TMI Blog2022 (7) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion that the revision order passed by ld. PCIT under section is not legally sustainable as the same is based on mere change of opinion, which we set aside. In the result, the substantial ground of appeal raised by the assessee is allowed. No contrary facts or law is brought to our notice to take other view. - Decided in favour of assessee. - ITA No.253/SRT/2018 - - - Dated:- 25-7-2022 - Shri Pawan Singh, Judicial Member And Dr Arjun Lal Saini, Accountant Member For the Assessee : Shri Nehal R Rana, C.A For the Revenue : Shri H.P.Meena, CIT-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of learned Principal Commissioner of Income tax-3, Surat [for short to as Ld. PCIT ] passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 12.03.2018 for assessment year (AY) 2012-13. The assessee has raised the following grounds of appeal:- 1.On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax has grievously erred in initiating the proceedings u/s 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is therefore prayed that the above proposed proceedings may please be revoked as learned members of the tribunal may deem it proper. 2. Brief facts of the case are that no return of income was filed by assessee for assessment year 2012-13. The case of assessee was re-opened under section 147 on the basis of information received by Assessing Officer that assessee has sold two pieces of land. The Assessing Officer after recording the reasons of reopening issued and served notice under section 148 dated 25.09.2014. In response to under section 148, the assessee filed his return of income on 20.03.2015 declaring nil income. The Assessing Officer after serving notice under section 143(2) proceeded for finalizing the assessment order. The Assessing Officer in para-2 3 recorded that assessee attended hearing through his representative from time to time and required details as per various questionnaires were furnished during the course of assessment proceedings furnished, after examination of such required information, the Assessing Officer accepted the return of income in the assessment order dated 30.03.2016 passed under section 143(3) r.w.s. 147 of the Act. Subsequently, Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has 1/3rd share and second land in Block No.147, he is having 100%. Both the plots of land was sold to Surya Food Agro Ltd. (nor farmer) and the agreement to sale was executed on 08.10.2010 as the purchaser was a non-agriculturist and land has to be converted into nonagricultural land for the purpose of transfer. As per agreement, the conversion charge was borne by said purchaser. The status of land sold vide agreement dated 08.10.2010 was of agricultural land and later on it was converted into non-agricultural land for the purpose of sale deed. The seller (assessee) has sold the agricultural land as the purchaser cannot get the land transferred in its name due to the fact that purchaser (Surya Food Agro Ltd.) was not an agriculturist, hence, the user of land was transfer. The land for the purpose of record and transferred as per the Transfer of Property Act, 1882. The stamp duty was charged on the basis of subsequent use of land and not on the past use of land. Hence, exact stamp duty was charged as per rate of non-agricultural land. The assessee also stated that as per Income tax only real income can be taxed and not on the fiction or on assumption basis. The assessee has rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of Revenue. As the consequential effect of verification of working of capital gains may result to the interest of revenue, hence, he believed that assessment order passed by Assessing Officer is also prejudicial to the interest of revenue. Accordingly, the ld. PCIT set aside the assessment order with the direction to the Assessing Officer to look into the issue of capital gains earned by the assessee and fresh assessment on this issue after calling the specific details and giving reasonable opportunity of hearing to the assessee. Aggrieved by the order of Ld. PCIT passed under section 263, the assessee has filed present appeal before this Tribunal. 6. We have heard the submission of Ld. Authorized Representative (AR) for the assessee and Ld. Commissioner of Income-tax Departmental Representative (CIT-DR) and have gone through the order of lower authorities carefully. The ld. AR for the assessee submits that for revising the assessment order the twin condition to be satisfied before as held in the case of Malabar Industries Vs CIT (2000) 243 ITR 83 (SC). The twin conditions are that assessment order passed by Assessing Officer must be erroneous and in so far as prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of section 50C as the land was shown as much higher than registration value and the applicability of capital gains in notice dated 18.02.2016. The assessee again vide his reply dated 16.03.2016 furnished complete details on non the applicability of Section 50C and explained that the consideration is received more than jantry value of agricultural land in assessment year 2010-11. The stamp duty was paid by purchaser on capital asset, after converting the impugned land into non-agricultural land. The Assessing Officer after considering the submission of assessee has accepted the reply furnished by assessee and has not made any addition. The Assessing Officer has taken a reasonable plausible and legally sustainable view. The order passed by Assessing Officer is not erroneous order as the Assessing Officer was fully satisfied about the nature of land on the date of agreement to sale and the fact that assessee sold agricultural land and convergent from agricultural land to non-agricultural land was that reasons for conversion of agricultural land to non-agricultural land as the purchaser was non-agriculturist and is not entitled to purchase agricultural land. Mere change of user of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied that order passed by Assessing Officer was erroneous and prejudicial to the interest of revenue. The order of Ld. PCIT is without specifying any reason and is liable to be vitiated as held by Hon'ble Allahabad High Court in the case of CIT Vs Sunder Lal (1974) 96 ITR 310 (All). The ld. AR for the assessee further submits that order passed by Ld. PCIT under section 263 is merely change in opinion which is wholly unreasonable, uncalled for and bad in law, as the Assessing Officer passed order 143(3) after calling for details on the issue after considering the reply of assessee and the evidence furnished and after verification and after due application of his mind. The Assessing Officer passed his assessment order which cannot be termed as erroneous and prejudicial to the interest of the revenue. To support his contention, Ld. AR for the assessee relied on the following case laws; CIT Vs Mehsana District Co-Operative (2005) 282 ITR 24(Guj) CIT Vs Mahendra Kumar Bansal (2008) 297ITR 99 (All) CIT Vs. Late Sundarlal (1974) 96 ITDR 310 (All) The Malabar Industrial Co. Vs CIT (2000) 243 ITR 83 (SC), Shri Harsadbhai L Patel vs. PCIT in ITA No.254/SRT/2018, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were called from time to time assessee. The assessee furnished by assessee and after discussing the material fact Assessing Officer accepted the return of income declared by assessee as nil. We find that Ld. AR for the assessee placed on record, the copies of the notices issued under section 142(1) and the reply filed by the assessee in response thereto. We find that in the notice date 28.07.2015, the Assessing Officer asked the assessee to furnish the copy of all bank statements along with details of purchase and sale of immovable properties. We find that the assessee submits the complete details with regard to the questions raised by Assessing Officer in his notice under section 148 dated 25.09.2014. The assessee also furnished the copy of sale deed of immovable property along with his reply and explained that assessee has sold two piece of land which is not a capital asset that the reasons the land is situated outside limit of 8 kilometres from the Municipal limit of population less than 10,000. The assessee furnished the copy of Taluka Mangrol, Surat about the nature of land. We find that the Assessing Officer again issued show cause notice dated 18.02.2016 and raised following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en done by purchaser and all expense were incurred by the said purchaser. The assessee also furnished the reply on the applicability of section 50C. We note that this reply was furnished by assessee in response to specific question raised by Assessing Officer. Admittedly, there is no reference in the assessment order about the reference of various questions and reply thereof. 14. The ld. AR for the assessee during the hearing of appeal vehemently argued that the Assessing Officer has not only examined all the facts during the assessment, but took a reasonable plausible and legal sustainable view, which cannot be branded as erroneous. The Ld. AR for the assessee also relied on the decision of Hon'ble jurisdictional High Court in the case of Mehsana Dist. Co-Op (supra), wherein it was held that from the Assessing Officer when two possibilities and Assessing Officer has taken one of the view which is commission does not agree cannot be prejudiced to the interest of revenue. So far as applicability of ratio in the case of Smt. Sarifabibi Mohamed Ibrahim (supra), we are in agreement with the Ld. AR for the assessee that the ratio of said decision is absolutely is not applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have been taken into consideration along with the other relevant factors, viz., that the land was sold to a co-operative housing society; that it was sold at Rs. 20 per sq. yard, and that it was situated within the corporation limits of Ahmedabad city. It is, therefore, not possible for us to say that the view taken by the Tribunal is unreasonable or erroneous in law. Even if we have to consider the intention of the assessee as to when he decided to sell the land, it becomes clear that he wanted to sell the land as agricultural land. In the agreement dated 18-12-1963, it is in terms stated that the assessee was selling the land as agricultural land only and, therefore, was not going to sign any application or plan for a non-agricultural use of the said land. (Emphasis added by us). 16. We find that Hon ble Jurisdictional in CIT v. Siddharth J. Desai [1983] 139 ITR 628(Guj), after considering all its previous decisions, held that the factors which are required to be taken into consideration for determining the question as to whether the land can be said to be agricultural land are (at page 638): 1. Whether, the land was classified in the revenue records as agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yield? 17. The Hon ble High has made emphasised that if the land is classified in the revenue records as agricultural land, then it would raise a rebuttable presumption and would furnish good prima facie evidence to show that it is an agricultural land. It was emphasised that if the land is also used for agricultural purpose till the date of the sale, then, unless there is some cogent evidence to indicate otherwise, the land should be treated as agricultural land.(emphasis added by us) 18. The Supreme Court in celebrated/ leading case of Malabar Industrial Co. Ltd. Vs CIT [2000] 243 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 so far as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order held that the contention on behalf of the revenue that the assessment order does not reflect any application of mind as to the eligibility or otherwise under section 80I of the Act requires to be noted to be rejected. An assessment order cannot incorporate reasons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic some. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made; and, secondly, the order is an appealable order, an appeal lies, would be filed, and only against disallowances which an assessee feels aggrieved with. 20. Further, Hon'ble Madras High Court in CIT Vs Mepco Industries Ltd., (2007) 207 CTR 462 (Madras) held that when two views are possible on an issue and it is not the case of the Commissioner that the view taken by Assessing Officer is not permissible in law, the learned Commissioner cannot invoke his jurisdiction under section 263 of the Act. (emphasis added by us). 21. Now again adverting to ..... 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