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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI CHANDRA MOHAN GARG & SHRI B.M. BIYANI
आदेश/O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by revision-order dated 08.03.2022passed by learned Pr. Commissioner of Income-Tax-1,Bhopal[“Ld. PCIT)”]u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of assessment-order dated 23.11.2019 passed by learned ITO-5(4), Bhopal[“Ld. AO”]u/s 143(3)/147for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on following grounds:
“1. On the facts and circumstances of the case and applicable law, Ld. Pr. CIT-1, Bhopal erred in holding that the order passed by the Ld. AO u/s 143(3)/147 is erroneous and prejudicial to the interest of revenue within the meaning of section 263 which is contrary to the material on record and provision of the Act, unjust and bad in law.
Pragya Saxena Assessment year 2012-13 2. On the facts and circumstances of the case and applicable law, Ld. Pr. CIT-1, Bhopal erred in invoking the provision of section 263 and passing the order there under by holding that the assessing officer has passed the order without considering the FMV of property sold which has resulted the assessment order being erroneous in so far as it is also prejudicial to the interest of the revenue.
3. On the facts and circumstances of the case and applicable law, Ld. Pr. CIT-1, Bhopal erred in holding that the order passed by the AO u/s 143(3)/147 is erroneous and prejudicial to the interest of revenue within the meaning of section 263 which is contrary to the material on credit and provisions of the act unjust and bad in law more particularly when it is not a case of lack of enquiry. 4.On the facts and circumstances of the case and applicable law, Ld. Pr. CIT-1, Bhopal erred in invoking the provision of section 263 and passing the order there under on the basis of audit objection.
5. On the facts and circumstances of the case and applicable law, Ld. Pr. CIT-1, Bhopal erred in invoking the provision of section 263 on issue which as settled in Vivad se Vishvas 2020.
The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal.”
Heard the learned Representatives of both sides at length and case- records perused.
The registry has informed that that the present appeal is filed after a delay of 9 days and therefore time-barred. The Ld. AR prayed that the delay has occurred due to Covid-19 Pandemic. The Ld. AR further placed reliance on the order of Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 read with Misc. Applications, by which suo motu extension of the limitation-period for filing of appeals w.e.f. 15.03.2020 under all laws has been granted and hence there is no delay in fact. We confronted the Ld. DR who agreed to the submission of Ld. AR. In view of this, the appeal is proceeded with for hearing, there being no delay.
Briefly stated the facts are such that the assessee-individual filed original return of the relevant AY 2012-13 on 31.07.2012 declaring a total income of Rs. 2,04,784/- which was assessed by revenue. Subsequently, the Pragya Saxena Assessment year 2012-13 revenue, based on information obtained from AIR that the assessee had sold an immovable property for Rs. 58,66,100/- during the previous year relevant to AY 2012-13, made a preliminary enquiry vide letter dated 07.01.2019 from assessee with regard to the transaction. The assessee filed replies dated 29.01.2019 and 30.01.2019. However, after considering such replies, the Ld. AO formed a belief that the capital gain earned from transaction was not disclosed by assesseein original-return, hence the same had escaped assessment. Accordingly, a notice u/s 148 was issued on 26.03.2019 and the case was taken up for re-assessment. Finally, the Ld. AO passed assessment-order whereby he assessed long-term capital gain from the impugned transaction at Rs. 96,674/- as per following working:
Full value of consideration 42,00,000 (sale consideration received) Less: Expenses on transfer (-)Nil Net consideration 42,00,000 Less: Indexed cost of acquisition (-)1,39,680 Less: Indexed cost of improvement (-)Nil Balance LTCG 40,60,320 Less: Exemption u/s 54F (-)39,63,646 (=40,60,320 * 41,00,000 / 42,00,000) Long-term Capital Gain 96,674 Taxable Long-term Capital Gain 96,674
Subsequently, Ld. PCIT examined the record of assessment- proceeding and observed that the assessment-order passed by Ld. AO is erroneous-cum- prejudicial to the interest of revenue for the reasonsmentioned below in the show-cause notice dated 02.12.2021 issued u/s 263:
Pragya Saxena Assessment year 2012-13 “On perusal of the assessment order and case records, it has been observed that during computation of LTCG, the Assessing Officer had allowed exemption under section 54F of Rs. 41,00,000/- on account of purchase of new residential house out of the total sale consideration of his immovable property of Rs. 42,00,000/-. However, the stamp duty value of the sold property at the time of transfer was Rs. 58,66,100/- and in terms of the provisions of section 50C of IT Act, the full value of sale consideration was taken of Rs. 42,00,000/- instead of Rs. 58,66,100/- (as valued adopted by Valuation Authority). Therefore the taxable LTCG will be computed as follows:-
Full value of consideration 58,66,100 Less: Expenses on transfer Nil Net consideration 58,66,100 Less: Indexed cost of acquisition (-)1,39,680 Less: Indexed cost of improvement (-)Nil Balance LTCG 57,26,420 Less: Exemption u/s 54F 40,02,373 (=57,26,420 * 41,00,000 / 58,66,100) Long-term Capital Gain 17,24,047
From the above it was clear that the LTCG was computed by the department of Rs. 96,674/- instead of Rs. 17,24,047/- i.e. less by Rs. 16,27,373/- (17,24,047 – 96,674). The mistake resulted in under assessment of LTCG to the extent of Rs. 16,27,373/- involving short levy of tax of Rs. 6,43,839/-.” 6. In response to show-cause notice, the assessee submitted a detailed reply which is reproduced by Ld. PCIT in Para No. 3 of the revision-order.
However, none of those submissions impressed the Ld. PCIT. Finally, Ld. PCIT passed revision-order on 08.03.2022 whereby the assessment- order was set aside and the Ld. AO was directed to pass a reasoned and speaking order on the issue in accordance with law.
Pragya Saxena Assessment year 2012-13 8. Being aggrieved by revision-order, the assessee has come in this appeal before us.
The assessee has raised as many as 6 grounds of appeal, out of which Ground No. 4 and 5 are not pressed / pleaded during the hearing and Ground No. 6 is general in nature; accordingly we are required to adjudicate Ground No. 1 to 3 only.
10. Thus, the controversy involved in the operative grounds before us is whether or not the revision-order passed by Ld. PCIT is valid in terms of section 263?
Submission of Ld. AR:
Ld. AR representing the assessee objected to the revision-order for three-fold reasons:
(i) The first contention raised by Ld. AR is that in the present case the revision has been undertaken for applicability of section 50C as the valuation done by stamps authority of Rs. 58,66,100/- was higher than the actual consideration of Rs. 42,00,000/-. Placing reliance upon the decision of ITAT, Chennai Bench in the case of Smt. Kalyani Seetharaman Vs. ACIT, dated 29.07.2022, the Ld. AR submitted that revision could not be done in such a situation.
(ii) The second contention raised by Ld. AR is that during the course of assessment-proceeding, Ld. AO has made sufficient enquiries on the issues raised by Ld. PCIT and hence this is not a case of lack of enquiry at all. To justify this contention, Ld. AR drew our attention to Paper Book Page No.14, 15, 16, 17 and 27 to demonstrate that vide letter dated 07.01.2019 (which was issued even before issuance of notice u/s 148) the Ld. AO made a preliminary enquiry from assesseewith regard to the impugned sale of immovable property
Pragya Saxena Assessment year 2012-13 registered at Rs. 58,66,100/- and in response to the same, the assessee filed replies dated 29.01.2019 and 30.01.2019 wherein a detailed submission on the capital gain arising from transaction as well as exemption u/s 54F was made and the AO was informed that there was no escapement of taxable income. Then, Ld. AR carried us to Paper Book Page No. 20 to 24 to demonstrate that vide Point No. 6 of the notice dated 29.06.2019 u/s 142(1) issued during assessment- proceeding, the Ld. AO raised following query:
“6. During the F.Y. 2011-12, you have sold an immovable property of Rs. 58,66,100/- (Fifty Eight Lakhs Sixty Six Thousand One Hundred only). You are required to furnish the documentary evidence of sale of immovable property of Rs. 58,66,100/- (Fifty Eight Lakhs Sixty Six Thousand One Hundred only). Whether provision of capital gain is attracted in your case, if yes please furnish the documents a regards cost of acquisition of the said property as well as improvement made therein if any. Whether you are eligible to claim exemption u/s 54/54F/54B/54E of the “Act”? If yes, please furnish the documentary evidence as regards your claim.” In response to this query, the assessee filed following reply vide letter dated 02.07.2019:
“6. Copy of sale deed of property being plot and copy of purchase deed of the property being residential house has been already submitted vide written submission dated 29.01.2019. A copy of such letter is being enclosed for reference. Please refer to such letter. The assessee had invested the sale proceeds of plot in residential house and has accordingly claimed exemption u/s 54F. The issue related to exemption made u/s 54F has been discussed in letter of the assessee dated 29.01.2019. Such letter may please be referred (Page No. 03 to 05).” Further, the assessee filed another reply vide letter dated 03.07.2019 as under:
“4. The assessee vide reply dated 29.01.2019 described as to how a deduction u/s 54F was claimed by the assessee and why provisions of section 50C are not applicable in case of the assessee. Contents of such reply were never discussed or disputed. No information was concealed in the return of income by the assessee, either.”
Pragya Saxena Assessment year 2012-13 Finally, Ld. AR carried us to the assessment-order wherein the Ld. AO has specifically noted that the property was sold for Rs. 42,00,000/- but the Stamps Duty Value was Rs. 58,66,100/-.
(iii) The third contention raised by Ld. AR is such that the computation of capital gain u/s 48 and the exemption u/s 54F are two independent workings and the “deemed consideration” of Rs. 58,66,100/- fixed u/s 50C is relevant qua the calculation of capital gain u/s 48, but certainly not for computing exemption u/s 54F. In support of this, Ld. AR also relied upon the decision of ITAT, Jabalpur Bench in Gyan Chand Batra Vs. ITO (2010) 133 TTJ 482 dated 13.08.2010. Therefore, according to Ld. AR, the exemption u/s 54F has to be computed by adopting “actual consideration” of Rs. 42,00,000/- and not on the basis of“deemed consideration” of Rs. 58,66,100/- and looked from that angle, ultimately there is neither any error inassessment-order nor any prejudice is caused to the revenue.
With these submissions, the Ld. AR contended that the Ld. PCIT has wrongly termed the assessment-order as erroneous-cum-prejudicial to the interest of revenue and, therefore, the revision-order passed by him is not warranted and the same should be quashed.
Submission of Ld. DR:
Per contra, the Ld. DR representing the revenue opposed the arguments of Ld. AR and defended the revision-order. Ld. DR submitted that assessment-order passed by Ld. AO simply records the factum of sale of property at Rs. 42,00,000/- having stamps valuation of Rs. 58,66,100/-, but except such mention of figures, the Ld. AO has nowhere dealt as to why the deemed consideration of Rs. 58,66,100/-, which is statutorily prescribed in law, was not applied by him for the computation of capital gain u/s 48 and working of exemption u/s 54F. Ld. DR submitted that the assessment-
Pragya Saxena Assessment year 2012-13 order is totally silent on these issues and hence it was a fit case of revision. Ld. DR prays to uphold the revision-order therefore.
Our analysis:
We have considered rival submissions of both sides and perused the material held on record. We would like to deal all pleadings made by Ld. AR one by one:
(i) Regarding first contention, we note that the decision given by Hon’ble ITAT, Chennai Bench in Smt. Kalyani Seetharaman (supra), is qua section 50C for computation of capital gain, but in the present case the stamps authority valuation is relevant not only for computation of capital gain u/s 48 but also for working out exemption u/s 54F.Since we are concerned with the revision-order in entirety which has two issues based on the stamps authority valuation, first one is the computation of capital gain u/s 48 and second one is the working of exemption u/s 54F, the said decision cannot help the assessee.
(ii) Regarding second contention, it is true that the Ld. AO has made certain enquiries and the assessee has also made replies during preliminary-enquiry as well as during assessment-proceeding as discussed earlier, but those enquiries are much less than what were required to examine the adoption of “stamps authority valuation” for computation of gain u/s 48 and exemption u/s 54F. The enquires do not exactly deal the same and are superficial enquiries.
(iii) Regarding third contention, though we are very much in agreement with the submission of Ld. AR that the “deemed consideration” is applicable qua the calculation of capital gain u/s 48 but not for computation of exemption u/s 54F. But, even after accepting and applying that contention, there would be an error and prejudice to the interest of revenue. This is so for the reason that even if the “actual
Pragya Saxena Assessment year 2012-13 consideration” of Rs. 42,00,000/- is adopted for working of exemption u/s 54F, the new investment made by assessee is Rs. 41,00,000/- only. Since the section 54F prescribed proportionate exemption in the ratio of “new investment ÷ actual consideration”, the exemption would at best be Rs. 57,26,430 (capital gain computed u/s 48 on the basis of deemed consideration) X 41,00,000 ÷ 42,00,000. Consequently, the taxable gain could not be Rs. 96,674/- as assessed by Ld. AO, it would be more than what has been assessed in assessment-order. Therefore, there would certainly be an error in the assessment-order and a prejudice also caused to the interest of revenue.
In view of above discussions and for the reasons stated above, we are of the considered view that in the present case, the assessment-order passed by Ld. AO is certainly erroneous-cum-prejudicial to the interest of revenue and the Ld. PCIT has rightly invoked the revisionary-action. Being so, we uphold the revision-order and decline to interfere in the matter. The assessee fails in this appeal.
In the result, this appeal of assessee is dismissed.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 03/02/2023.