TMI Blog2022 (3) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... information and after detailed examination of the same. The Assessing Officer has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail - we quash the order passed by the ld PCIT under section 263 - Decided in favour of assessee. - ITA No.254/SRT/2018 - - - Dated:- 25-3-2022 - SHRI PAWAN SINGH, JM DR. A.L.SAINI, AM Assessee by : Shri P.M.Jagasheth, C.A Respondent by : Shri H.P.Meena CIT-DR O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: By way of this appeal, the assessee has challenged correctness of the order dated 21.03.2018, passed by the Learned Principal Commissioner of Income Tax, (ld.PCIT) under section 263 of the Income tax Act, 1961, in the matter of assessment under section 143(3) read with section 147 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s grievously erred in setting aside the assessment order framed u/s 143 r.w.s. 147 of the Act without pointing out as to how the order is erroneous and prejudicial to interest of revenue. 9. It is therefore prayed that the above proposed proceedings may please be revoked as learned members of the tribunal may deem it proper. 2. Although, this appeal filed by the Assessee for Assessment Year 2012-13, contains multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Assessee. Most of the grounds raised by the Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievance of the Assessee. The solitary grievance of the assessee is that order passed by the assessing officer under section 143(3) r.w.s. 147 of the Act, is neither erroneous nor prejudicial to the interest of Revenue, hence jurisdiction exercised by the ld.PCIT is bad in law. 3. Appeal arises this way. The assessee, before us is an individual and has filed its return of income for the assessment year 2012-13 on 31.03.2013, declaring total income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y dropping of proceedings u/s 147 of the Act was without making proper enquiries or verification, which should have been made on this issue. Therefore, ld PCIT noted that reassessment order passed by the assessing officer is erroneous and prejudicial to the interest of revenue as per Explanation 2(a) to section 263 of the Act. Therefore, ld PCIT issued a show -cause notice dated 12.02.2018 to the assessee, to explain the transaction. 6. In response to the show cause notice issued by Ld. PCIT u/s 263 of the Act, the assessee submitted written submission, which is reproduced below: 1. In respect of contention regarding your claim that the assessing officer had not verified the chargeability of capital gain during the course of proceeding and not made proper inquiry or verification finalized the order of dropping the proceedings initiated u/s 147 of the I .T.Act, is contrary to the fact of the case. 2. The assessee, during the year in concern sale agriculture land situated at Block No.360, Baleshwar, Taluka Palsana. Surat to Shri Rakeshkumar D. Jain for Rs.22,00,000/- on 30/03/2012. But Shri Rakeshkumar D. Jain was a nonagriculturist and wanted to use land for residential pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld AO based on the Law and the judicial pronouncements does not arise. 7. We thus request your Honour to squash the proposed proceedings u/s 263 of the Act. 7. However, Ld. PCIT rejected the contention of assessee and held that in assessee`s case clause (a) (b) of the above Explanation 2 of Section 263 of the I.T.Act, 1961 are clearly applicable since nowhere in the assessment record, there is evidence that assessing officer has examined the issue of capital gain, and assessing officer had passed assessment order without making inquiries or verification which should have been made in this case. Therefore, ld PCIT held that assessment order passed by the assessing officer is erroneous as well as prejudicial to interest of the revenue, hence ld PCIT set-aside the order of assessing officer and directed the assessing officer to look into the issue of capital gain earned by the assessee during the AY 2012-13 and make fresh assessment on this issue. 8. Aggrieved by the order of Ld.PCIT, the assessee is in appeal before us. 9. Shri P.M.Jagasheth, Learned Authorized Representative (AR) for the assessee pleads that during re-assessment proceedings, assessee submitted rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 of Ganot Dhara from Dy, Collector for selling agriculture land to non-agriculturist on behalf of Shri Rakeshkumar D. Jain. The assessee has got approval to sale on 20/03/2012, subject to conditions to be fulfilled by Shri Rakesh kumar D. Jain and after that sale deed has been made on 30/03/2012. At the time of sale, the land was agriculture land. Permission for conversion of agriculture land to non-agriculture land had been granted on 17/09/2012, as per Gam Namuno 6 entry No.5629 dated 07/11/2013. Hence, status of the land was agriculture land on 30/03/2012, when it was sold by the assessee and later on, order for conversion of land into non-agriculture land has been passed in favor of purchases, (Shri Rakesh kumar D. Jain). 13. From the above facts, it is abundantly clear that when the land was sold by the assessee, the status of land was agricultural land. This fact has been adequately inquired and examined by the assessing officer during the reassessment proceedings and having examined the said fact, the assessing officer has dropped the re-assessment proceeding initiated u/s 147 of the Income Tax Act. Hence, assessing officer, having examined the assessee`s fact (that lan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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