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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by revision order dated 22.03.2019 passed by learned Pr. Commissioner of Income-Tax-1, Indore [“Ld. PCIT”] u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of re-assessment order dated 19.12.2016 passed by ITO, 3(5), Indore [“Ld. AO”] u/s 147 read with section 143(3) of Income-tax Act, 1961 for Assessment-Year [“AY”] 2011-12, the assessee has filed this appeal on following grounds:
“1. That the action u/s 263 of PCIT-1, Indore is timed-barred, illegal and bad in law. 2. That any issue reopen due to change of opinion is bad in law, illegal and unfortunate. 3. Any other ground at the time of hearing with your kind permission.” Page 1 of 6
Shri Pradeep Khandelwal, Indore, vs. ITO ,5(3), Indore.
At the time of hearing, none appeared on behalf of assessee nor any adjournment application is filed. On perusal of case-file, it is found that the case involves old AY 2011-12 and it’s a priority matter since the impugned revision-order was passed u/s 263. Further, the assessee has filed two written-submissions dated 13.09.2022 and 19.09.2022 and the Ld. DR for revenue was also ready to argue the case. Therefore, the hearing is proceeded and the matter is being disposed of.
On perusal of case-file and with the able assistance of Ld. DR for revenue, it emerged during hearing that in the present case the PCIT has passed impugned order on 22.03.2019 to revise the order of re-assessment passed by AO on 19.12.2016. The basis of revision is the issue of exemption claimed by assessee u/s 54/54F which according to Ld. PCIT the AO has allowed without proper examination. This is evident from Para No. 2.1 of revision-order extracted below:
((i) “ On perusal and examination of records, it is found that the assessee sold four residential plots situated in the area of Municipal Corporation of Indore on different dates in different size during 2010-11 which was purchased in 2002-03. The assessee claimed exemption u/s 54 of Rs. 28,50,000/- (Rs. 18,00,000/- for purchase of plots & Rs. 10,25,000/- for where as the assessee neither submitted any bills relating to purchase of any building materials, all expenses were claimed on one plane paper, nor transfer of permission for construction in the own name & exemption of Rs. 28,50,000/- u/s 54 show in computation of income was nor scrutinize in assessment proceeding as per provision of the I. T. Act. Thus the claimed amount of Rs. 28,50,000/- as .per section 54F of the I. T. Act, 1961, was allowed without examining the conditions for allowance of the same.”
The assessee has filed copy of re-assessment order dated 19.12.2016. On perusal of same, it is found that the re-assessment was confined to contravention of section 40A(3) and the exemption u/s 54/54F was not a subject-matter of re-assessment at all. For the sake of ready reference, the order of re-assessment is scanned and re-produced below:
Shri Pradeep Khandelwal, Indore, vs. ITO ,5(3), Indore. Shri Pradeep Khandelwal, Indore, vs. ITO ,5(3), Indore. Shri Pradeep Khandelwal, Indore, vs. ITO ,5(3), Indore.
Thus, when the re-assessment itself confined to contravention of section 40A(3) only, how can the order of re-assessment be said to be erroneous qua the exemption u/s 54/54F? We raised this query to Ld. DR. The Ld. DR could not submit any convincing reply though he dutifully relied upon impugned revision-order.
In our considered understanding, when the issue of exemption u/s 54/54F was never a part of re-assessment order passed by AO u/s 147 read with section 143(3), the PCIT cannot term the re-assessment order as erroneous qua the exemption u/s 54/54F. Therefore, the revisionary action has no valid basis to stand. Faced with situation, we have no option except to quash the impugned revision-order. We, therefore, quash the revision- order and re-store the reassessment order dated 19.12.2016.
Before parting we may add here that the Ld. PCIT could have been well within his right if he would have revised the original assessment-order passed by AO u/s 143(3) but in the present case, the PCIT has revised the order of re-assessment and not the order of original assessment. Further, we also looked into the order of original assessment and found that it was passed on 28.02.2014 (a copy filed by assessee alongwith written- submission); therefore the revision-order dated 22.03.2019 would be time- barred being outside the limit of 2 years from 31.03.2014 (end of the Shri Pradeep Khandelwal, Indore, vs. ITO ,5(3), Indore. financial year in which the original order was passed). This is what is contended by assessee in one of the grounds of appeal also.
Resultantly, this appeal is allowed.
Order pronounced in the open court on 11/08/2023