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| The Tax Publishers2020 TaxPub(DT) 3669 (Pune-Trib) INCOME TAX ACT, 1961
Section 263
Where assessee failed to demonstrate from the order of AO nor could provide any evidence that independent enquiry and verifications were conducted by AO on the nexus between property acquired and loan taken for the said purpose and AO had not at all gone into the area of examination of facts concerning the said nexus which is the subject matter of order under section 263 by CIT and when no enquiry was conducted, therefore, order of assessment was bound to be erroneous in so far as prejudicial to the interest of the revenue.
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Revision under section 263 - Reopening of assessment - Nexus between the particular property acquired and the loan amount obtained for such purpose -
Assessee had taken loan from the bank for making investment in property and interest paid on such loan was claimed as cost of improvement. Subsequently, assessment proceedings for the assessee were re-opened by the issuance of notice under section 148 and assessee filed revised return of income declaring total income. AO finalized the assessment under section 143(3) read with section 147 accepting the returned income. During the course of the re-assessment proceedings, it was contended that interest was not claimed as revenue expenditure and was capitalized in the cost of assets. AO accepted the said contention and accepted the returned income while finalizing the assessment proceedings under section 143(3) read with section 147. CIT on perusal of the materials available on records, noticed that no tangible material was available to prove the nexus between the particular property acquired and loan amount obtained for such purpose. Therefore, PCIT was of the opinion that the assessment order passed under section 143(3) read with section 147 was erroneous in so far as it is prejudicial to the interest of the revenue. Held: Assessee failed to demonstrate the nexus between the property acquired and loan taken for the said purpose nor could provide any evidence that independent enquiry and verifications were conducted by AO on this issue. AO had not at all gone into the area of examination of facts concerning the said nexus which is subject matter of order under section 263 by CIT. When no enquiry was conducted, when no reasons on facts has been placed on record, the order of assessment was bound to be erroneous in so far as prejudicial to the interest of the revenue. In the case of Rampyari Devi Sarogi vs. CIT [(1968) 67 ITR 84 (SC) : 1968 TaxPub(DT) 0135 (SC)] it was held that where AO accepted a particular contention/issue without any enquiry or evidence whatsoever, the order was erroneous and prejudicial to the interest of the Revenue. Therefore, order passed under section 263 by CIT was upheld.
Followed:Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC) Tara Devi Aggarwal v. CIT (1973) 88 ITR 323 (SC) : 1973 TaxPub(DT) 0389 (SC) Rampyari Devi Saraogi v. CIT & Ors. (1968) 67 ITR 84 (SC) : 1968 TaxPub(DT) 0135 (SC)Relied:CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) : 1993 TaxPub(DT) 1357 (Bom-HC) S. Balan Alias Shanmugam Balkrishnan Chettiar. v. DCIT (2009) 120 ITD 469 (Pune-Trib) : 2009 TaxPub(DT) 0299 (Pune-Trib)
REFERRED :
FAVOUR : Against the assessee
A.Y. : 2011-12
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