TMI Blog2021 (9) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... AO cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law - in the case under consideration, the view which has been taken by the AO is one of the courses permissible in law, which cannot be brushed aside by the Pr. CIT u/s 263 - we set aside the order of the Pr. CIT passed u/s 263 of the Act, and restore the order of the AO. Accordingly, the grounds raised by the assessee on this issue are allowed. - ITA No. 162/H/2021 - - - Dated:- 17-9-2021 - Shri Satbeer Singh Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri M.V. Prasad For the Revenue : Shri Balakrishna ORDER PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against Pr. CIT, Tirupati s order dated 05/03/2021 for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee, a Chartered Accountant by profession, filed his return of income for the AY 2017-18 admitting total income of ₹ 5,55,100/- and agricultural income of ₹ 5,50,000/-. Assessee derives income from house property, from business or profession and from other sources. The case was selected for scrutiny and statutory notices were issued to the assessee, against which, the assessee furnished the details as required by the AO. 2.1 On verification of the above information and the return of income, the AO noticed that the assessee has admitted agricultural income of Rs..28,00,000 for the FY 2015-16 relevant to the AY 2016-17 and ₹ 5,50,000/- for the FY 2016-17 relevant to the AY 2017-18. Thus, there was steep decrease in agricultural income shown in ITR for the AY 2017-18 when compared to the AY 2016-17 as against the CASS reason which reflected as Large agricultural income shown in ITR . However, the agricultural income details were verified and it was noticed that the large yield during the FY 2015-16 was because of receipts on sale of second cutting of Eucalyptus Plantation besides regular agricultural income derived and whereas for the FY 2016- 17, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made thereby making the said assessment order liable to be considered as erroneous in so far as it is prejudicial to the interests of revenue within the meaning and scope of section 263 of the Act. Accordingly, a details show cause notice u/s 263 on 19/01/2021 was issued to the assessee calling for his objections, if any, In response, the assessee filed his written submissions by e-mail dated 13/02/2021. 3.1 After considering the submissions of the assessee, the Pr.CIT set aside the assessment order with a direction to re-do the assessment de novo in accordance with law after making all necessary inquiries and verification in respect of the issues pointed out in his order and after affording a reasonable opportunity of being heard to the assessee, by observing as under: 26. it is unambiguously clear that the assessment order was passed without making enquiries or verification which should have been made with regard to the Issues which were mandated to be examined when the case was selected for complete scrutiny. As per the provisions of clause (a) of Explanation 2 to section 263(1) Inserted in the statute with effect from 01.06.2015 by the Finance Act, 2015, an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee could not produce any relevant material to substantiate the agricultural income before the Pr. CIT. In respect of cash deposits, he submitted that the assessee could not produce details before the Pr. CIT for the huge deposits made between ₹ 40 lakhs (₹ 15+25 lakhs) i.e. on two occasions on 12/11/2016 and 19/11/2016 in Andhra Pragathi Grameena Bank and SBH, which is during the demonetization period. He, therefore, submitted that Pr. CIT has rightly exercised his jurisdiction u/s 263 of the Act. 7. After hearing both the parties and perusing the material on record as well as the orders of authorities below, on careful examination of the assessment order, we observe from the order of Pr. CIT that the same issues which have already been examined by the AO while completing the assessment u/s 143(3) of the Act, dated 15/11/2019 raised objections. In respect of the agricultural income, we observe that the same has been decided by the coordinate bench in assessee s own case for AY 2016-17 in ITA no. 161/Hyd/2021 vide order dated 12/08/2021, a copy of which is filed on record, wherein the coordinate bench has observed as under: 6. We have heard the rival submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinstate the order of the Ld. AO. 7.1 In respect of cash deposits in the bank, the ld. AR of the assessee drew the bench attention to the paper book wherein the bank statements are filed to submit that this issue has already been examined by the AO after taking into consideration of copy of challans and satisfied to the fact that the assessee facilitated to the clients for rendering better services received amounts from clients to pay income tax challans on behalf them and said amounts were not utilized for any other purpose. Therefore, it cannot be said that the assessee s intention of the cash deposits into the bank was in a malafide nature to make black money into white during demonetization period. Once the AO has taken a view on the issue, on which two views are possible, the view which is taken by the AO, if Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law, as per the ratio laid down by the Hon ble Supreme Court in the case of Malabar Industries ltd. Vs. CIT, 2000 (243) ITR 83, wherein it has been held as under: The unsuccessful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment should not be set aside and ₹ 3,66,649 should not be assessed under the head income from other sources. After the appellant filed its reply the Commissioner, by order dated February 8/9, 1988, concluded that the said amount was unconnected with any agricultural operation activity and was liable to be taxed under the head income from other sources. Dissatisfied with the Order of the Commissioner, the appellant filed an appeal before the Income-tax Appellate Tribunal, which was dismissed on August 5, 1988. On the application of the appellant under Section 256(1) of the Act, the aforementioned questions were referred to the High Court of Kerala at Ernakulam. Mr. Roy Abaraham, learned counsel for the appellant, urged the very same two contentions which were argued before the High Court, namely, (i) that the exercise of jurisdiction by the Commissioner under Section 263(1) of the Act was not only unwarranted but also illegal; he contended that mere loss of tax could not be treated as prejudicial to the interests of the revenue and that only when the order of the Assessing Officer would affect the administration of the revenue that it could be treated as prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase prejudicial to the interests of the revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy Co. Vs. S.P. Jain and Another [31 ITR 872], the High Court of Karnataka in Commissioner of Income- tax, Mysore Vs. T. Narayana Pai [98 ITR 422], the High Court of Bombay in Commissioner of Income-tax Vs. Gabriel India Ltd. [203 ITR 108] and the High Court of Gujarat in Commissioner of Income-tax Vs. Smt. Minalben S. Parikh [215 ITR 81] treated loss of tax as prejudicial to the interests of the revenue. Mr. Abaraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company Vs. Commissioner of Income-tax [163 ITR 129] interpreting prejudicial to the interests of the revenue. The High Court held, In this context, it must be regarded as involving a conception of acts or orders which are sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts the conclusion that the order of the Income-tax Officer was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under Section 263(1) was justified. The second contention has to be rejected in view of the finding of fact recorded by the High Court. It was not shown at any stage of the proceedings, the amount in question was fixed or quantified as loss of agricultural income and admittedly it is not so found by the Tribunal. The further question whether it will be agricultural income within the meaning of Section 2(1A) of the Act as elucidated by this Court in Commissioner of Income-tax, West Bengal, Calcutta Vs. Raja Benoy Kumar Sahas Roy [32 ITR 466] does not arise for consideration. It is evident from the Order of the High Court that findings recorded by the Tribunal that the appellant stopped agricultural operation in November 1982 and the receipt under consideration did not relate to any agricultural operation carried on by the appellant, were not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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