Jangpal Singh Tanwar Vs Pr. CIT (ITAT Chandigarh)
Held that for invoking revisionary power u/s 263 it is necessary to point out the error in the order and that too such an error should be prejudicial to the interest of the revenue
Facts-
The return furnished by the assessee was accepted by the AO. However, PCIT set aside the order invoking section 263 holding that AO failed to examine the assessee’s eligibility for exemption u/s 54. Being aggrieved by the said order, assessee has preferred present appeal.
Conclusion-
Held that the revisionary power u/s 263 of the Act cannot be allowed to be exercised in a casual arbitrary manner.
Held that the entire LTCG from the sale of the property has been applied to the new property. Documents substantiating this claim are available on record and have not been upset. The revisionary power u/s 263 of the Act cannot be allowed to be exercised in a casual arbitrary manner. It is incumbent upon the ld. PCIT to point out the error in the order and that too such an error which can be said to be prejudicial to the interests of the Revenue. In the facts of the present case the Revenue has dismally failed on this count.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present appeal has been filed by the assessee wherein the correctness of the order passed u/s 263 dated 21.03.2021 of Pr.CIT-1, Chandigarh pertaining to 2016-17 assessment year is assailed on the following grounds :
1. That the Ld. Commissioner of Income Tax has wrongly assumed jurisdiction under section 263 of the Act to set-aside the assessment order dated 07.12.2018 passed by the Assessing Officer in as much as the order is neither erroneous nor prejudicial to the interest of Revenue and as such the assumption of jurisdiction under section 263 of the Act is beyond his competence.
2. That the Ld. Commissioner of Income Tax has erred in law in issuing notice and thereafter passing the order under section 263 of the Act only on the basis of an audit objection which is not permissible and as such the order passed is illegal, arbitrary, unjustified which merits annulment.
3. That the Ld. Commissioner of Income Tax has failed to consider that the case of the assessee was picked up for limited scrutiny and the issues in that regard including sale/purchase of property, indexed cost, etc. were thoroughly looked into and as such the assessment order passed was neither erroneous not prejudicial.
4. That the Ld. Commissioner of Income Tax has erred in failing to consider the various replies and submissions placed on record in proceedings before her in the correct perspective which is arbitrary and unjustified.
5. That the assessment order having been passed by the Assessing Officer after due application of mind and taking into consideration the various replies and material on record, the action resorted to by the Commissioner of Income Tax is unwarranted and uncalled for.
6. That the order of Commissioner of Income tax is erroneous, arbitrary, opposed to the facts of the case and is unsustainable in law.
2. The relevant facts of the case are that the assessee e-filed his return on 05.08.2016 declaring an income of Rs.4,21,230/-. The income as per the assessment order passed u/s 143(3) and had been declared under the head ‘salaries’ and “income from other sources” . The said returned income was accepted by the AO. This order was set aside by ld. PCIT u/s 263. The record shows that the ld. PCIT makes a reference to the fact that the assessee’s case was selected for limited scrutiny on the following issues :
“Whether investment and income relating to properties are duly disclosed.”
3. After issuing Show Cause Notice to the assessee, the ld. PCIT after hearing the assessee set aside the assessment. The ld. PCIT held that the AO failed to examine assessee’s eligibility for exemption u/s 54. The AO was directed to pass a fresh order after making necessary verifications/enquiries.
4. The assessee is aggrieved by the said order.
5. The ld. AR inviting attention of the Bench to the Paper Book filed, made detailed submissions on each and every ground raised before the ITAT.
5.1 Vehemently arguments were advanced on ground No. 1 which is seen to be the over-arching ground which we propose to address a little later. Vehement arguments were also made in respect of ground No. 2 raised before the ITAT. Attention of the Bench was invited to various efforts made and ultimately information made available to the assessee under the RTI etc. so as to argue that the order was bad in law as Audit Objection was the reason for the ld. PCIT to set aside the validly passed assessment order.
5.2 Arguments in respect of ground No. 3 were also advanced. The remaining grounds seem to be in support of ground No.1, were also addressed.
5.3 In the course of the hearing, it need be noted that position of law as canvassed on behalf of the assessee was addressed at length by the ld. AR. Arguments addressing the legal position as considered by the ld. PCIT were also advanced. Distinction on facts qua the law applicable and considered was heavily debated, infact by both the sides. On giving our thoughtful consideration thereto, we deem it appropriate to first address the arguments on facts as advanced by both the parties and available on record.
6. The ld. AR has vehemently argued that the order passed by the AO was passed after making due enquiries. It was his submission that in the facts of the present case, the assessee is not dependent or relying upon what was argued in the physical hearing before the AO as in the facts of the present case, the detailed submissions of the assessee are available on the e-portal of ITBA. The present case, it was submitted, is the case wherein hearings have taken place via e-proceedings. Inviting attention to the Paper Book available on record, it was submitted, that various notices issued by the AO on different dates in the e-proceedings are available. The replies of the assessee similarly are also available on the e-portal. It was submitted that these are supported with Annexures and copies of these queries with replies with documentary evidences are all available from pages 4 to 161. At pages 1 to 3 of the Paper Book, it was submitted, is the copy of the return filed by the assessee and the computation of total income. At pages 162 onwards is the copy of the notices issued by the ld. PCIT; replies of the assessee and copies of online request under RTI; Copy of the order u/s 7(1) of RTI Act 2005; copy of online appeal under RTI and reply thereto are all available from pages 169 to 186 at Sr.Nos. 30 to 34. In the very same Paper Book from Sr.No. 2 to Sr.No. 26 i.e. page 4 to page 161 is the evidence of the queries raised in the e-proceedings.; the queries raised and replies made to the AO. Accordingly, on the basis of this evidence on record, it was his submission that there can be no doubt in the minds of anyone about the fact that all necessary and due enquiries made by the AO before the passing of the order. Inviting attention to Paper Book page 4 to 7, it was submitted that the AO has issued notice u/s 143(2) dated 19.09.2017. It was highlighted that the case was picked up by CASS (Computer Aided Scrutiny Selection) for limited scrutiny for “Whether investment and income relating to properties are duly disclosed.” It was submitted that this fact has been noticed by the ld. PCIT also. Inviting attention to Paper Book page 8, the assessee’s response on the e-portal of the Income Tax Department was relied upon. A perusal of the same reads as under :
Refer to notice no ITBA/AST/S/143(2)/2017-18/100642 9276(1) dated 19/9/2017. In this regard we hereby submitted that we had fully disclosed all investment and income details in the income tax return filed on 05/08/2016 vide acknowledgement no 3852989300 50816 for the AY 2016-17.
7. Attention was invited to Paper Book page 9 and 10 which is copy of the notice issued electronically dated 10.04.2018 requiring the assessee to file his submissions on or before 16.04.2018 on the following issues :
8. It was his submission that the proceedings continued. Attention was invited to Paper Book page 11 which is the response to the notice dated 10.04.2018. In the remarks column, the assessee had made the following explanation available to the Assessing Officer :
“Respected Sir Refer to Notice under section 142( 1) In this regard we are submitting the following information I .Computation of income in the attachment. 2.Sale Deed in the attachment. 3.Name of the is Sh Amrik Singh S/O Sh Moti Ram and address of the seller is House no. 547 Siver City main Zirkpur Dist SAS Nagar Mohali. 4.Market price for the purpose of stamp duty was Rs 18200000/-. 5.The Mode of payment is as under i. Rs 50,00,0000 vide cheque no 408096. ii. Rs 50,00,0000 vide cheque no 408096. iii. Rs.50,00,0000 vide cheque no 408096. iv. R s 2818.”
9. The e-proceedings, it was submitted, continued as is evident from the replies of the assessee available on e-portal, copies at pages 12 to 13; alongwith annexures which included copy of e-Proceedings Response Acknowledgement dated 15.04.2018 (Paper Book page 12-13) alongwith the following annexures:
