ANKUR GUPTA,HARYANA vs. PR,CIT,DELHI-1, NEW DELHI

When the appeal was called out, no one appeared for the assessee.

Briefly, the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed its return of income on 12.10.2017 declaring income of Rs.29,97,630/-. Assessee’s case was selected for scrutiny and assessment was completed vide order dated 14.06.2019 passed u/s. 143(3) of the Act accepting the income returned by the assessee. After completion of assessment, as aforesaid, ld. PCIT called for and examined the assessment record by exercising his powers u/s. 263 of the Act. While doing so, he noticed that during the year under consideration, the assessee had sold 7,50,000 shares of M/s. Cirracore LLC Georgia USA through agreement dated 15.12.2016 and earned long term capital gain of Rs.3.34 crores. He further observed that while computing long term capital gain, the assessee has stated that the units were allotted as ESOP for nil consideration. In the return of income, the assessee had claimed that entire long term capital gain was invested in a residential flat. Hence, deduction was claimed u/s. 54F of the Act. On examining the record, ld. PCIT found various deficiencies in the sale agreement of ESOP as well as various other issues. He observed that the Assessing Officer had not examined the audited balance sheet of the companies, whose shares were claimed to have been sold. He observed, the Assessing Officer also failed to ascertain the fact whether the sale consideration was correctly shown by the assessee. He also pointed out deficiencies regarding the initial payments. He observed, the Assessing Officer also failed to examine whether the assessee had actually purchased a flat before allowing deduction u/s. 54F of the Act. Thus, on the basis of aforesaid facts, ld. PCIT issued a show cause notice to the assessee seeking his reply as to why the assessment order should not be held as erroneous and prejudicial to the interest of revenue and accordingly, set aside. After examining the reply of the assessee, learned PCIT ultimately concluded that while completing the assessment, the Assessing Officer has not made any enquiry either regarding earning of long term capital gain or the deduction claimed u/s. 54F of the Act. On the aforesaid premise, he set aside the assessment order with a direction to the Assessing Officer to examine the issue relating to earning of long term capital gain and deduction claimed u/s. 54 of the Act.

We have heard the ld. Departmental Representative and perused the materials on record. As can be seen from the impugned order of ld. PCIT, he has noted various deficiencies in the assessment order, in the sense that, before accepting the long term capital gain and deduction claimed u/s. 54F of the Act thereon, the Assessing Officer has not made any effective enquiry at all. The aforesaid allegation of the Revisionary Authority remains uncontroverted before us, as the assessee has neither appeared nor filed any submission to demonstrate that the assessment order is neither erroneous nor prejudicial to the interest of revenue in terms of section 263 of the Act. On perusal of the assessment order subjected to revisionary proceedings, it is noticed that assessee’s case was selected for limited scrutiny only for the purpose of examining large deductions/exemption claimed under various provisions including section 54F of the Act. There is nothing either in the body of assessment order or any other material available on record to suggest that the Assessing Officer has enquired into the issues, for which, the case was selected for limited scrutiny. In view of the aforesaid, we do not find any infirmity in the order passed u/s. 263 of the Act. Accordingly, we dismiss the grounds raised.

In the result, the appeal is dismissed.