TMI Blog2012 (1) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... cause letter under section 263(1) of the Act to the assessee. The main objection raised by the ld. CIT while exercising his power under section 263 of the Act is with regard to the agricultural income shown by the assessee. According to the ld. CIT, the Assessing Officer has not made any enquiry with regard to the agricultural land obtained on lease from some persons and agricultural operations conducted thereon. He has also observed that in the profit and loss account of M/s Ankrerite Herbal Farms owned by the assessee engaged in the agricultural activities and ₹ 24,35,356 has been shown as opening stock and also on verification of return for assessment year 2005- 06, it was found that the assessee has made purchases of Safed Musli of ₹ 18,27,000 and have declared closing stock at ₹ 24,35,356. The ld. CIT has also doubted certain expenses claimed on irrigation, cultivation and labour charges. The other point raised in this show cause notice is with regard to the unsecured loan of ₹ 1.25 lakhs. 3. The assessee has filed detailed written submission before the ld. CIT explaining that the Assessing Officer has made detailed enquiries on this issue. The list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has made detailed enquiries on both the issues. In support of his contention, he has invited our attention to the Office Note given in the assessment order and in this office note, the Assessing Officer has categorically mentioned that the details regarding agricultural income of the assessee has been obtained and the Inspector of this office has also submitted his report in this regard and no adverse inference was drawn. He has also invited our attention to the report submitted by the Inspectors, Shri. K. G. Philips and Shri. Mohd. Aslam in which they have admitted that as per direction of the ITO they have visited various places of Mohanlalganj and Sarojini Nagar Tehsil to physically verify and enquire about income generated from cultivation of Ayurvedic Herbs (Safed Musli). On physical verification and spot enquiries, the Inspectors have come to the conclusion that the assessee has taken land from the Villagers after paying sum as agreed between them on lease and cultivated the above crops i.e. Safed Musli, which is used for medicinal purposes, on this land in June and harvested it in the end of March. They have also approved the version of the assessee that cultivation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTR 113]. 5. Seaking Infrastrucutre Ltd. v. CIT, I.T. Appeal No.4030/Mum/2007. 6. Ahalya Trading Private Limited v. CIT, I.T. Appeal No.9630/Mum/2004. 6. The ld. D.R., on the other hand, has submitted that the Additional CIT has simply moved a proposal, but the record was examined by the ld. CIT himself and having formed an opinion that the assessment orders are erroneous and prejudicial to the interest of the Revenue, he issued a show cause notice to the assessee and the assessee has failed to furnish the explanation in support of his claim of agricultural income. The ld. CIT has rightly exercised his jurisdiction under section 263 of the Act by setting aside the assessment orders, having noted that the assessment orders are erroneous and prejudicial to the interest of the Revenue. 7. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the documents placed on record, we find that the assessment orders in both the assessment years were set aside by the ld. CIT having observed that the Assessing Officer has not made a proper enquiry with regard to the agricultural income generated on cultivation of Safed Musli, a medici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ojini Nagar Tehsil to physically verify and enquire about the income generated by Dr. Kirti Kumar out of cultivation of Ayurvedic Herbs, Safed Musali . I have contacted the person, who have given land to Dr. Kirti Kumar for cultivation of the above Ayurvedic Herbs named Safed Musali in villages. Parvar Purav, Vikas Khand, Sarojini Nagar in 3 cases 4 cases in village Dhanwara, Vikas Khand, Mohanlalganj, Distt. Lucknow. Physically verification and on spot enquiries reveals that the Assessee has taken land from the above villagers after paying sum as agreed between them. He cultivates the above Herbs on this land in June and harvests it in end of March which is used medicinal purpose. The Assessee's version of cultivation of herbs and preparation of medicine has been found correct. It is testament to mention here that he also undertake cultivation of other medicinal herbs. Submitted Dated: 27/05/2008 Yours faithfully Sd/- (K.G. Philips) Sd/- (Mohd. Aslam) 8. Having taken into account the Inspectors Report, agreements as entered into between the assessee and land owners for lease of land and the Revenue re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous insofar as it is prejudicial to the interest of the Revenue. The power of suo motu revision in sub-section (1) of section 263 of the Act is only nature of supervisory jurisdiction and the same can be exercised only if the circumstances as prescribed therein exists. Two circumstances must exist to enable the ld. Commissioner to exercise power of suo motu revision under this sub-section. The assessment order must be erroneous and also prejudicial to the interest of the Revenue, otherwise the ld. Commission cannot exercise power under this sub-section. 12. In order to exercise power under section 263 (1) of the Act, there must be material before the ld. CIT to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interest of the Revenue. The erroneous order is an order which is not in accordance with law or which has been passed by the ITO without making any enquiry in undue haste. The order can be said to be prejudicial to the interest of the Revenue, if it is not in accordance with law. In consequence thereof, lawful revenue due to the State has not been realized or cannot be realized. There must be material available on record called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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