TMI Blog2022 (3) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... aim for sale of wheat paddy - The assessee also furnished an affidavit from the Sarpanch of the village, before the A.O. in support of the above contention, the contents of the said affidavit were duly verified by Sarpanch of the Village Tajpur, District Ludhiana Therefore it cannot be said that the A.O. had not applied his mind or had not asked the assessee about the agricultural income declared. A.O. framed the assessment after making the proper enquiry and applying his mind. In our opinion, when the assessment is framed after making the inquiries and by considering the relevant details relating to the issue on which the case was selected for scrutiny then it cannot be said that the assessment so framed was erroneous or prejudicial to the interest of the Revenue. CIT(A) exercised his jurisdiction under section 263 of the Act on the issue which was considered in depth by the A.O. while framing the assessment order, therefore the impugned order passed by the Ld. CIT(A) has no legs to stand, as the assessment order was passed by the A.O. under section 143(3) of the Act after due verification and application of mind on the issue relating to the agricultural income shown by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only grievance of the assessee relates to the jurisdiction assumed by the Ld. PCIT under section 263 of the Income Tax Act, 1961 (hereinafter referred to as Act ). 4. Facts of the case in brief are that the assessee e-filed his return of income on 05/11/2015 declaring an income of ₹ 73,860/- Agricultural income of ₹ 22,10,000/-, thereafter the case was fixed for scrutiny. The A.O. mentioned that the necessary details as requisitioned vide questionnaire and order sheet entry were filed and placed on record which were gone through, the information / documents were produced which were examined and verified. The A.O. accepted the income and agricultural income disclosed in the return of income by the assessee. Thereafter, the Ld. PCIT exercised his jurisdiction under section 263 of the Act and issued the notice through ITBA for compliance. 4.1. The Ld. PCIT observed that the assessment record revealed that the assessment was completed under section 143(3) of the Act on 14/07/2017 which was found to have deformities as it was made without making proper and in depth enquiries. He further observed that the assessee was asked to furnish the copy of Jamabandi of agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the view that the assessee had nothing to say in the above matter and it was held that the A.O. passed cryptic and routine order without application of mind, rendering the assessment erroneous and prejudicial to the interest of the revenue. The reliance was placed on the following case laws: Mahalakshmi Liquor Promoters (P) Ltd. Vs. CIT (2013) 29 taxmann.com 70 Dr. Rabindra Kumar Singh Vs. CIT(Central), Patna [2011] 131 ITD 39 (Ranchi) Rajalakshmi Mill Ltd. Vs. ITO, Coimbatore (2009) 31 SOT 353 (Chennai)(SB) Ambika Agro Suppliers Vs. ITO, Jalgaon [ 2005] 95 ITD 326 (Pune) Rameshchandra Maleram Varma Vs. DCIT [2002] 121 Taxman 29 (Ahd.)(Mag.) Malabar Industrial Co. Ltd. Vs. CIT [2000] 109 Taxman 66 (SC) Deniel Merchants Pvt. Ltd. Vs. ITO (2017-TIOL-455-SC-IT) Subhlakshmi Vanijya Pvt. Ltd. Vs. CIT 155 ITD 171(Kol) Lakshmi Vilas Bank Vs. JCIT (2018-TIOL-2284-HC-MAD-IT) PCIT Vs. Shri Braham Dev Gupta (2018-TIOL-1547-HC-DEL-IT) 5. Now the assessee is in appeal. 6. The Ld. Counsel for the assessee submitted that the assessee is regularly filing his return of income and showing the agricultural income, in the subsequent years also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernal audit is 23/07/2018 and the show cause notice under section 263 was issued on 11/03/2020 when the limitation time for issuing the notice under section 263 of the Act was going to expire. It was further stated that in response to the show cause notice, the reply was filed by the assessee wherein it was explained to the Ld. PCIT that the evidence of the land holding taken on lease had duly been filed before the A.O. It was also stated that net income of the assessee per acre at ₹ 52,000/- was duly explained, which had been accepted by the A.O. during the original assessment proceedings. 6.3. Ld. Counsel for the assessee submitted that the proceedings in the present case were initiated under section 263 of the Act on the basis of audit objection as raised by the audit wing of the department so there was no independent application of mind by the Ld. PCIT and the proceedings were initiated merely on the basis of information received from the audit wing of the department which was clear from the facts that the explanation filed by the assessee in reply to the show cause notice had not been rebutted or considered anywhere in the order passed by the Ld. PCIT under section 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h agriculture income earned by the assessee. e) Similar agriculture income earned in the earlier years also. Reply 3 (Page34) a) The affidavit duly attested and verified by Sarpanch certifying the agriculture land measuring 60 acres has been taken on theka by the assessee 6.5. It was contended that from the above reply it was clear that the assessee had duly filed detailed explanation which clearly shows that the A.O. had duly applied his mind at the time of determining the assessment under section 143(3) of the Act and there was an office note given by the A.O. at the time of passing the assessment order. Therefore, the whole contention of the Ld. PCIT that there was no application of mind by the A.O. falls flat. It was contended that when there was due application of mind, evidenced from the assessment order or from the various replies furnished during the course of assessment proceedings then no action under section 263 was required to be taken. Reliance was placed on the following case laws ; Malabar Industries Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC)] CIT Vs. Deepak Mittal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . PCIT was justified in holding that the assessment order passed by the A.O. was erroneous and prejudicial to the interest of the revenue. He strongly supported the impugned order passed by the Ld. PCIT and reiterated the observations made in the said order. 7.1. In his rejoinder the Ld. Counsel for the Assessee submitted that the assessee was showing agricultural income in the preceding as well as succeeding years which had been accepted by the department and even an Affidavit of the Sarpanch of the village was furnished in support of the claims that the assessee was owing 41 acres of agricultural land in village Tajpur and also used to take 60 acres of agricultural land on lease (Theka) from the said village and that the assessee was mostly cultivating cash crop on lease hold land, like potato, fodder, makki which were sold in the village( the said affidavit was duly verified by the Sarpanch, Gram Panchayat, Tajpur copy of which is placed at page no. 31 of the assessee s compilation). 8. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is not in dispute that the case of the assessee was selected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ganti [2020] 195 DTR(Mad) 428 (supra) held as under: The reason for selecting the case for limited scrutiny through CASS was to consider two issues namely(i) substantial increase in capital in a year, and (ii) the sale consideration of the property in the IT return was less than the sale consideration of the property reported in AIT. These issues were considered by the A.O. and after p0erusal of documents verification of the IT returns of the assessee and making enquiries with the limited company where the assessee held shares, the A.O. came to the conclusion. Thus, both the issues, which were the basis for exercise of the powers under s. 263, were, in fact, the issues, which were considered by the A.O. in the limited scrutiny culminating in the order of assessment under s. 143(3). The factual matrix was appreciated by the Tribunal to hold that the Principal CIT could not have invoked the revisionary jurisdiction under s. 263 mainly on the ground that substantial increase in capital investment reflected by the assessee in his balance sheet as compared to the preceding year. The Tribunal further pointed out that these issues were raised by the A.O. in the scrutiny assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come out. In the present case also the Ld. CIT(A) exercised his jurisdiction under section 263 of the Act on the issue which was considered in depth by the A.O. while framing the assessment order, therefore the impugned order passed by the Ld. CIT(A) has no legs to stand, as the assessment order was passed by the A.O. under section 143(3) of the Act after due verification and application of mind on the issue relating to the agricultural income shown by the assessee. On the basis of the same agricultural income the Ld. Pr. CIT considered the assessment order as erroneous and prejudicial to the interest Revenue. 9. In the present case, it is claimed that show cause notice was issued by the Ld. PCIT on the basis of the audit objection copy of which is placed at page no. 38 to 39 of the assessee s paper book. 9.1 On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT vs. Sohana Woolen Mills (supra) held as under: A reference to the provisions of s. 263 shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the AO was erroneous and prejudicial to the interest of Revenue. Mere audit objection and merely because a di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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