Shital Priyasharan Shah,, Ahmedabad v. The Dy.CIT, Central Circle-1(3),, Ahmedabad

ITA 1454/AHD/2015 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Allowed

Appeal Details

RSA Number 145420514 RSA 2015
Assessee PAN AQXPS9304E
Bench Ahmedabad
Appeal Number ITA 1454/AHD/2015
Duration Of Justice 1 year(s) 5 month(s)
Appellant Shital Priyasharan Shah,, Ahmedabad
Respondent The Dy.CIT, Central Circle-1(3),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 21-10-2016
Date Of Final Hearing 14-10-2016
Next Hearing Date 14-10-2016
Assessment Year 2010-2011
Appeal Filed On 21-05-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ./ ITA NO. 1454/AHD/2015 / ASSESSMENT YEAR: 2010-11 SHITAL PRIYASHARAN SHAH NO.201 SHAIVAL PLAZA 67 PRITAMNAGAR NR. GUJARAT COLLEGE ELLISBRIDGE AHMEDABAD PAN : AQXPS 9304 E VS. DCIT CENTRAL CIRCLE-1(3) AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : S/SHRI S.N. SOPARKAR P. M. MEHTA & PARIN SHAH ARS REVENUE BY : SHRI R.N. PARBAT CIT-DR / DATE OF HEARING : 14/10/2016 / DATE OF PRONOUNCEMENT: 21/10/2016 / O R D E R PER N.K. BILLAIYA ACCOUNTANT MEMBER: WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX ( CENTRAL) AHMEDABAD DATED 30.03.2015 PERTAINING TO AY 2010-11. 2. THE ASSESSEE HAS STRONGLY CHALLENGED THE ORDER O F THE PRINCIPAL CIT STATING THAT THE PRINCIPAL CIT ERRED IN ASSUMING HI S JURISDICTION U/S 263 OF THE ACT WHICH IS BAD IN LAW. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AT LENGTH AND WITH THE ASSISTANCE OF THE LD. SR. COUNSELS WE HAVE CAREFULLY PERUSED THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE LIGHT OF RULE 18(6) OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES. ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 2 4. THE ASSESSMENT WAS MADE VIDE ORDER DATED 26.03.2 013 U/S 143(3) OF THE ACT BY WHICH THE RETURNED INCOME OF RS.1.99 CR ORES HAS BEEN ACCEPTED AS THE ASSESSED INCOME. 5. DRAWING SUPPORT FROM THE PROVISIONS OF SECTION 2 63 OF THE ACT THE PRINCIPAL CIT ISSUED A SHOW-CAUSE NOTICE DATED 19.0 2.2015. THE RELEVANT PARTS OF THE NOTICE READ AS UNDER:- 3. IT IS OBSERVED THAT YOU HAVE ADMITTED BY YOUR OWN THAT THE TRANSACTION IN SHARES WERE MADE WITH A MOTIVE TO EA RN PROFIT AND THEREFORE THE NATURE OF THESE TRANSACTION CANNOT BE THAT OF I NVESTMENT AND SAME SHOULD BE TREATED AS BUSINESS TRANSACTION. AS A RESULT OF SAME THE PROFIT ARISING OUT OF THESE TRANSACTIONS SHOULD BE TAXED AS PROFIT AND GAINS OF BUSINESS AND PROFESSION. SINCE YOU HAVE CLAIMED SHORT TERM CAPI TAL GAIN AMOUNTING TO RS.1.94 CRORES FOR THE AY 2010-11 THE ASSESSMENT L OOKS ERRONEOUS SO FAR AS THE SHORT TERM CAPITAL GAIN IS CONCERNED. FURTHER DURING THE YEAR UNDER CONSIDERATION YOU HAVE TAKEN LOAN AMOUNTING TO RS.3 .4 CRORE FROM M/S. SHEETAL BIO AGRITECH LIMITED. ON VERIFICATION OF B ANK ACCOUNT OF M/S. SHEETAL BIO AGRETEC LTD. IT IS NOTICED THAT CASH W AS DEPOSITED ON THE DATE OF TRANSFER OF THE FUNDS IN YOUR ACCOUNT. NEITHER THE RETURN OF INCOME NOR ANY CONFIRMATION WAS FILED BY M/S. SHEETAL BIO AGROTECH LIMITED. 4. IN VIEW OF THE ABOVE FACTS THE ASSESSMENT ORDER U/S 143(3) DATED 26.03.2013 PASSED BY THE ASSESSING OFFICER IS PRIMA FACIE BOTH ERRONEOUS AS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE I INTEND TO REVISE THE SAID ORDER U/S 263 OF THE I.T. ACT. 5. VIDE THIS LETTER YOU ARE THEREFORE GIVEN AN OP PORTUNITY OF BEING HEARD IN THIS REGARD. YOU ARE REQUESTED TO ATTEND MY OFF ICE IN PERSON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE ALONGWITH YOUR SUBMI SSIONS IF ANY IN THIS REGARD. THE HEARING FOR THIS PURPOSE IS FIXED ON 2 7.02.2015 AT 12.00 PM AT THE ABOVE MENTIONED ADDRESS. 6. THE ASSESSEE STRONGLY OBJECTED TO THE ASSUMPTION OF POWERS BY THE PRINCIPAL CIT CHALLENGING THE PROCEEDINGS U/S 263 O F THE ACT. THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE DID NOT FIND ANY F AVOUR WITH THE PRINCIPAL CIT WHO MADE THE FOLLOWING OBSERVATIONS W HILE SETTING ASIDE THE ASSESSMENT ORDER:- ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 3 4. THE WRITTEN SUBMISSION FILED BY THE AR OF THE A SSESSEE HAS BEEN CAREFULLY CONSIDERED BY ME. ON PERUSAL OF RECORDS I T IS FOUND THAT THE ASSESSEE INVESTED VERY MEAGER AMOUNT OF RS.2 16 600/- AS COM PARED TO INVESTMENT IN THE SHARES OF M/S RADHE DEVELOPERS INDIA LTD. AMOUN TING TO RS. 3.78 CRORES. THE ASSESSEE HIMSELF ADMITTED THAT APART FROM SHARE S OF RADHE DEVELOPERS INDIA LTD. NO MAJOR TRANSACTIONS IN SHARES WERE MA DE AND WHATEVER TRANSACTIONS WERE MADE WERE MOSTLY RELATED TO IPO. IT IS ALSO ADMITTED THAT EXCEPT SHARE TRANSACTIONS OF M/S RADHE DEVELOPERS I NDIA LTD OTHER SHARE DEALINGS ARE INSIGNIFICANT. INVESTMENT IN SHARE SHO WN AS INVESTMENT IN ASSESSEE'S BALANCE SHEET IS ASSESSEE'S PREROGATIVE. IT IS ALSO PERTINENT TO MENTION HERE THAT DESPITE HAVING NUMBER OF BANK ACC OUNTS IN AHMEDABAD THE ASSESSEE OPENED A NEW BANK ACCOUNT WITH BHUJ ME RCANTILE CO-OP. BANK AHMEDABAD ON 23/06/2009 AND ON THE SAME DATE BANK ACCOUNT WAS ALSO OPENED BY SHEETAL BIO AGROTECH LTD. IN THE SAME BAN K AND SAME BRANCH. THEREAFTER ON 30/06/2009 CASH WAS DEPOSITED IN TH E BANK ACCOUNT OF M/S. SHEETAL BIO AGROTECH LTD. AND ON THE SAME DAY FUND S WERE TRANSFERRED TO SHRI SHITAL P. SHAH AND FURTHER TRANSFERRED TO RADH E DEVELOPERS INDIA LTD. WHICH CLEARLY INDICATE THAT FUNDS DEPOSITED IN CASH AND TRANSFERRED TO THE ACCOUNT OF ASSESSEE IS UNEXPLAINED CASH CREDIT AND SOURCE OF SAME SHOULD HAVE BEEN BE VERIFIED BY THE ASSESSING OFFICER BY ISSUIN G NOTICE U/S. 133(6) /131(1) OF THE ACT. IN VIEW OF THE FINANCIAL STATUS OF THE ASSESSEE HIS CAPACITY FOR MAKING INVESTMENT IN SHARES IS DOUBTFUL. THE NA TURE OF BORROWINGS ARE ALSO SUSPICIOUS BECAUSE SHRI PRATIK R. SHAH THE D IRECTOR OF THE COMPANY M/S. SHEETAL BIO AGROTECH LTD. STATED THAT HE WAS P ROVIDING ACCOMMODATION ENTRIES ONLY. 7. THE FIRST THING WHICH HAS TO BE CONSIDERED IS WH ETHER THE PRINCIPAL CIT HAS RIGHTLY ASSUMED THE POWER UNDER SECTION 263 OF THE ACT. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD . 243 ITR 83 HAS LAID DOWN THE FOLLOWING RATIO:- 'A BARE READING OF SECTION 263 OF THE INCOME-TAX AC T 1961 MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICT ION BY THE COMMISSIONER SUO MOTU UNDER IT IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II ) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABS ENT--IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDIC IAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE- - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 4 AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WI LL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLI CATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS' 8. NOW LET US SEE IN THE LIGHT OF THE ABOVE RATIO WHETHER THE ASSESSMENT HAS BEEN MADE ON AN INCORRECT ASSUMPTION OF FACTS O R AN INCORRECT APPLICATION OF LAW. THE FIRST OBSERVATION OF THE P RINCIPAL CIT IS THAT THE ASSESSEE HAD INVESTED VERY MEAGER AMOUNT OF RS.2 16 600/- AS COMPARED TO INVESTMENT IN THE SHARES OF RADHE DEVELOPERS INDIA LTD AMOUNTING TO RS.3.78 CRORES. THE PRINCIPAL CIT FURTHER OBSERVED THAT SHEETAL BIO AGROTECH LTD OPENED A BANK ACCOUNT IN BHUJ MERCANTILE CO-OP BANK AHMEDABAD AND DEPOSITED CASH IN THE SAID BANK ACCOUNT AND ON THE SAME DAY FUNDS WERE TRANSFERRED TO SHRI SHITAL P. SHAH AND FURTHER TRAN SFERRED TO RADHE DEVELOPERS INDIA LTD. THE PRINCIPAL CIT WAS OF THE FIRM BELIEF THAT THE CREDIT AND SOURCE OF THE AMOUNT TRANSFERRED SHOULD HAVE BEEN VERIFIED BY THE ASSESSING OFFICER AND HAVING FAILED TO DO SO T HE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PRINCIPAL CIT CONCLUDED BY HOLDING AS UNDER:- THE ASSESSMENT ORDER DATED 26/03/2013 IS THEREFORE CANCELLED AND THE ASSESSING OFFICER IS DIRECTED TO AGAIN COMPLETE THE ASSESSMENT AFTER MAKING APPROPRIATE ENQUIRY REGARDING THE SOURCE OF UNSECUR ED LOAN OF RS.3.4 CRORES AS MENTIONED ABOVE. THE ASSESSING OFFICER IS DIRECT ED TO VERIFY COMPLETE TRAIL OF FUNDS AND MAKE SUITABLE ADDITION IN THE CASE OF THE BENEFICIARIES OF THE TRANSACTION. REGARDING PROFIT MADE ON TRANSACTION IN SHARES THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASS ESSEE REGARDING THE SAME BEING CAPITAL GAIN OR BUSINESS INCOME. WHILE DOING SO THE PRINCIPLE OF NATURAL JUSTICE SHOULD BE FOLLOWED BY HIM. 9. A PERUSAL OF THESE FACTUAL MATRIX SHOWS THAT IN THE YEAR 2006 THE ASSESSEE WAS HOLDING 11 000 SHARES OF RADHE DEVELOP ERS INDIA LTD. THE SHARES WERE OF RS.10/- EACH. ON 24.10.2007 THE AS SESSEE APPLIED FOR 21 LACS CONVERTIBLE WARRANTS AT RS.18/- EACH AND ON 04.01.2 008 THE ASSESSEE WAS ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 5 ALLOTTED THE WARRANTS. ON 21.08.2009 THE WARRANTS WERE CONVERTED INTO SHARES OF RS.10/- EACH AGAINST ONE WARRANT AND ACCO RDINGLY THE ASSESSEE GOT 2.10 CRORES SHARES AT RS.1/- EACH. BETWEEN 02.02.20 10 AND 31.03.2010 THE ASSESSEE SOLD 1.02 CRORES SHARES AT PROFIT. 10. THE AFOREMENTIONED TRANSACTIONS WERE QUESTIONED BY THE ADIT. NECESSARY REPLIES WERE FILED BEFORE THE ADIT AND AL L THE RELEVANT DETAILS WITH DOCUMENTS WERE SUBMITTED. THE ASSESSEE ALSO S UBMITTED DETAILS OF QUERIES RAISED BY THE ADIT AT THE TIME OF HEARING. ON 12.02.2013 THE DCIT CIRCLE (11) AHMEDABAD ISSUED A SHOW-CAUSE NOTICE W HICH READS AS UNDER:- ON PERUSAL OF THE DETAILS SUBMITTED BY YOU AND THE INFORMATION AVAILABLE ON RECORD IT IS SEEN THAT YOU HAVE INVESTED RS. 3.87 CRORES IN M/S RADHEY DEVELOPERS ( INDIA ) LTD BY ACQUIRING 2 10 000 SHAR ES. IN THIS REGARDS YOU HAVE SUBMITTED THAT THE SOURCES OF THESE INVESTMENT S WERE LOANS RECEIVED FROM M/S SHITAL BIO AGRITECH LTD WHOSE ACCOUNT PAY CHEQUES DRAWN ON BHUJ MERCANTILE COOPERATIVE BANK ON 29-06-2009. TH E INVESTMENT WAS MADE ON 30-06-2009 AND FURTHER YOU HAVE SUBMITTED T HAT THE LOAN OF RS. 3.40 LACS WAS REPAID BY YOU AFTER SELLING THESE SHA RES BEFORE 30-03-2010. ON FURTHER PERUSAL IT IS NOTED THAT YOU HAVE MADE INVE STMENT OF RS. 38.07 LACS THAT IS 10 PER CENT OF TOTAL INVESTMENT RS. 3.87 CR ORES OUT OF WHICH FUNDS AVAILABLE IN YOUR BUSINESS FIRM M/S DIVYA INVESTMEN T. IT IS SEEN THAT YOU HAVE FURNISHED THE DETAILS AS TO HOW THE SURPLUS FU NDS OF RS. 38.7 LACS WERE RAISED BY YOUR FIRM M/S DIVYA INVESTMENT AND AS REG ARDS THE LOAN OF RS. 3.4 CRORES OBTAINED FROM M/S SHITAL BIO AGRITECH LTD N O EVIDENCES WHATSOEVER HAVE BEEN FURNISHED TO PROVE THAT IT HAS CREDIT WOR THINESS TO ADVANCE LOAN TO YOU. IN VIEW OF THIS YOU ARE HEREBY SHOW CAUSED AS TO WHY THE LOAN OF RS. 3.4 CRORES AND RS. 38.7 LACS BE NOT TREATED AS UNEX PLAINED CASH CREDITS APPEARING IN YOUR BOOKS WITHIN THE MEANING OF SECTI ON 68 OF THE ACT. LOOKING TO THE NATURE OF TRANSACTIONS CARRIED OUT B Y YOU AND THE STATEMENT GIVEN BY YOU BEFORE ADIT(INV.) AHMEDABAD THAT YOU HAVE MADE THESE TRANSACTIONS WITH A MOTIVE TO EARN PROFIT IN DICATING THE NATURE OF THE TRANSACTIONS AS BUSINESS TRANSACTIONS. YOU ARE THE REFORE REQUIRED TO SHOW- CAUSE AS TO WHY STCG SHOWN BY YOU ON THESE TRANSACT IONS BE NOT TREATED AS INCOME FROM BUSINESS AND PROFESSION CARRIED OUT BY YOU. YOU REPLY SHOULD REACH THE UNDER-SIGNED WITHIN 03 D AYS TIME FROM THE RECEIPT OF THIS LETTER FAILURE TO WHICH IT WILL PRE SUMED THAT YOU HAVE NOTHING ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 6 TO SUBMIT IN THIS REGARD AND THE ASSESSMENT SHALL B E FINALIZED ON THE MERITS OF THE DETAILS AVAILABLE ON RECORD. 11. ON 21.03.2013 THE ASSESSEE FILED ALL THE DETAI LS SOUGHT BY THE DCIT CIRCLE-11 AHMEDABAD. AT THIS STAGE IT WOULD BE P ERTINENT TO REFER TO THE SUBMISSIONS OF THE DR WHO STATED THAT THOUGH THE FI RST NOTICE WAS ISSUED BY THE DCIT CIRCLE-11 AHMEDABAD BUT THEREAFTER THE RECORDS WERE TRANSMITTED TO DCIT CENTRAL CIRCLE-1(3). THEREFOR E THE PRESENT ASSESSING OFFICER HAD NO OPPORTUNITY TO EXAMINE THE DETAILS/D OCUMENTS. THIS CONTENTION OF THE LD. DR DOES NOT HOLD ANY WATER B ECAUSE ON 23.03.2013 THE ASSESSEE HAD FILED AFFIDAVIT EXPLAINING THE NATURE SOURCE IDENTITY AND GENUINENESS OF THE ENTIRE TRANSACTIONS OF ALLOTMENT OF SHARE WARRANT AND CONVERSION OF THE SAME TO SHARES AND SUBSEQUENTLY S ELLING THEM AT PROFIT. THIS AFFIDAVIT ALONGWITH THE NECESSARY DETAILS WERE FILED WITH THE PRESENT ASSESSING OFFICER. 12. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. GABRIEL INDIA LTD. REPORTED IN (1993) 203 ITR 108 (BOM) HAS HEL D THAT THE DECISION OF THE INCOME-TAX OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN TH AT REGARD...........'. THIS IS FURTHER FORTIFIED BY THE OBSERVATION OF THE ASSESSI NG OFFICER IN HIS ORDER WHICH READS AS UNDER:- IN RESPONSE TO THE NOTICES SHRI GAUTAM N. SHAH CA ATTENDED WITH THE ASSESSEE SHRI SHITAL P. SHAH AND FILED THE DETAILS CALLED FOR. THE DETAILS SUBMITTED BY THE ASSESSEE HAVE BEEN VERIFIED AND KE PT ON RECORD. THE ASSESSEE IS AN INDIVIDUAL AND DERIVING INCOME FROM BUSINESS HOUSE PROPERTY CAPITAL GAINS AND INCOME FROM OTHER SOURCES AND THE RETURNED INCOME WAS ACCEPTED AS SUCH. 13 THE ASSESSING OFFICER HAS TAKEN A VIEW WHICH MAY BE DIFFERENT FROM THE VIEW OF THE LD. PRINCIPAL CIT AND ASSUMING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS A LOSS TO THE REVENUE BUT THE HONBLE SUPREME COURT ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 7 IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) HAS HELD THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSI NG OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. 14. IT IS A SETTLED POSITION OF LAW THAT POWERS U/S 263 OF THE ACT CAN BE EXERCISED BY THE COMMISSIONER ON SATISFACTION OF TW IN CONDITIONS I.E. THE ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. BY ERRONEOUS IS MEANT CONTRARY TO LAW. THUS THIS POWER CANNOT BE EXERCISED UNLESS THE COMMISSIONER IS ABLE TO EST ABLISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS WHERE THERE ARE TWO POSSIBLE VIEWS AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS NO ACT ION TO EXERCISE POWERS OF REVISION CAN ARISE NOR CAN REVISIONAL POWER BE EXE RCISED FOR DIRECTING A FULLER ENQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERR ONEOUS WHEN A VIEW HAS ALREADY BEEN TAKEN AFTER ENQUIRY. THIS POWER OF RE VISION CAN BE EXERCISED ONLY WHERE NO ENQUIRY AS REQUIRED UNDER THE LAW I S DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADEQUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI [2016] 71 TAXMANN.COM 272 (BOMBAY). THIS VIEW IS F URTHER SUPPORTED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF SHRI PRAKASH BHAGCHAND KHATRI IN TAX APPEAL NO. 177 WITH TAX APP EAL NO.178 OF 2016 WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT WAS S EIZED WITH THE FOLLOWING SUBSTANTIAL QUESTION OF LAW:- WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN UPHOLDING THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT ON M ERITS AND STILL STORING THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54 OF THE ACT TO THE FILE OF ASSESSING OFFICER EVEN THOUGH THE WORKING OF ALLOWA BILITY OF DEDUCTION UNDER SECTION 54F IS AVAILABLE IN THE ORDER UNDER S ECTION 263 WHICH IS NOT DISPUTED BY THE ASSESSEE BEFORE ITAT. ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 8 AND THE HONBLE HIGH COURT AFTER CONSIDERING THE F ACTS HELD AS UNDER:- 6. IT CAN THUS BE SEEN THAT THOUGH FINAL ORDER OF ASSESSMENT WAS SILENT ON THIS ASPECT THE ASSESSING OFFICER HAD CARRIED OUT INQUIRIES ABOUT THE NATURE OF SALE OF LAND AND ABOUT THE VALIDITY OF THE ASSES SEE'S CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. LEARNED COUNSEL FOR T HE REVENUE HOWEVER SUBMITTED THAT THESE INQUIRIES WERE CONFINED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN THE CONTEXT OF FULF ILLING CONDITIONS CONTAINED THEREIN AND MAY POSSIBLY HAVE NO RELEVANCE TO THE Q UESTION WHETHER THE SALE OF LAND GAVE RISE TO A LONG TERM CAPITAL GAIN. LOOK ING TO THE TENOR OF QUERIES BY THE ASSESSING OFFICE AND DETAILS SUPPLIED BY THE ASSESSEE WE ARE UNABLE TO ACCEPT SUCH A CONDITION. IN THAT VIEW OF THE MATTER THE OBSERVATION OF THE TRIBUNAL THAT THE ASSESSING OFFICER HAVING MADE INQ UIRIES AND WHEN TWO VIEWS ARE POSSIBLE REVISIONAL POWERS COULD NOT BE EXERCISED CALLED FOR NO INTERFERENCE. SINCE WITH RESPECT TO COMPUTATION AND ASSERTIONS OF OTHER ASPECTS OF DEDUCTION UNDER SECTION 54F OF THE ACT THE TRIBUNAL HAS REMANDED THE PROCEEDINGS NOTHING STATED IN THIS ORDER WOULD AFFECT EITHER SIDE IN CONSIDERATIONS OF SUCH CLAIM. 7. NO QUESTION OF LAW ARISES. TAX APPEALS ARE DISM ISSED. 15. AS MENTIONED ELSEWHERE THE ELABORATE ENQUIRES WERE MADE NOT ONLY BEFORE THE ASSESSMENT PROCEEDINGS STARTED BUT ALSO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE ASSESSEE HAS FULLY C OMPLIED WITH ALL QUERIES RAISED BY THE REVENUE AUTHORITIES. THE CONTENTION THAT THE PRESENT ASSESSING OFFICER DID NOT MAKE FULL ENQUIRY IS NOT ACCEPTABLE BECAUSE WHEN THE ASSESSMENT RECORDS WERE TRANSMITTED FROM ONE DC IT TO ANOTHER DCIT THE OTHER DCIT WAS WELL AWARE OF THE QUERIES RAISED DURING THE COURSE OF PROCEEDINGS. THE OFFICER WAS ALSO AWARE OF ALL THE REPLIES FILED BY THE ASSESSEE SUPPORTED BY RELEVANT DOCUMENTARY EVIDENC ES. 16. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF THE JUDICIAL DECISIONS DISCUSSED HEREINABOVE IN OUR UNDERSTANDING OF LAW THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F THE REVENUE. WE THEREFORE SET ASIDE THE IMPUGNED ORDER PASSED BY T HE PRINCIPAL CIT U/S 263 AND RESTORE THAT OF THE ASSESSING OFFICER PASSED U/ S 143(3) OF THE ACT. ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 9 17. BEFORE PARTING THE DR HAS RELIED UPON THE DECI SION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF BLESSING CONST RUCTION VS. ITO REPORTED IN (2013) 32 TAXMANN.COM 366 (GUJARAT) HONBLE HIG H COURT OF CALCUTTA IN THE CASE OF CIT VS. MAITHAN INTERNATIONAL REPORTED IN (2015) 56 TAXMANN.COM 283 (CALCUTTA) HONBLE HIGH COURT OF A LLAHABAD IN THE CASE OF GOVIND PRASAD AGARWAL V. CIT REPORTED IN (2014) 4 1 TAXMANN.COM 521 (ALLAHABAD) HONBLE HIGH COURT OF GUJARAT IN THE C ASE OF MUKUR CORPORATION REPORTED IN [1978] 111 ITR 312 AND CIT VS. ARUNABEN SUMANKUMAR REPORTED IN (2003) 259 ITR 386 (GUJ). A PERUSAL OF ALL THESE DECISIONS RELIED UPON BY THE DR SHOWS THAT THEY ARE MISPLACED AS IN ALL THESE CASES NO ENQUIRY WAS MADE BY THE ASSESSING OF FICER WHEREAS IN THE CASE IN HAND DEFINITE AND SPECIFIC ENQUIRIES WERE MADE TO WHICH SPECIFIC REPLIES WERE FILED ALONGWITH SUPPORTING DOCUMENTARY EVIDENCES. THE DR HAD FURTHER RELIED UPON THE DECISION OF THE CO-ORDI NATE BENCH MUMBAI IN THE CASE OF ANUJ JAYENDRA SHAH [2016] 67 TAXMANN.C OM 38 (MUMBAI - TRIB.) STATING THAT THE INSERTION OF EXPLANATION 2 TO SECT ION 263 HAS A RETROSPECTIVE EFFECT. THIS ORDER IS DATED 30.12.2015. SUBSEQUEN T TO THIS THE CO-ORDINATE BENCH AT AHMEDABAD VIDE ORDER DATED 20.05.2016 HAS HELD THAT EXPLANATION 2 TO SECTION 263 IS PROSPECTIVE. WE ARE INCLINED T O ACCEPT THE REASONING GIVEN BY THE CO-ORDINATE BENCH AHMEDABAD. 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 21 ST OCTOBER 2016 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER (N.K. BILLAIYA) ACCOUNTANT MEMBER AHMEDABAD; DATED 21/10/2016 BIJU T. PS ITA NO. 1454/AHD/2015 SHITAL PRIYASHARAN SHAH VS. DCIT AY 2010-11 10 !#$ %$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! # / CONCERNED CIT 4. # ( ) / THE CIT(A ) 5. & ! ! / DR ITAT AHMEDABAD 6. / GUARD FILE . / BY ORDER TRUE COPY / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD