TMI Blog2018 (7) TMI 1720X X X X Extracts X X X X X X X X Extracts X X X X ..... e hold, in principle, that the ld. CIT was not justified in not approving the stand of the Assessing Officer that income from growing of mushroom was agricultural income. Impugned order is set aside pro tanto. Adverting to the facts of the instant case, as is also palpable from the impugned order, that it is not the case of the assessee that the CIT did not give opportunity of hearing in this regard. Thus, no fault can be found with the CIT in directing the AO to verify the quantum of the income from the growing of mushroom. We, therefore, approve the view of the ld. CIT in so far as the second aspect is concerned, namely, the Assessing Officer failed to make proper verification of the quantum of income arising from growing of mushroom, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial to the interest of the Revenue on the ground that the Assessing Officer accepted, without any application of mind, the assessee s claim of exempt income of ₹ 15,12,47,000/-, being, agricultural income which was actually generated from growing mushroom. After thoroughly discussing the point, the ld. CIT set aside the assessment order and directed the Assessing Officer to verify the assessee s claim of production of mushroom resulting into agricultural income and also to: verify the quantum of actual profit earned. The assessee is aggrieved against this order. 3. We have heard both the sides perused the relevant material on record. It is overt that the ld. CIT held the assessment order to be erroneous and prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the Revenue, unless the view taken by the ITO is unsustainable in law. It goes without saying that debatable issues are outside the ken of section 263. An assessment order must be necessarily, inter alia, erroneous so as to be eligible for revision u/s 263. If a point is debatable and the two views are prevalent on a particular point and the Assessing Officer adopts one view, whereas the CIT considers the other view to be more plausible, it cannot be said that the assessment order is erroneous so as to clothe the CIT with the power to revise the assessment order. Since there was a cleavage of judicial opinion on the point as to whether or not income from growing of mushoroom is agricultural, which issue has now been settled i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263 states that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue if, in the opinion of the Principal CIT or Commissioner: the order is passed without making inquiries or verification which should have been made. Clause (b) further provides that an order is deemed to be covered within the purview of section 263 if : the order is passed allowing any relief without inquiring into the claim . Explanation 2 has been inserted by the Finance Act, 2015 w.e.f. 01.06.2015 and the same is applicable to the facts of the instant case. We are confronted with a situation in which there is no shred of evidence that the AO inquired into the aspects of the quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find any reason to restrict the jurisdiction of the CIT only to the extent of issues taken up in the notice. The raison d etre of our such conclusion is the language used in section 263(1) of the Act, which uses the expression after giving the assessee an opportunity of being heard which is different from after the service of notice. If an opportunity has been given during the course of revisionary proceedings, no challenge can be laid to the power of the CIT in considering the assessment order as erroneous and prejudicial to the interest of the Revenue on a count which is not the subject matter of notice u/s 263. The Hon'ble Supreme Court in CIT vs. Electro House (1971) 82 ITR 824 (SC) has held that it is not necessary for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pprove the view of the ld. CIT in so far as the second aspect is concerned, namely, the Assessing Officer failed to make proper verification of the quantum of income arising from growing of mushroom, etc., claimed by the assessee as exempt agricultural income. The impugned order is upheld to this extent. 9. To sum up, we hold that the ld. CIT was not justified in invoking section 263 in holding that income from growing of mushroom is an agricultural income. However, no fault can be found with the order of the ld. CIT in directing the Assessing Officer to verify the quantum of income from growing of mushroom. 10. In the result, the appeal is partly allowed. The decision was pronounced in the open court on 26th July, 2018. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
