Kusumlata Sonthalia vs. PCIT (ITAT Kolkata)
Preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst. Year 2010-11 was originally completed and thereafter a search and seizure action was conducted on 05.03.2015, therefore, assessment year 2010-11 is an unabated assessment. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated.
Therefore, in assessee’s case original assessment was completed much prior to search and seizure therefore the assessment year under consideration, that is, A.Y. 2010-11 is unabated and in unabated proceedings, the AO cannot disturb the findings given thereon in the original assessment unless there is incriminating material unearthed by the search team, since in assessee’s case under consideration there is no incriminating material therefore order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue.
We also note that the Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon’ble Supreme Court in Malabar Industries Ltd. vs. CIT (supra). Since the order of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is “null” in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 by the Principal CIT.
Facts of the case
1. The search operation was conducted upon the assessee on 05/03/2015. Consequently, the assessment order in case of the assessee was passed for A.Y.2010-11 U/S. 153A r.w.s. 143(3) of the Act on 30/12/2016 by making minor addition u/s 14A of the Act
2. In the RoI, the assessee had claimed the exemption u/s 54 & 54F, same was duly examined by the AO during the assessment proceedings.
3. Upon the examinations of the records by the Ld. Pr. CIT, it was noticed that the assessee had taken Home Loan from ICICI Home Finance Ltd. in May 2004 to book a flat to be constructed by Sahara Grace at Gurgaon and paid installments from F.Y.2003-04 onwards till March 2010 and based upon that fact, the Pr. CIT concluded that the claim of the assessee made before the AO for purchase of flat has been found to be a case of construction of flat and not purchase as per judicial decisions. The Pr. CIT relied upon case of Farida A Dungerpurwala -vs- ITO(2014) 35 ITR 205 (Mumbai Trib.) and ACIT -vs- Sagar Nitin Parikh (Mumbai Trib. Vide ITA No.6399/Mum/2011 dated 03.06.2017, wherein it was held that the booking of a flat which is going to be constructed by a builder has to be considered as a case of “Construction of Flat” and deduction u/s.54F and 54 is available only if the assessee constructs a new house within three years after the date of transfer of original assets or house property.
4. The Ld. Pr. CIT further cite the Circular No.471 dated 15.10.1986 and further modified vide Circular No.672 dated 16/12/1993 such allotment house under construction is to be treated as case of construction.
5. Based on above findings, the Pr. CIT concluded that the assessment order passed by AO u/s 153A/143(3) of the Act dated 30/12/2016 is erroneous in so far as it is prejudicial to the interest of revenue, hence assessment order needs to be revised as per the provision of Section 263 of the Act.
Assessee’s Grounds
1. In the nutshell, the grounds of the assessee are summarized as follows;
