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2015 (3) TMI 565 - ITAT MUMBAI

2015 (3) TMI 565 - ITAT MUMBAI - TMI - Revision u/s 263 - unaccounted income from agricultural land - Held that:- In this case the AO issued notice to the assessee under section 143(3) on 6.8.2009 and notice under section 142(1) notice on 27/7/2010. The assessee participated in the assessment proceedings. To various enquiries of the AO the assessee furnished information to the satisfaction of the AO specifically vide assessee’s counsel dated 27/7/2010. The assessee furnished full details of inco .....

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t is not taxable and treated as exempt from tax. For this view of the AO, CIT cannot find fault and he cannot impose his view on AO when the AO has taken one possible view. More so, when a transfer of land in similar area was considered, by Co-ordinate Bench of this Tribunal in the case of ITO vs. Amrutilal B. Shah [2013 (12) TMI 1102 - ITAT MUMBAI] wherein held that the definition of capital asset provided in section 2(14)(iii) is not met. There is no notification issued by the Central Governme .....

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within the meaning of section 2(14) of the Act. Regarding the onus related issues, we find that the same keep changing depending on the information furnished by the assessee and also gathered by the Revenue from time to time. Thus we annul the order passed by ld. CIT u/s. 263 - Decided in favor of assessee. - ITA NO.3647/Mum/2013 - Dated:- 4-3-2015 - Shri I.P. Bansal And Shri Chandra Poojari JJ For the Appellant : Shri K. Shivaram and Shri Rahul Hakani Fotr the Respondent : Mrs. Parminder Kaur O .....

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O in the assessment order passed by him on 19.11.2010. The assessee had received compensation for acquisition of right of user in land, for laying pipeline for transportation of petroleum, in the portion of the land belonging to the assessee . The end use however was clearly for non agricultural purposes. As per the judicial decision in this regard the compensation received cannot be assessed as agricultural income. As the impugned assessment order was erroneous and prejudicial to the interests .....

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weeds only). This shows that the land was not utilized for cultivation/agricultural purposes. As against these the assessee had produced four panchnamas signed by Talati of Pune dated 24/4/2007, wherein it was stated that the pipeline had been laid down in these areas. The number of trees, their age etc. were also given in these panchnama. However, it was observed by the CIT that this document did not bear the any seal or stamp of the authorities/Talati and the AO did not seem to have applied h .....

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essee had applied for compensation. It was seen from the panchnamas dated 24.4.2007, that the pipeline had been laid down. 3.2 Chronology of events taken from assessee s submission are as follows:- a) RGTIL issued notice dated 19.4.2005 to be replied within 21 days. b) Assessee did not reply c) Another notice was sent by RGTIL dated 2.5.2006 seeking documentary evidence for crops on the land, for the purpose of determining compensation. d) No reply was received from assessee, neither any documen .....

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but there is no official seal affixed to it. Talati is from Pune and not from Karjat, the land is located in Mandvone village which are in Karjat Taluka. h) Before the digging work for pipeline started or at any point of time, upon receiving the notice, the assessee had not lodged her claim of existence of specific trees on the lands. i) It was further observed by the CIT that after the work of pipeline is over, the assessee cannot make a panchnama stating that so many trees aged so many years .....

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eral receipts for having received compensation. 3.2.1 CIT also observed that the assessee did not produce the order passed by the competent authority determining the compensation to be paid for land and trees. 3.3 Further it was observed by the ld.CIT that the assessee had mentioned that she had received ₹ 8,69,812/- vide cheque No.001224 dated 27/10/2007 drawn on Bank of India as per Xerox copy of the cheque on record and another cheque of the same amount vide cheque No.001228 dated 27/10 .....

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land were produced by the assessee . Sale bills of the agricultural produce were also not produced. The panchnamas dated 24.4.2007 appeared to be self-serving and self-generated documents. The AO had not made any effort to check the genuineness of these documents submitted by the assessee. The AO should have verified the same from the Land Revenue Records of the Gram Panchayat of Mandvane Village, Karjat Taluka about the status or existence of cultivation, at any time, on these lands. The assess .....

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she had retained ownership of the land and the same lands were shown as assets in her returns. It was thus, contended by the assessee that there is no liability to pay capital gain tax, there being no transfer/conveyance of the land. 3.6 As per the provisions of section 2(47)(ii) and (iii) of the Act the extinguishment of right therein or the compulsory acquisition thereof under any law amounts to transfer of capital asset. 3.7 It was observed by the ld. CIT that in the case of the assessee the .....

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unicipal limits, by making independent enquiries. The assessee was directed to produce before documentary evidence which existed during the period when the trees were grown/existed and not the panchnamas prepared subsequent to the felling of the trees, in support of her claim of agricultural produce. The assessee was also directed to produce order of the competent authority determining the full and final compensation, with interest if any, before the AO along with particulars of the appeal filed .....

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us. 4. We have heard both the parties and perused the material on record. We have carefully considered the rival submissions in the light of material placed before us and also gone through all the judgements cited by the parties before us. First we take up the legal issue with reference to the jurisdiction of invoking the provisions of section 263 of the Act by the learned CIT. The scheme of the IT Act is to levy and collect tax in accordance with the provisions of the Act and this task is entr .....

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d erroneous has not been defined in the Income Tax Act. It has been however defined at page 562 in Black s Law Dictionary (seventh Edition) thus; erroneous, adj. Involving error, deviating from the law . The word error has been defined at the same page in the same dictionary thus: error No. 1 : A psychological state that does not conform to Objective reality; a brief that what is false is true or that what is true is false . 4.1 At page 649/650 in P. Ramanatha Aiyer s Law Lexicon Reprint 2002, t .....

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ent, an error may lay in the judgement, or in the conduct, but a fault lies in the will or intention. 4.2 At page 650 of the aforesaid Law Lexicon, the scope of Error, Mistake, Blunder, and Hallucination has been explained thus: An error is any deviation from the standard or course of right, truth, justice or accuracy, which is not intentional. A mistake is an error committed under a misapprehension of misconception of the nature of a case. An error may be from the absence of knowledge, a mistak .....

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It is extended in medical science to matters of sensation, whether there is no corresponding cause to produce it. In its ordinary use it denotes an unaccountable error in judgement or fact, especially in one remarkable otherwise for accurate information and right decision. It is exceptional error or mistake in those otherwise not likely to be deceived. 4.3. In order to ascertain whether an order sought to be revised under Section 263 is erroneous, it should be seen whether it suffers from any of .....

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4. Section 263 of the Income-tax Act seeks to remove the prejudice caused to the revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo moto proceedings either where the Assessing Officer takes a wrong decision without considering the materials available on record or he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warrant ed. The Commissioner will be well within his powers to regard an order .....

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rently in order but calls for further enquiry. He must discharge both the roles effectively. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The scheme of assessment has undergone radical changes in recent years. It deserves to be noted that the present assessment was made under Section 143(3) of the Income-tax Act. In other w .....

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utiny assessments. He should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is legitimately due from him, and on the other hand, he has a duty to protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put bl .....

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t to have bee n made and the genuineness of the claim ought to have been examined and not because there is anything wrong with his order if all the facts stated or claim mad e therein are assumed to be correct. The Commissioner may consider an order of the Assessing Officer to be erroneous not only when it contains some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereo-typed order which simply accept s what the assessee has stated in his return and f .....

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rovision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall the orders passed without applying the principles of natural justice or without application of mind. In our humble view, arbitrariness in decisionmaking would .....

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ction 263. Arbitrariness in decision-making causing prejudice to either party cannot therefore be allowed to stand and stare at the legal system. It is difficult to countenance such arbitrariness in the actions of the Assessing Officer. It is the duty of the Assessing Officer to adequately protect the interest of both the parties, namely, the assessee as well as the State. If he fails to discharge his duties fairly, his arbitrary actions culminating in erroneous orders can always be corrected ei .....

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relevant issue giving, howsoever briefly, his reasons therefor. In S.N. Mukherjee v. Union of India AIR 1990 SC 1984, it has been observed by the Hon'ble Supreme Court as follows: Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in .....

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our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has .....

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It is settled law that while making assessment on assessee, the ITO acts in a quasi- judicial capacity. An assessment order is amenable to appeal by the assessee and to revision by the Commissioner under Sections 263 and 264. Therefore, a reasoned order on a substantial issue is legally necessary. It was held that orders, which are subversive of the administration of revenue, must be regarded as erroneous and prejudicial to the interests of the revenue. If the Assessing Officers are allowed to m .....

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ial to the interests of both the parties, because even the assessee is deprived of the benefit of a positive finding in his favour, though he may have sufficiently established his case. 4.7 In view of the foregoing, it can safely be said that an order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the Revenue under Section 263 in the following cases: (i) The order sought to be revised contains error of reasoning or of law or of fact on the face of it. (ii) .....

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case. 5. In this case the AO issued notice to the assessee under section 143(3) on 6.8.2009 and notice under section 142(1) notice on 27/7/2010. The assessee participated in the assessment proceedings. To various enquiries of the AO the assessee furnished information to the satisfaction of the AO specifically vide assessee s counsel dated 27/7/2010. The assessee furnished full details of income derived at ₹ 53,23,339/- from agricultural land located at Mondvane Village and it was stated t .....

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mpose his view on AO when the AO has taken one possible view. More so, when a transfer of land in similar area was considered, by Co-ordinate Bench of this Tribunal in the case of ITO vs. Amrutilal B. Shah 22 ITR (Trib.) 668(Mum.), it was held as follows: 7. We have heard both the parties, perused the orders of the Revenue authorities and the papers filed before us. We find that it is not the case of the Revenue that the land in question is located within 8 kms from the municipal limits of Jamna .....

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