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TMI Blog2022 (5) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... ing jurisdiction u/s 263 of the Act, 1961. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has grievously erred in violating the principles of natural justice by not the mentioning the grounds for initiating action u/s 263 of Income Tax Act, 1961 in the show cause notice issued. AS such the order passed/s 263 is void ab-initio. The action of the ld. CIT was wholly unreasonable, uncalled for the bad in law. 4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s 263 is merely 'change in opinion'. The order u/s 143(3) of the Income Tax Act passed by the Ld AO does not in any way represent erroneous order. The action of the Ld. Pr. CIT was wholly unreasonable, uncalled for and bad in law. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has grievously erred in assuming that the assessing office had not verified (i) the capital gain disclosed by the assessee on sale of properties and (ii) exemption claimed u/s 54B of the Act thereof during the course of assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as sold as per Sale Deed dated 24.11.2014 for consideration of Rs.1,13,50,000/-. Against this sale consideration, the assessee claimed cost of acquisition without indexation of Rs.77,27,400/- and cost of improved without indexation of Rs.36,15,171/- respectively. The assessee has shown Short Term Capital Gains (STCG for short) of Rs.7,429/- [1,13,500,00 - (77,27,400 + 36,15,171)]. The Ld. PCIT further recorded that on perusal of Form No. 7 & 12 issued by Local Authority in respect of agricultural activities in Block No.107/A, Simada, (Puna) Surat City, the name of assessee is not appearing in the list who were carrying out agricultural activity. The Ld. PCIT further recorded that for AY 2013-14, assessee has not shown any agricultural income in his return of income. However, for AY 2014-15, assessee has shown agricultural income of Rs.50,681/- only. The Ld. PCIT after referring provision of section 54B held that as per the aforesaid provision, agricultural land which are sold or purchased should have been used for agricultural activities for two years immediately preceding the date on which transfer took place. Prima facie, it is apparent from the record that at-least two years ago ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and the learned Commissioner of Income-tax -Departmental representative (CIT-DR) for the revenue. The ld. AR for the assessee submits that during the scrutiny assessment the assessing officer examined all the issues raised by ld PCIT. The Assessing Officer vide his notice dated 10/11/2017 and 29/11/2017 required details of deduction under Section 54B, details of property purchased. The Assessing Officer also enquired about the agriculture activities carried out on the land sold by assessee for two years prior to date of transfer and evidence/proof about the new asset acquired and its use for agriculture purposes alongwith other requisite details. The assessee vide his reply dated 21/11/2017 and 8th December, 2017 furnished necessary information and relevant evidence in the form of 7/12 extract in respect of land sold by assessee as well as new land purchased by the assessee. The Assessing Officer vide his notice dated 13/11/2017 also made necessary enquiry about the sale of other property with all relevant evidence. The assessee furnished complete details including the details with regard to flat in Life Style building. The Assessing officer after examining the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of notice u/s 142(1) with required details - submission with copies of Form- 7/12 of sold and purchase agriculture lands, * Reply filed on 13.12.2017 in respect of notice u/s 142(1) along with required details - submission contained copies of purchased deeds of sold agriculture lands -pages 379 to 399, Assessment order u/s 143(3) dated 22.12.2017. 6. On the other hand, the ld CIT-DR for the revenue supported the order of ld PCIT. The ld CIT-Dr submits that the assessment order is silent about the investigation or enquiry conducted by Assessing Officer. The ld. CIDT-Dr submits that he supports the order of ld. PCIT and pray to dismiss the appeal of assessee. 7. We have considered the rival submissions of both the parties and have gone through the order of Ld. PCIT impugned before us. Before adverting to the facts of the present case, we may refer certain leading case on the scope of revisionary jurisdiction of ld. PCIT. The Supreme Court in celebrated/ leading case of Malabar Industrial Co. Ltd. v. CIT [2000] 234 ITR 832 (SC), held that the prerequisite for the exercise of jurisdiction by the Commissioner suo-motu is that the order of the Income-tax Officer is erroneous in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z., (i) the order is erroneous; and (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. One finds that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to course and practice of Court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. The Hon'ble High Court also held that from the definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an assessing office acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in under haste. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo-motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objectives were available from the records called for and examined by such authority. The decision of the ITO could not be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied to us). 12. Now adverting to the facts of the present case, there is no dispute that there is no reference about various enquiries or investigations carried out by Assessing Officer while passing the assessment order on 22/12/2017. Before us, the learned AR of the assessee vehemently submitted that during assessment, the Assessing officer made detailed enquiries and accepted the claim of assessee on exemption under Section 54B as well as short term capital gain of Rs.7429/-.We find that during the assessment proceedings, the Assessing Officer issued various notices for seeking information and evidence with regard to the claim of exemption under Section 54B as evident from the show cause notice dated 10/11/2017 and 13/11/2017 and 29/11/2017. The assessee furnished his reply and also filed evidence that agriculture land sold by the assessee was used for agriculture activities as evident from extract of 7/12. Thus, the issue was examined by Assessing Officer and on his satisfaction, no addition was made. So far as other issue regarding sale and purchase of other properties i.e. flat in Life Style building, the Assessing Officer vide his notice dated 13/11/2017 required necessary ..... 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