HANSABEN MAHENDRAKUMAR MEHTA,AHMEDABAD vs. THE PR. CIT, AHMEDABAD-1, AHMEDABAD
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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
आदेश/O R D E R
PER SUCHITRA KAMBLE, JM: The captioned appeal has been filed at the instance of the assessee against the order dated 28.03.2023 passed by the Learned Principle Commissioner of Income Tax, Ahmedabad ( in short “Ld.PCIT”) arising in the matter of assessment order passed under s. 263 of the Income Tax Act,
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2 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2018-19.
The assessee has raised the following grounds of appeal:
1.1 The order passed by U/s.263 on 28.03.2023 by Pr. CIT-1 Abad holding the order of assessment passed u/s 143(3) on 10.11.2020 by AO to the extent of allowing the claim of exemption u/s 54F of RS. 3,16,37,333/- was erroneous and prejudicial to the interest of the Revenue for want of adequate inquiry is wholly illegal, unlawful and against the principles of natural justice. 1.2 The order passed by U/s.263 on 28.03.2023 by Pr. CIT-1 Abad holding the order of assessment passed u/s 143(3) on 10.11.2020 as erroneous and prejudicial to the Revenue is illegal and unlawful. 2.1 The Id. Pr. CIT has grievously erred in law and or on facts in holding the order of assessment passed u/s 143(3) on 10.11.2020 by AO to the extent of allowing the claim of exemption u/s 54F of RS. 3,16,37,333/- was erroneous and prejudicial to the interest of the Revenue for want of adequate inquiry and on merits held the said claim u/s 54F to be inadmissible. 2.2 That the in the facts and circumstances of the Id. Pr. CIT ought not to have held that the order of assessment passed u/s 143(3) on 10.11.2020 by AO to the extent of allowing the claim of exemption u/s 54F of RS. 3,16,37,333/- was erroneous and prejudicial to the interest of the Revenue for want of adequate inquiry and on merits held the said claim u/s 54F to be inadmissible. 3.1 The Id. Pr. CIT has grievously erred in law and or on facts in holding that the exemption allowed u/s 54F was not in order. That the in the facts and circumstances of the Id. Pr. CIT ought not to have held that the exemption allowed u/s 54F was not in order It is, therefore, prayed that the order passed by Pr CIT u/s 263 as well as directions to disallow the said expenses should be quashed.
The assessee filed her return of income for the assessment year 2018- 19 on 10.07.2018 declaring total income at Rs.2,98,51,920/- The case was selected for scrutiny through CASS to verify the capital gains deduction claimed during the year under consideration and assessment proceedings u/s.143(3) of the Income Tax Act 1961 was finalized on 10.11.2020 accepting the returned income. The Ld.PCIT observed that the assessee had earned
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3 capital gain on sale of unlisted shares and availed exemption of Rs.3,20,00,000/- under section 54F of the Act. The Ld.PCIT observed that since the Act prescribes that the assessee has to purchase/construct a residential house within the prescribed period of 3 years, the investment in construction cost of house owned by her husband and brother-in-law cannot be considered as eligible for availing exemption u/s.54F of the Act. Thus, the Ld.PCIT issued notice u/s.263 of the Act which was subsequently replied by the assessee along with the documents submitted before the Assessing officer. The Ld.PCIT after taking cognizance of the submission of the assessee held that the assessment order passed by the Assessing Officer u/s.143(3) of the Act is erroneous in prejudicial to the interest of the Revenue and set-aside the same. The Ld.PCIT further directed the Assessing Officer to make fresh assessment after making necessary inquiries.
Being aggrieved by the order u/s.263 of the Act, the assessee filed appeal before us.
The Ld.AR submitted that the assessee’s case was selected for limited scrutiny to verify the capital gain deduction claimed by the assessee in her ITR. Thus, the inquiry made by the Assessing Officer has been done thoroughly in respect of this exemption u/s.54F of the Act relating to the capital gains. In fact the enquiries relating to the ownership of land and residential house was made as per the notice dated 16.09.2020 and 05.10.2020 by the Assessing Officer. The Assessing Officer was very well aware of the dwell ownership of the property and in fact the legal submission made by the assessee during the assessment proceedings was also taken cognizance by allowing the claim of exemption u/s.54F of the
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4 Act. The assessee had given the related documents about her house property as well as the details of ownership and percentage of shares in the property as co-owner, cost of construction, name of members and their shares as well as sale deed during the assessment proceedings. Thus, the AO has rightly allowed the claim of the assessee us/s.54 of the Act. The Ld.AR submitted that the Ld.PCIT was not justify in invoking the provision of section 263 of the Act, as the assessment order is not at all erroneous or prejudicial to the interest of the Revenue as the exemption u/s.54F of the Act was in respect of investment made in the residential house in the name of assessee and not in other person as the land belongs to the assessee only.
The Ld.DR relied upon the order of the Ld.PCIT and submitted that the Assessing Officer has not taken into account that the land is not in the ownership of the assessee but that of her husband. Thus, the permission obtained for commencement of construction activity in the said land from the competent authority was also not furnished by the assessee and therefore no proper verification was done by the Assessing Officer at the time of assessment proceedings. Thus, the Ld.DR submitted that the Ld.PCIT has rightly invoked the provision of section 263 of the Act.
We have heard both the parties and perused the materials available on records. It is pertinent to note that the ownership of the land is that of assesee’s spouse and her brother-in-law and in fact the assessee has given these details for claiming u/s.54F of the Act. The assessee has given all the details relating to the construction as well as the purchase of residential house within the prescribed period of 3 years. The contention of the Ld.DR that the land belonging to her spouse and her brother-in-law will not
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5 debarred the claim u/s.54F of the Act as projected by the Ld.PCIT. But besides this the AO has made detailed inquiries at the time of the assessment proceedings and therefore section 263 cannot be invoked for merely the change in opinion/difference of opinion of the Ld.PCIT. The AO at the time of the assessment proceedings has taken cognizance of all the details filed by the assessee and therefore the invocation of section 263 itself is not justifiable. Hence, the appeal of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the Open Court on 25th September, 2024 at Ahmedabad.
Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER (True Copy) अहमदाबाद/Ahmedabad, �दनांक/Dated 25/09/2024 Manish, Sr. PS
