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Income Tax Appellate Tribunal, BENCH, NAGPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश/ ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax, Nagpur-2 (for short ‘Pr. CIT’) u/s. 263 of the Income-tax Act, 1961 (for short ‘the Act’) dated 26.02.2021, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Act, dated 24.12.2018 for assessment year 2016-17. Before us the assessee has assailed the impugned order on the following grounds of appeal:
“1) Based on the facts and circumstances of the case, order passed by the Learned PCIT-II, Nagpur is bad in law and needs to be set aside. 2) Based on the facts and circumstances of the case and in law, the assessment order passed by the ITO, Ward-III, Yavatmal is neither erroneous nor prejudicial to the interest of the revenue as the assessment order was passed after due verification and hence there is no situation which of invoking provisions of section 263 of the IT Act, 1961. 3) Assessee craves leave to add, alter or amend any of the grounds of appeal.”
3 The Vasant Co-Op. Shetkari Ginning & Pressing Factory Limited Vs. Pr. CIT ITA No. 29/NAG/2021
Succinctly stated, the assessee company which is engaged in the business of cotton ginning and pressing had e-filed its return of income for the assessment year 2016-17 on 16.10.2016, declaring Nil income a/w current year loss of (Rs.8,84,164/-). Original assessment was thereafter framed by the Assessing Officer vide his order passed u/s.143(3) of the Act, dated 24.12.2018 assessing the income of the assessee company at Rs.83,31,970/- a/w. carry forward of current year loss of Rs.10,70,399/- (as against Rs.8,84,164/- claimed by the assessee).
After culmination of the assessment proceedings the Pr. CIT called for the assessment records of the assessee company. It was observed by the Pr. CIT that the order passed by the Assessing Officer u/s.143(3), dated 24.12.2018 was found to be erroneous in so far as it was prejudicial to the interest of the revenue u/s.263 of the Act for four reasons, viz. (i) the Assessing Officer loosing sight of the fact that the assessee had claimed depreciation @5% on the W.D.V of its factory building, i.e a depreciable asset, had wrongly allowed
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indexation of its ‘cost of acquisition’ while computing the Long Term Capital Gain (for short ‘LTCG’) on the sale of the same; (ii). that the Assessing Officer failing to appreciate that the assessee had not shifted any industrial undertaking but had carried out a simpliciter sale of a factory which was closed on 02.02.2010 had summarily accepted its claim for deduction under Sec. 54G of the Act.; (iii). that the Assessing Officer dispensing with a reference to the valuation officer of the Department for ascertaining the correct cost of acquisition of the factory land as on 01.04.1981 had summarily accepted the value shown by the assessee in its return of income; and (iv). that the Assessing Officer while framing the assessment had without carrying out any verification and failing to take cognizance of the contents of an impugned document, i.e, Page 23 of a notepad which revealed an on- money of Rs.11 lacs that was received in cash by assessee on sale of a property, had simply accepted the sale consideration of Rs.85 lacs that was claimed by the assessee to have been received on sale of flats from the purchaser, viz. Shri Shrikant Swaikar. On the basis of his aforesaid observations the Pr. CIT called upon the assessee to put
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forth an explanation as to why the order passed by the Assessing Officer u/s. 143(3), dated 24.12.2018 may not be revised by him u/s. 263 of the Act.
In reply, the assessee tried to impress upon the Pr. CIT that as no infirmity did emerge from the order passed by the Assessing Officer u/s. 143(3), dated 24.12.2018, and the latter only after exhaustive deliberations had accepted the multi facet claims of the assessee, therefore, the same was not amenable for revision under Sec. 263 of the Act. Before the Pr. CIT, it was claimed by the assessee that the indexed ‘cost of acquisition’ of Rs.3,96,22,185/- was in respect of the cost of factory land whose Fair Market Value (F.M.V) as on 01.04.1981 was taken at an amount of Rs.36,65,327/-. It was claimed by the assessee that as land was undisputedly not a depreciable asset, therefore, no infirmity did emerge from indexation of its cost of acquisition at Rs.3,96,22,185/-. However, the aforesaid claim of the assessee did not find favor with the Pr. CIT. Rebutting the aforesaid claim of the assessee, it was observed by the Pr. CIT that as the
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assessee while calculating the LTCG had taken the cost of acquisition of factory premises, i.e a depreciable asset on which it had claimed depreciation @5%, at Rs.36,65,327/-, therefore, its claim for indexation of the cost of acquisition of the same was not to be allowed. Accordingly, the Pr. CIT on the basis of his aforesaid observations held the order passed by the Assessing Officer u/s. 143(3), dated 24.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act, i.e., to the extent he had allowed the assessee’s claim of indexation of the ‘cost of acquisition’ of Rs.3,59,56,858/- qua the factory premises, i.e., a depreciable asset. It was further observed by the Pr. CIT that the failure on the part of the Assessing Officer in not making a reference to the valuation officer of the Department for ascertaining the correct cost of acquisition of the factory land as on 01.04.1981, and summarily accepting the ‘cost of acquisition’ as was shown by the assessee in its return of income, had also rendered the order passed by him under Sec. 143(3), dated 24.12.2018, to the said extent, as erroneous in so far as it was prejudicial to the interest of the revenue within the
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meaning of Sec. 263 of the Act. It was further observed by the Pr. CIT that the assessee out of total LTCG of Rs.18,49,77,815/- that was claimed to have arisen on shifting of its industrial undertaking from an urban area to a non-urban area had claimed deduction amounting to Rs. 16,73,11,080/- u/s.54G of the Act. However, it was observed by the Pr. CIT that a perusal of the records revealed that the assessee had not shifted any industrial undertaking but had sold its factory situated at Wani that was closed on 02.02.2010 and thereafter, had invested the sale proceeds towards purchase of another factory situated at Village-Nilapur, Teshil Wani, Dist. Yavatmal. Observing, that there was no shifting of any industrial undertaking from an urban to a non-urban area, but a simplicitor transaction of sale of old factory and utilization of the sale proceeds for purchase of a new factory, the Pr. CIT was of the view that the assessee was not entitled for exemption u/s. 54G of the Act. It was, thus, observed by the Pr. CIT that the summarily acceptance of the assessee’s claim for deduction u/s. 54G of the Act by the Assessing Officer had rendered his order passed u/s. 143(3), dated 24.12.2018 as erroneous in so far it was prejudicial to
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the interest of the revenue u/s. 263 of the Act. Also, it was noticed by the Pr. CIT that the Assessing Officer while framing te assessment had without making any verification simply accepted the sale consideration of Rs.85 lacs that was claimed by the assessee to have been received on sale of flats from the purchaser, viz. Shri Shrikant Swaikar. It was observed by the Pr. CIT that as per the contents of the impugned document, i.e., Page 23 of a notepad, an amount of Rs.11 lacs was received in cash by assessee from Shri Shrikant Swaikar (supra) on sale of flats. On the basis of his aforesaid observation, the Pr. CIT was of the view that the actual sale consideration of the flats in question received by the assessee was Rs.96 lacs (Rs.85 lacs + 11 Lacs), that was wrongly taken by the Assessing Officer at Rs.85 lacs, i.e., as disclosed by the assessee, which, thus, had rendered his order as erroneous to the extent it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. Backed by his aforesaid observations the Pr. CIT held the order passed by the Assessing Officer as erroneous in so far as it was prejudicial to the interest of the revenue on the aforesaid grounds and set-aside the order passed by
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the Assessing Officer u/s. 143(3), dated 24.12.2018 with a direction to him to pass a speaking order after affording a reasonable opportunity of being heard to the assessee.
The assessee being aggrieved with the order passed by the Pr. CIT under Sec. 263 of the Act, dated 26.02.2021 has carried the matter in appeal before us.
We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
We shall first deal with the grievance of the assessee that the Pr. CIT had erred in law and on the facts of the case, in concluding, that it was not entitled for indexation of the ‘cost of acquisition’ qua the property in question, for the reason that the property transferred was a building, i.e a depreciable asset, on which depreciation @5% of WDV had been claimed by the assessee. On a perusal of the records, we
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find that the assessee had vide a registered sale deed, dated 16.04.2015 transferred a piece and parcel of land admeasuring, viz.(i) 25808.09 Sq. Mtrs (or 2,77,798.31 Sq. ft.) being a portion of Nazul Plot No.1, Sheet No. 3-C ; and (ii). admeasuring 3420.70 Sq. Mtrs (or 36,820 Sq. Ft.) being a portion of Nazul Plot No.6, Sheet No. 2-D, therein totaling to an area of 29,228.79 Sq. Mtrs (or 3,14,618.31 Sq. ft.) to M/s. Shewalkar Developers Ltd., Nagpur and had not transferred any building as had been so inferred by the Pr. CIT. Our aforesaid conviction is fortified from a perusal of the aforementioned sale deed, dated 16.04.2015, the relevant extract of which for the sake of clarity is reproduced as under: “(1) That, in pursuance of the aforesaid Agreement dated 02-05-2013 subsequent to the Auction and Resolution passed by the Vendor Society on 24/02/2013 and in consideration of a total sum of Rs. 21,30,00,000/- (Rupees Twenty One Crore Thirty Lac) Only paid by the Purchaser Company to the Vendor Society in the manner appearing hereinbelow, the receipt whereof the Vendor Society does hereby acknowledge, the Vendor Society as the full and absolute owner possession thereof does hereby grant, convey, assure, assign and transfer by way of sale to the PURCHASER ALL THOSE pieces and parcel of lands containing by admeasurement 25808.09 Sq. Mtrs (Or 2,77,798.31 Sq. ft.), being a portion of Nazul Plot No.1, Sheet No. 3-C and piece of land containing by admeasurement 3420.70 Sq. Mtrs ( Or 36,820 Sq. Ft.), being a portion of Nazul Plot No.6, Sheet No. 2-D, thus, totaling 29,228.79 Sq. Mtrs ( Or 3,14,618.31 Sq. ft.) together all other rights, title, benefits and interest, all and singular house edifices, courts, compound, sewers, ditches, fences, drains, ways, paths, passages, common gutters, wells, waters, water courses, yards. areas, trees. plants lights, liberties, easements rights of
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ingress and egress, profits, privileges, rights advantages, members and appurtenance whatsoever in and pertaining to the said property situated at Wani in Tahsil-WANI and District-YAVATMAL and more specifically described in the schedule hereunder written TO HOLD SAME TO AND UNTO THE PURCHASER as the absolute and full owner thereof forever, free from encumbrances of all kinds whatsoever and also free from payment of non- Agricultural Assessment, taxes, Cesses, Electricity and water charges, society’s dues and all other outgoings etc. thereon and payable up to date.”
Apart from that, we find that the “Schedule” forming part of the aforesaid sale deed, dated 16.04.2015 also substantiates the aforesaid factual position, and the same reads as under: “SCHEDULE REFERRED TO ABOVE ALL THOSE pieces and parcel of lands containing by admeasurement 25808.09 Sq. Mtrs (Or 2,77,798.31 Sq. ft.), being a portion of Nazul Plot No.1, Sheet No. 3-C and piece of land containing by admeasurement 3420.70 Sq. Mtrs ( Or 36,820 Sq. Ft.), being a portion of Nazul Plot No.6, Sheet No. 2-D, thus, totaling 29,228.79 Sq. Mtrs ( Or 3,14,618.31 Sq. ft.) shown in details in the map annexed herewith as ANNEXURE-A, including all other easementary rights appurtenant and belonging thereto, situated at Wani in Tahsil-Wani and District-Yavatmal and bounded as under: ON THE EAST -FACTORY OFFICE ON THE WEST - SADHANKAR WADI ON THE NORTH - YAVATMAL ROAD ON THE SOUTH - ROAD OF NAGAR PARISHAD (18 Mtr. Wide DP Road)” Also, Annexure-A of the aforesaid sale deed, dated 16.04.2015 dispels all doubts, and substantiates the fact that the assessee society had during the year under consideration sold the aforesaid land admeasuring 29,228.79 Sq. Mtrs., viz. (i). 25808.09 Sq. Mtrs (Nazul,
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Plot No.1, Sheet No.3-C); and (ii). 3420.70 Sq. Mtrs (Nazul, Plot No.6, Sheet No.2-D). On the basis of our aforesaid observations, we are of the considered view, that as stated by the Ld. AR, and rightly so, now when the assessee during the year under consideration had sold land admeasuring 29,228.79 Sq. Mtrs (supra) which admittedly is not a depreciable asset, therefore, its claim for indexation of cost of acquisition of the same was as per the mandate of law and had wrongly been dislodged by the Pr. CIT on the basis of misconceived facts, i.e., on the basis of his conviction that the assessee had sold a “building”, i.e. a depreciable asset, on which depreciation @5% was claimed by it. We, thus, in terms of our aforesaid observations not being able to persuade ourselves to uphold the view taken by the Pr. CIT, i.e, as regards the entitlement of the assessee towards indexation of cost of acquisition of the property in question, i.e., land admeasuring 29,228.79 Sq. Mtrs, thus, set-aside his order and restore the order passed by the Assessing Officer to the said extent.
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At the same time, we find substantial force in the observation of the Pr. CIT that as the Assessing Officer had summarily accepted the cost of acquisition of the aforesaid land as on 01.04.1981 at Rs. 36,65,327/-, i.e, as was projected by the assessee in its return of income, and had not made any reference to the valuation officer of the department for determining the correct FMV of the said land on 01.04.1981, therefore, the same had rendered the order passed by him as erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of Sec. 263 of the Act. On a perusal of the assessment order, we find that there is nothing discernible therefrom which would reveal that the cost of acquisition of land as on 01.04.1981 that was adopted by the assessee as per “Explanation (b)(i)” to Sec. 55(2) pf the Act was verified by the Assessing Officer before summarily accepting the same as such. As per “Explanation 2(a)” of Sec. 263(1), if the order is passed by the AO without making inquiries or verification which should have been made by him, then, the same is to be deemed to be erroneous in so far it is prejudicial to the interests of the revenue. As the AO while passing the order under
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Sec. 143(3), dated 24.12.2018 had failed to make any inquiries or verification as regards the F.M.V of land in question on 01.04.1981 that was taken by the assessee at Rs. 36,65,327/-, therefore, the order so passed by him as per “Explanation 2(a)” of Sec. 263(1) of the Act is to be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue. We, thus, in terms of our aforesaid observations uphold the order passed by the Pr. CIT u/s.263 of the Act qua the aforesaid issue.
We shall now advert to the grievance of the assessee that the Pr. CIT had erred in setting aside the order passed by the Assessing Officer u/s. 143(3), dated 24.12.2018, for the reason that he had wrongly allowed the assessees’s claim of deduction u/s.54G of the Act amounting to Rs. 16,73,11,080/-.
On a perusal of the record, we find that the assessee had during the year under consideration sold its factory land/plot at Wani to M/s. Shewalkar Developers Ltd., Nagpur vide a sale deed, dated 19.06.2015 for a sale consideration of Rs. 22,46,00,000/-. Claiming that it had
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shifted its industrial undertaking, i.e., a closed factory at Wani to a non-urban area by purchasing a new factory building vide a sale deed, dated 13.08.2014 at Village Nilapur a/w. ginning and pressing machinery, oil Mill, plant accessories, spares tools and appliances, the assessee had as against the LTCG of Rs. 18,49,77,815/- on the aforesaid sale transaction raised a claim for deduction of Rs. 16,73,11,080/- u/s. 54G of the Act. On a perusal of the assessment order, we find that the aforesaid claim of deduction u/s.54G of Rs.16,73,11,080/- (supra) claimed by the assessee was allowed by the Assessing Officer while framing the assessment vide his order passed u/s. 143(3), dated 24.12.2018. However, the Pr. CIT being of the view that the assessee had not shifted any industrial undertaking, but had carried out a simpliciter sale of its factory which was closed way back on 02.02.2010, and had invested the sale proceeds in purchase of another factory situated at Village Nilapur, Tehsil Wani, District: Yavatmal, therefore, the Assessing Officer had erroneously allowed the assessee’s claim for deduction of Rs.16,73,11,080/-u/s. 54G of the Act, which therein had rendered his order passed u/s. 143(3), dated
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24.12.2018 as erroneous in so far as it was prejudicial to the interests of the revenue u/s.263 of the Act. Accordingly, the Pr. CIT set-aside the order passed by the Assessing Officer with a direction to him to re- assess the income of the assessee afresh on the basis of a speaking order after affording a reasonable opportunity of being heard to the assessee.
Before us, it is the claim of the Ld. Authorized Representative (for short ‘AR’) that as the assessee company in the course of shifting of its industrial undertaking which was situated in an urban area, i.e., at Wani, had transferred its land which was used for the purpose of business of its aforesaid industrial undertaking and, had utilized the sale proceeds for acquiring new land for the purpose of the business of the industrial undertaking at Village Nilapur, Tehsil Wani, District: Yavatmal, i.e, a non-urban area, therefore, its claim for deduction u/s.54G of the Act was in order. On the contrary, we find that the Pr. CIT was of the view that as the assessee had not shifted any industrial undertaking, but had carried out a simpliciter sale of its factory land
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which was closed on 02.02.2010 and invested the sale proceeds towards purchase of another factory situated at Village Nilapur, Tehsil Wani, Dist. Yavatmal, therefore, it was not entitled for claim of deduction u/s. 54G of the Act.
In our considered view, before proceeding any further, it would be relevant to cull out Section 54G of the Act, which reads as under:
“54G. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset, being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situate in an urban area, effected in the course of, or in consequence of, the shifting of such industrial undertaking (hereafter in this section referred to as the original asset) to any area (other than an urban area) and the assessee has within a period of one year before or three years after the date on which the transfer took place,— (a) purchased new machinery or plant for the purposes of business of the industrial undertaking in the area to which the said undertaking is shifted ; (b) acquired building or land or constructed building for the purposes of his business in the said area ; (c) shifted the original asset and transferred the establishment of such undertaking to such area; and (d) incurred expenses on such other purpose as may be specified in a scheme framed by the Central Government for the purposes of this section, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain is greater than the cost and expenses incurred in relation to all or any of the purposes mentioned in clauses (a) to (d) (such cost and expenses being hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year ; and for the purpose of
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computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its being purchased, acquired, constructed or transferred, as the case may be, the cost shall be nil ; or (ii) if the amount of the capital gain is equal to, or less than, the cost of the new asset, the capital gain shall not be charged under section 45 ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its being purchased, acquired, constructed or transferred, as the case may be, the cost shall be reduced by the amount of the capital gain. Explanation.—In this sub-section, "urban area" means any such area within the limits of a municipal corporation or municipality as the Central Government may, having regard to the population, concentration of industries, need for proper planning of the area and other relevant factors, by general or special order, declare to be an urban area for the purposes of this sub-section. (2) The amount of capital gain which is not appropriated by the assessee towards the cost and expenses incurred in relation to all or any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for all or any of the purposes aforesaid before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for all or any of the purposes aforesaid together with the amount, so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for all or any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within the period specified in that sub-section, then,— (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires ; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.” On a perusal of the aforesaid statutory provision, we find that the availability of deduction therein contemplated gets triggered only
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where the capital gain arises from transfer of a capital asset, inter alia, including land that was used for the purposes of the business of an industrial undertaking situated in an urban area, effected in the course of, or in consequence of the shifting of such industrial undertaking to any area other than an urban area, and the assessee has within a period of 1 year before or 3 years after the date on which the transfer took place, appropriated the amount of capital gain towards the cost and expenses in relation to all or any of the purposes mentioned herein below :
(a) purchased new machinery or plant for the purposes of business of the industrial undertaking in the area to which the said undertaking is shifted ; (b) acquired building or land or constructed building for the purposes of his business in the said area ; (c) shifted the original asset and transferred the establishment of such undertaking to such area; and (d) incurred expenses on such other purpose as may be specified in a scheme framed by the Central Government for the purposes of this section. then, to the extent the capital gain had been utilized for all or any of the aforementioned purposes, to the said extent the same shall not be charged under Sec. 45 of the Act. However, in case the assessee had
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not appropriated the amount of capital gain towards the cost and expenses incurred in relation to all or any of the purposes mentioned hereinabove within a period of 1 year before the date of transfer of the original asset; or before the date of furnishing the return of income under Sec. 139, then, the same shall be deposited by him before furnishing such return, i.e, not later than the ‘due date’ applicable in its case for furnishing the return of income under sub-section (1) of Sec. 139 in a bank account maintained under the Capital Gain Account Scheme, 1988 (CGAS) with a specified bank, and the same shall thereafter within the specified time period be utilized for all or any of the aforementioned purposes.
As is discernible from Sec. 54G of the Act, the availability of deduction therein contemplated would get triggered only where the capital gain arises from transfer of a capital asset, being machinery or plant or building or land or any rights in building or land, that was used for the purposes of the business of an industrial undertaking situated in an urban area, is effected in the course of, or in consequence of the
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shifting of such industrial undertaking to any area other than an urban area . In sum and substance, the availability of deduction u/s 54G of the Act, inter alia, pre-supposes shifting of an industrial undertaking from an urban area to any area other than an urban area. Now, in the case before us, we find that except for the fact that the assessee had during the year under consideration sold land admeasuring 29,228.79 Sq. Mtrs. situated at Tehsil Wani, District. Yavatmal, there is nothing discernible from the record that would reveal that there was in fact shifting of an industrial undertaking by the assessee from an urban area, i.e., Wani to a non-urban area, i.e., Village Nilapur, Tehsil: Wani, District: Yavatmal. However, the assessee except for harping on its claim that it had shifted its old industrial undertaking from an urban area to a non-urban area, had however, failed to place on record any such material which would irrefutably evidence the same. Although our attention was drawn by the Ld. AR to the seeking of a “No objection certificate” (NOC) by the assessee company from the Labour Commissioner, but the same would not substantiate its claim that the capital gain arising on the sale of land in
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question was in the course of, or in consequence of, the shifting of its industrial undertaking as per the requirement of Sec. 54G of the Act, and was not a case of a simpliciter sale of the land of its factory that was closed way back on 02.02.2010 and investment of the sale proceeds towards purchase of factory building at Village Nilapur, Tehsil Wani, Dist. Yavatmal a/w ginning and pressing machinery, oil mill, plant accessories, spares tools and appliances. In our considered view, as the assessee had failed to place on record any material which would irrefutably substantiate its claim that the capital gain on the transfer of land in question, i.e, land at Wani had arisen on transfer of land (that was used for the purposes of its business of an industrial undertaking situate in an urban area) in the course of, or in consequence of, the shifting of the said industrial undertaking to a non-urban area, therefore, the Pr. CIT had rightly observed that the summarily allowing of the assessee’s claim for deduction under Sec. 54G by the AO had rendered the order passed by him under Sec. 143(3), dated 24.12.2018 as erroneous in so far it is prejudicial to the interest of the revenue under Sec. 263 of the Act. Although we principally concur with
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the aforesaid observation of the Pr. CIT, but are of the considered view that the issue in hand, i.e, entitlement of the assessee towards claim of deduction u/s 54G in the absence of the requisite details requires to be revisited by the AO for de novo examination. We, thus, in terms of our aforesaid observations modify the order passed by the Pr. CIT on the aforesaid issue under consideration and, direct the AO to re-examine the assessee’s claim for deduction u/s 54G after calling for the necessary details and affording a reasonable opportunity of being heard to him. Accordingly, the order passed by the Pr. CIT as regards the aforesaid issue is modified in terms of our aforesaid observations.
We shall now advert to the observation of the Pr. CIT that as the AO while framing the assessment u/s 143(3), dated 24.12.2018 had failed to take cognizance of the contents of an impounded document, i.e, Page 23 of a Notepad which referred to an unrecorded cash payment of Rs.11 lacs that was received by the assessee on sale of flat from the purchaser, viz. Shri Srikant Swaikar, and had summarily accepted the sale consideration of the said property at Rs.85 lacs, i.e,
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as was shown by the assessee in its return of income, therefore, the order passed by him was rendered as erroneous in so far as it was prejudicial to the interest of the revenue u/s.263 of the Act.
After having given a thoughtful consideration to the aforesaid issue, we find that it is a matter of fact borne from record that there is no whisper in the body of the assessment order about the aforesaid impounded document, i.e, Page 23 of the Notepad, much the less contents of the same, wherein there was a mention of cash payment of Rs.11 lacs by Shri. Srikant Swaikar (supra) to the assessee. On the basis of the aforesaid facts, we are of the considered view, that the summarily acceptance of the sale consideration of Rs.85 lacs as was shown by the assessee in its return of income, and not taking cognizance on the aforesaid impounded document which referred to a receipt of an amount of Rs. 11 lacs(supra) from the aforesaid purchaser, viz. Shri. Srikant Swaikar had rendered the order passed by the Assessing Officer u/s. 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interest of the revenue u/s.263 of the Act.
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We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the Pr. CIT who had rightly observed that the failure on the part of the Assessing Officer to consider the aforesaid amount of Rs.11 lacs (supra) as was discernible from the impugned document, i.e., Page 23 of the impounded notepad had rendered his order as erroneous in so far as it is prejudicial to the interests of the revenue u/s. 263 of the Act, uphold the same.
On the basis of our aforesaid deliberations, we herein, viz. (i). set-aside the order of the Pr. CIT u/s. 263, to the extent he had concluded that the assessee had wrongly sought indexation of cost of acquisition; (ii). uphold the order of the Pr. CIT, on the ground, that the summarily acceptance by the AO of the F.M.V of land as on 01.04.1981 at Rs. 36,65,327/-, i.e, as adopted by the assessee for computing the LTCG on transfer of the same had rendered the order passed by him u/s 143(3), dated 24.12.2018 as erroneous in so far as it was prejudicial to the interests of the revenue u/s 263; (iii). though principally concur with the Pr. CIT that as the assessee had failed to
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establish its entitlement for claim of deduction u/s 54G of the Act, therefore, the summarily allowing of its claim of deduction by the AO had rendered the order passed by him u/s 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interests of the revenue u/s 263 of the Act, but at the same time have modified the order of the Pr. CIT by directing the AO to re-examine the assessee’s claim for deduction u/s 54G, i.e, after calling for the requisite details and affording a reasonable opportunity of being heard to the assessee; and (iv). uphold the order of the Pr. CIT, on the ground, that the failure on the part of the AO in not considering the contents of an impounded document, i.e, a notepad which referred to receipt of ‘on money’ of Rs.11 lacs by the assessee on sale of flat from the purchaser, viz. Shri Srikant Swaikar had rendered the order passed by the AO u/s 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interests of the revenue u/s 263 of the Act.
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In the result, appeal of the assessee is partly allowed in terms of our aforesaid observations.
Order pronounced in the open court on 09th day of May, 2022. Sd/- Sd/- JAMLAPPA D. BATTULL RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 09th May, 2022 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT, Nagpur-2. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, 4. नागपुर/ DR, ITAT, Nagpur. गाड�फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.
28 The Vasant Co-Op. Shetkari Ginning & Pressing Factory Limited Vs. Pr. CIT ITA No. 29/NAG/2021
Date 1 Draft dictated on 02.05.2022 Sr.PS/PS 2 Draft placed before author 04.05.2022 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved AM/JM by second Member 5 Approved draft comes to Sr.PS/PS the Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order