IN THE ITAT, KOLKATA BENCH
P.M. JAGTAP, V.P. & A.T. VARKEY, J.M.
Krishna Murari Poddar v. Pr. CIT
I.T.A. No. 332/Kol/2020
28 October, 2020
In favour of assessee.
Appellant by: S.K. Tulsiyan, Advocate
Respondents by: Imokaba Jamir, Commissioner
A.T. Varkey, J.M.
This is an appeal preferred by the assessee against the order of learned Principal Commissioner-Kolkata, dated 11-3-2020 for assessment year 2015-16 passed under section 263 of the Income Tax Act, 1961 (in short the 'Act'). The assessee has challenged the jurisdiction of the learned Principal Commissioner to invoke jurisdiction under section 263 of the Act.
2. Brief facts of the case is that the learned Principal Commissioner took note of the original scrutiny assessment order passed under section 143(3) of the Act against the assessee for assessment year 2015-16 on 23-8-2017 and was of the opinion that the assessment framed by the assessing officer was erroneous, prejudicial in the interest of the revenue. According to him, the case of the assessee was selected for scrutiny due to 'increase in capital' of the assessee in this assessment year. According to learned Principal Commissioner from the explanation given by the assessee to assessing officer, he could discern that was on account of receipt of gift of residential flat at Apartment no. A0703, 7th Floor, Project RMZ Latitude, Bangalore. In this respect, further details was that assessee's daughter Ms. Ankita Kejriwal by gift, dated 29-8-2014 (which has been notarized as gift declaration on 20-1-2015) had gifted the residential flat to assessee; which action was followed subsequently on 16-3-2015 by a supplementary agreement wherein the assessee was nominated as purchaser in her place (donor Ms. Ankita Kejriwal) wherein she was the confirming party. According to learned Principal Commissioner, gift deed which has not been registered with the respective Sub-Registrar office is void, since registration is mandatory as per section 17 of Registration Act, 1908 and section 123 of the Transfer of Property Act. Therefore, according to learned Principal Commissioner the assessment framed by the assessing officer was carried out without proper verification/examination of the issues stated above and since no addition was made in this regard, he issued show cause notice conveying his intention to exercise his revisional jurisdiction under section 263 of the Act. Pursuant to show cause notice, the assessee objected to the revisional proceedings and made it submission which have been incorporated from page nos. 3 to 4 of the impugned order. Not being satisfied with the explanation given by the assessee, the learned Principal Commissioner was of the opinion that the assessee has increased his capital during the year on account of receipt of gift of residential flat as stated above at Bangalore. According to learned Principal Commissioner as per section 17 of the Registration Act, 1908 and section 123 of the Transfer of Property Act, it was mandatory to register a gift deed at the respective Sub-Registrar office. According to learned Principal Commissioner, since the gift deed is not registered, transfer of immovable property cannot take place thereby renders the transfer void. The learned Principal Commissioner noted that the learned Authorised Representative for the assessee submitted before him that the donor being the assessee's daughter, the gift by relative/daughter is not covered under section 56(2)(vii) of the Act and any technical requirement of relevant Registration Act or Transfer of Property Act is tax neutral from the income tax point of view, however he did not agree. Even though it was brought to the notice of the learned Principal Commissioner that the flat has been registered in assessee's name on 14-9-2018 after completion of all formalities by the developer of the property, the learned Principal Commissioner after considering all the aforesaid facts was of the opinion that the assessing officer has accepted increase in capital without proper application of his mind, and since it is not mentioned in the assessment order that he had verified the source of increase in capital, according to learned Principal Commissioner, the assessing officer has not ascertained whether the daughter who has gifted the flat to the assessee has the capacity to purchase the flat or not. Therefore, he was of the opinion that the assessment order passed by the assessing officer was erroneous and prejudicial to the interest of the revenue and thereafter he took the aid of the explanation inserted in section 263 of the Act with effect from 1-6-2015 and held that the assessment Order, dated 23-8-2017 passed by the assessing officer was erroneous insofar as prejudicial to the interest of the revenue and thereafter he restored the assessment back to the file of assessing officer and directed him to make fresh assessment and to verify the issues discussed in his order afresh after giving proper opportunity of being heard to the assessee.