Sarita Gupta v. Pr. CIT, Ghaziabad [ITA No.1174/Del/2022] (ITAT Delhi)
The assessee, a resident individual, sold an immovable property for INR 62,06,000/- during the Assessment Year 2012-13. The Assessing Officer reopened the assessment under section 147 of the Act. The assessee filed her return of income, declaring income of INR 6,42,470/-, which was the income declared in the original return of income.
The Assessing Officer asked the assessee to provide details of the properties sold and the capital gain. The assessee provided all the information, and it was found that the property was jointly owned by the assessee and another co-owner, purchased for INR 20 lakhs, with the assessee’s share of INR 10 lakhs. The property was sold for INR 62,06,000/-, with the assessee’s share being INR 31,03,000/-. After reducing the acquisition cost and indexation benefit, the long-term capital gain was calculated.
The assessee’s income from the sale of property totaled to INR 14,59,324/-. She invested the entire capital gain in purchasing new residential property, claiming exemption under section 54 of the Act. The Assessing Officer accepted her return of income and completed the assessment.
The learned PCIT examined the assessment record after completion and found that the capital gain amount was not deposited in the capital gain account scheme during the interim period until its utilization in the purchase/construction of new property. The Assessing Officer did not consider these facts, leading the PCIT to believe the assessment order is erroneous and prejudicial to the interest of Revenue.
A show-cause notice under section 268 of the Act was issued, urging the assessee to show-cause why the order should not be declared as erroneous and set aside the assessment order with a direction to disallow the deduction claimed under section 54 of the Act, as the assessee has failed to deposit the capital gain amount in capital gain account scheme.
The Assessing Officer had thoroughly examined the issue of sale of immovable property and the resulting capital gain. The Assessing officer had stated that the assessee’s counsel had provided written responses, sale deeds, copies of property purchases, and computations of capital gain. The assessing officer had also called for the assessee to provide details of exemption claimed under section 54 with supporting evidences. The order-sheet entries in the assessment record showed that the Assessing Officer had duly examined the capital gain from the sale of property and the assessee’s claim of deduction under section 54 of the Act.
The showcause notice issued under section 263 of the Act and the order passed under the provision clearly revealed that the assessee had provided supporting evidence. The revisionary authority had not doubted the amount of capital gain arising from the assessee’s investment in a residential house within the time limit prescribed under section 54(1) of the Act. However, the authority had treated the assessment order as erroneous and prejudicial to the interest of Revenue.
The PCIT has adopted a hyper-technical approach, and once the basic conditions of section 54(1) are satisfied, the assessee remains entitled to claim the deduction under section 54 of the Act. There is no prejudice to the Revenue as the assessee is entitled to deduction under section 54(1) of the Act.
The Court ruled that the power to revise the assessment order under section 263 of the Act is invalid, thus quashing the order and restoring the assessment order.
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