IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘E’ NEW DELHI

Before Sh. Bhavnesh Saini, Judicial Member
Dr. B. R. R. Kumar, Accountant Member

ITA No. 1731/Del/2020: Asstt. Year: 2015-16

Manoj Singhal, Vs Pr. CIT-5,
H. No. 9-10, Alipur Road, Civil Lines, New Delhi
New Delhi-110032
(RESPONDENT)
(APPELLANTT
PAN No. AOZPS8161B

Assessee by : Sh. Amit Goel, Adv.
Revenue by : Ms. Pramita Biswas, CIT DR

Date of Hearing: 27.05.2021 Date of Pronouncement: 28.05.2021

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by the assessee against
the order of the ld. PCIT-5 Delhi dated 23.03.2020.

2. Following grounds have been raised by the assessee:

“1. On the facts and circumstances of case and in law,
the Ld. Principal Commissioner of Income Tax - 5, New
Delhi (hereinafter referred to as the Ld. PCIT) erred in
initiating proceedings under section 263 of come Tax
Act, 1961 (Act) by wrongly assuming jurisdiction
under section 263 of the Act and hence, the order
passed by the PCIT under section 263 of Act is without
jurisdiction, bad in law and void ab-initio.

2. On the facts and circumstances of case and in law,
the Ld. PCIT erred in setting aside the assessment and
has also erred in holding that the original assessment
order passed by the Assessing Officer under section
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Manoj Singhal

143(3) of Act was erroneous and prejudicial to the
interest of the revenue.

3. On the facts and circumstances of case and in law,
the directions issued by the Ld. PCIT under section
263 of Act are erroneous, vague, ambiguous and
untenable and, therefore the order u/s 263 of the Act
passed by the Ld. PCIT is liable to be quashed.

4. On the facts and circumstances of case and in law,
the order passed under section 263 of the Act by the
Ld. PCIT is bad in law as the same has been passed
without application of mind and deserves to be
quashed.

5. On the facts and circumstances of case and in law,
the Ld. PCIT erred in invoking the provisions of
section 263 of the Act, and thereby directing the
Assessing Officer to make the de-novo assessment.

6. On the facts and circumstances of case and in law,
the order passed by Ld. PCIT in arbitrary and against
the principle of natural justice.”

3. All the grounds of appeal, in substance, relate to the
contention that the proceeding initiated and order passed u/s
263 by ld. PCIT is liable to be quashed as it is bad in law,
without jurisdiction and against the principle of natural justice.

4. The facts of the case are that the return of income for the
year consideration was filed on 27.09.2015 declaring income of
(-Rs.3,30,61,960/-). The case of the appellant was selected for
limited scrutiny. The issues of limited scrutiny were:-

I) Purchase of property
II) Deduction claimed under the head-capital gain

5. The ld. PCIT issued notice dated 16.03.2020 u/s 263 of the
Act asking the assessee to furnish reply by 20.03.2020. The
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Manoj Singhal

said notice is enclosed in the paper book at page no. 2 to 4.

Para 2 to 6 of this notice is reproduced as under:

“2. Perusal of record revealed that The assessment of Mr. Manoj
Singhal for the assessment year 2015- 16 was completed in
November, 2017 at income of Rs. 3,30,61,960/- u/s 143(3) of
the Income Tax Act. On perusal of the record, it is found that
the assessee has claimed deduction of Rs. 6,12,10,100/- u/s
54F of the Act. However the assessee has sold equity shares of
Rs. 9,74,40,000/- and has gained LTCG amounting Rs.
9,72,95,775/- after indexation. The assessee has invested Rs.
6,12,10,100/- (including incident expenses) into a new
residential house and has claimed deduction u/s 54F of this
whole amount. However, as per section 54F of the Income Tax
Act, 1961 assessee is eligible for deduction to the extent of
proportion to amount of Capital Gain invested in new residential
house. The eligible deduction in the case of the assessee u/s
54F is calculated as under:

“Deduction u/s 54F

= Cost of the new house X Capital Gain Net Consideration = Rs.
6,12,10,100/- X Rs. 9,72,95,775/- Rs. 9,74,40,000/- = Rs.
6,11,19,500/- Thus the assessee is eligible for deduction of Rs.
6,11,19,500/- u/s 54F of the Income Tax Act, 1961 and not of
Rs. 6,12,10,100/-. The AO overlooked this issue and this
resulted in under assessment of Rs. 90,600/- (61210100-
61119500).

3. It is further observed from the computation of Income, that
the assessee is receiving rental income from as many as seven
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Manoj Singhal

properties. But the assessee has not mentioned the full address

and description of these properties. Therefore, it cannot be

ascertained from the assessment record, whether the assessee

satisfies the conditions for claiming deduction u/s 54F of the

Act, or not, particularly, when the receipts on account of sale

proceeds of shares are shown from Kolkata based company M/s

Shreyan Vyapar Pvt. Ltd. for shares of M/s SMS IT Solutions

Pvt. Ltd., again a Kolkata based company doing no business.

Further, no evidence has been placed on record to substantiate

the market value of the said investment. In view of these facts,

the assessee is not entitled for deduction u/s 54F of the Act.

The issue involves a huge amount of Capital Gain and the

revenue loss may be Rs. 1,38,70,209/- or more. This issue has

not been examined to determine correctness of the claim of the

assessee regarding deduction u/s 54F of the Act and

justification of investment in purchase of new specified asset.

4. In view of the above, and there is no plausible explanation
by the assessee, and besides, proper inquiry has also not been
done.

5. From analysis of the assessment records, it is obvious that
the assessment order passed by the then assessing officer is
erroneous and prejudicial to the interest of Revenue.”
5 ITA No. 1731/Del/2020
6. Heard the arguments of both the parties. Manoj Singhal

7. The primary contention of the ld. AR is that the case of the
assessee has been selected for limited scrutiny on two grounds
viz. verification of Purchase of property and verification of
deduction claimed under the head capital gain and expanding
the scope of scrutiny by the way of order u/s 263 is legally not
valid.

8. On the other hand, the ld. DR argued that the ld. PCIT has
got wider powers to examine the entire case to plug the
loopholes and leakage of revenue.

9. We have gone through the notice issued by the revenue
dated 29.07.2016 wherein the AO mentioned that two issues
have been identified for examination which are verification i.e.
purchase of property and verification of deduction claimed
under the head capital gain.

10. From the record, we find that the complete details
pertaining to both the issues have been examined by the AO
and the replies of the assessee dated 22.09.2017, 16.10.2017,
30.11.2017 along with the details of sale of shares,
confirmation of the parties, bank statements, purchase of
property, registration document and deduction u/s 54F claimed.
The entire details of the said two transactions which are the
subject matter of scrutiny have been duly provided and
examined by the AO and duly accepted after examination and
verification.
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Manoj Singhal

11. On going through the details, we find that the deduction

claimed u/s 54F was Rs.6,12,10,100/- whereas the deduction

eligible was Rs.6,11,19,500/-. Thus, there is a computational

difference of Rs.90,600/- in the claim of deduction u/s 54F

which could have been rectified u/s.154. The provisions of

section 263 need not be invoked for computational error for

which other provisions of the Act are fairly sufficient. The

directions of the ld. PCIT which are beyond the selection criteria

of scope of scrutiny for the instant year cannot be held to be

legally valid.

12. In the result, the appeal of the assessee is allowed.
Order Pronounced in the Open Court on 28/05/2021.

Sd/- Sd/-

(Bhavnesh Saini) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member

Dated: 28/05/2021 ASSISTANT REGISTRAR

*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT