TMI Blog2022 (7) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... lack of enquiry on the part of the AO while allowing the claim of the assessee. Therefore, the assessment order cannot be termed as erroneous . There is no material on record indicating that the appellant had not satisfied the conditions laid down under the provisions of the Act for claiming exemption u/s 54B - Therefore, the assessment order cannot be branded as erroneous and prejudicial to the interests of the revenue . CIT is not justified in exercising the power of revision u/s 263 of the Act and order passed u/s 263 by the ld. Pr.CIT is hereby set-aside. Accordingly, the grounds of appeal raised by the assessee stand allowed. - ITA No.200/PUN/2021 - - - Dated:- 30-6-2022 - Shri Inturi Rama Rao, Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member For the Assessee : Smt. Pooja Rander For the Revenue : Shri Sardar Singh Meena ORDER PER INTURI RAMA RAO, A M: This is an appeal filed by the assessee directed against the order of ld. Pr. Commissioner of Income Tax- 4, Pune [ the Pr.CIT ] dated 31.03.2021 passed u/s 263 of the Income Tax Act, 1961 for the assessment year 2016-17. 2. The appellant raised the following grounds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with all consequential reliefs. 6. The learned Pr.CIT has failed to appreciate that since the appellant has converted his agriculture land to stock in trade on 16/11/2011, the amended provisions of Section 2[14][iii][b][III] of the I.T. Act 1961 were inapplicable and the impugned land was an agriculture land not amounting to Capital asset giving rise to any taxable Capital gains as on the date of conversion. In the circumstances it may please be held that the appellant had rightly claimed the deduction u/s 54B of the I.T. Act 1961 with all consequential reliefs. 7. The learned Pr.CIT has failed to appreciate that in view of provisions of Section 45(2] of the I.T. Act 1961, the capital gains on sale of impugned agriculture land introduced by the appellant as stock in trade of his business had become chargeable to income tax during previous year relevant to A.Y.2014-15 and hence in view of the amended provision of Section 54B w.e.f. 01/04/2013 the Capital Gains were rightly claimed as exempt u/s 54B of the I.T. Act 1961 and the same may please be allowed to the appellant assessee with all the consequential reliefs. 8. Since the learned Assessing Officer after conducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t situated within the areas of 8 kilometres from the end of the municipal limits of Pune. It was submitted that the assessment order cannot be termed as erroneous as the Assessing Officer had allowed the claim of deduction u/s 54B of the Act after due verification of the claim. The assessment order cannot be termed as prejudicial to the interest of the revenue as the order was passed in accordance with law. It is further contended that there is no material on record to show that the assessment order passed is erroneous. However, the ld. Pr.CIT on consideration of these submissions made by the assessee held that the Assessing Officer had failed to examine the claim for deduction u/s 54B without verification as to the date of transfer of original asset and the nature of purchase of land etc. and, therefore held that the assessment order passed is erroneous and prejudicial to the interests of the revenue. Accordingly, the ld. Pr.CIT set aside the assessment with a direction to the Assessing Officer to re-do the same after due verification. 5. Being aggrieved, the appellant is in the present appeal before us. 6. The ld. AR for the assessee submits that the issue of eligibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submitted that the lands purchased were immediately used for agricultural purposes. The Assessing Officer allowed the claim on examination of the above details of the claim took a plausible view and, therefore, the order of revision cannot be maintained. 8. On the other hand, ld. CIT-DR placed reliance on the order of the ld. Pr.CIT. 9. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the validity of the revision exercised by the ld. Pr.CIT u/s 263 of the Act in respect of claim for deduction u/s 54B allowed by the Assessing Officer. The Parliament had conferred the power of revision on the Commissioner of Income Tax u/s 263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open. In Gabriel India Ltd.'s case (supra), law on this aspect was discussed in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. . . . There must be some prima facie material on re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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