the Ld. CIT(A) while deleting the order passed by the AO in re- assessment proceeding. We, therefore, find no irregularities in the said order passed by the Ld. CIT(A) which deserves to be upheld. Revenue’s appeal is, therefore, found to be devoid of any merit and thus, dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 09/09/2022 by placing the result on the Notice Board as per Rule 34(4) of the Income Tax (Appellate Tribunal) Rule, 1963. This Order pronounced in Open Court on 09/09/2022 Sd/- Sd/- SD Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 09/09/2022 TRUE COPY TANMAY, Sr. PS
ITO vs. Shri Vardhman Gadia Asst.Year –2012-13 - 5 –