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10-01-2020, Muzaffer Mahmood Khan, Section 54F, 263, Tribunal Pune

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1 week 4 days ago #12036 by amit
Section - 54F, 263
Order Date - 10-01-2020
Favouring - Revenue
Court - Tribunal Pune
Appellant - Muzaffer Mahmood Khan
Respondent - PCIT
Citation - 120Taxpundit100
Appeal No. - ITA No.895/PUN/2019
Asstt. Year - 2014-15



This appeal by the assessee against the order dated 19-03-2019 passed by the Pr. Commissioner of Income Tax (Appeals)-2, Aurangabad u/s. 263 of the Act for assessment year 2014-15.

2. The assessee raised as many as ground Nos. 1 to 5 involving the only issue, challenging the initiation of the proceedings u/s. 263 of the Act, consequently to quash the order dated 19-03-2019 passed by Pr. CIT in the facts and circumstances of the case.

3. The brief facts of the case as emanating from the record are that the assessee is an individual engaged in trading of batteries and coolers and conducts his business under the name and style of “M/s. Diamond General Batteries.” He filed his return of income declaring a total income at Rs.8,52,907/- and was selected for limited scrutiny. The AO issued notices u/s. 143(2) and 142(1) of the Act and in response to such notices an authorized representative on behalf of the assessee appeared before the AO and filed written submissions and explained income returned. The AO accepted the return of income filed by the assessee and completed scrutiny assessment vide its order dated 20-12 2016 u/s. 143(3) of the Act.

4. As matter stood thus the Pr. CIT-2, Aurangabad on verification of assessment records for the year under consideration show caused assessee why the assessment order passed by the AO u/s. 143(3) of the Act should not be treated as erroneous and prejudicial to the interest of revenue for following reasons:

i. Firstly, for showing investment in two residential units; and

ii. Secondly, for showing purchase price of said property at Rs.70,00,000/- which is 1346% above market price of Rs.4,84,000/-

5. In reply, it was explained that the developer/builder M/s. Golden Dreams Buildcon Pvt. Ltd. executed Deed of Assignment (Sale Deed) on 31-07-2014 in favour of assessee and the said date is to be considered as date of purchase of residential unit. Further, for the second query it was explained the value ascertained by the Stamp Valuation Authority is only to facilitate the payment of stamp duty for registering the sale deed is always varies from market value. Supporting the same, sample sale transactions in a tabular form were submitted. The Pr. CIT-2, Aurangabad found the submissions of assessee are not acceptable and held the claim allowed by the AO u/s. 54F violated the conditions and the AO failed to examine the issue. Regarding the second issue of market price the Pr. CIT2, Aurangabad held the AO should have verified the issue by examining the flats nearby, and he held the assessment order passed u/s. 143(3) of the Act is erroneous and prejudicial to the interest of revenue.

6. Having aggrieved, the assessee is now before us challenging the action of Pr. CIT in holding the assessment order passed by the AO u/s. 143(3) of the Act is erroneous and prejudicial to the interest of revenue. The assessee filed paper book containing pages 1 to 288 certifying that all documents therein were before lower authorities.

7. Heard both parties and perused the material available on record. The contention of Shri K. Srinivasan, the ld. AR that it was a limited scrutiny and the AO issued notice dated 10-08-2016 u/s. 142(1) along with a questionnaire and specifically asked to furnish details of low capital gain with respect to sale consideration and substantial increase in capital in a year. We note that the notice dated 10-08-2016 issued u/s. 142(1) of the Act is placed at page No. 256 of the paper book and the questionnaire is at page 255 of the paper book. On perusal of the same, it shows that a question was raised by the AO at point No. 3, in response to the said notice the assessee gave reply dated 22-08-2016 which is at page No. 205 of the paper book wherein it was specifically stated that the assessee sold the jointly held inherited agricultural land and the assessee received Rs.2.97 crores being 22% of share in accordance with the Sharia/ Mohammaden Law. It was claimed that the assessee has made certain investments from the sale proceeds of agricultural land and supported the allowability of claim u/s. 54B and 54F of the Act along with all details of sale proceeds and its reinvestment.

8. On perusal of deed of Agreement to Assign which is at page No. 182 of the paper book wherein it has been executed between M/s. Golden Dreams Buildcon Pvt. Ltd. and Mr. Muzaffar Mahmood Khan viz. assessee before us being owner/assignor and purchaser/assignee, respectively wherein it was agreed to allot undivided area/ two units admeasuring 200 sq. ft. built up area in IT building No. IT-1 in IT Park known as “Premchand Infocity” for a total consideration of Rs.2,00,000/-. Further, it was agreed to assign two residential unit of “Premchand Infocity IT Park” in Cluster “A” building No. A-7, bearing No. 701 & 702 located on sixth floor for a total consideration of Rs.68,00,000/-. Further, the said Agreement speaks that the undivided area of 200 sq. ft. of IT Unit and Residential Unit in IT Park are inseparable and the assessee shall not be entitled to transfer undivided area in IT Building and Residential Unit separately. Therefore, it is clear that the assessee made investments in two IT Units and two Residential Units. Though, the Agreement to Assign said to have been before the AO, it appears from assessment order no reference whatsoever made by the AO in terms of claim u/s. 54F of the Act.

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