2015 (3) TMI 49 - AT - Income Tax

Tribunal overturns CIT's order, upholds assessee's appeal for AY 2009-10.

The tribunal allowed the assessee's appeal against the CIT's order under section 263 for the assessment year 2009-10. The tribunal found that the AO had ... Revision u/s 263 - AO has neither called for any particulars, nor examined any alleged debtors - ingenuine sale of agricultural land - Held that:- In the case of scrutiny assessment, notices have been issued u/s 143(2) and 142(1). The information furnished has been examined and on verification of the same, the assessment has been completed. The assessee has given the names and the people who have repaid the amounts to him and all the information was available with the AO. In case of schedule land, the registration of sale deed of agricultural land does not take place and the assessee has furnished the notarized copies of the sale agreement before the AO and the CIT. Mere notarization of the sale agreement seems to be the practice in that area being schedule land. Hence the CIT, on a mere change of opinion initiated the proceedings u/s 263. The order of AO cannot be revised if it has been passed after application of mind. Merely because the opinion of the CIT is different from AO this section cannot be resorted to. In the present case the AO has gathered details with respect to repayment of hand loans by relatives and friends and also sale of agricultural land i.e. the AO has considered the explanation given by the assessee and passed an order after applying his mind. Hence, following the ratio of the decision in CIT vs. Gabriel India, [1993 (4) TMI 55 - BOMBAY High Court], we allow the assessee’s appeal. - Decided in favour of assessee. Issues: Appeal against CIT order u/s 263 for A.Y 2009-10.Analysis:1. The assessee filed an appeal against the CIT's order under section 263 of the Income Tax Act for the assessment year 2009-10. The case involved scrutiny of cash transactions in the bank account and assessment u/s 143(3) by the Income Tax Officer.2. The CIT invoked jurisdiction u/s 263 due to lack of proper documentation for cash deposits and loans claimed by the assessee. The CIT found errors in the AO's assessment, including absence of sale deed proof for agricultural land, lack of confirmation letters from debtors, and non-compliance with sections 269SS and 269T of the Act.3. The assessee's submissions included details of loans given to friends/relatives and sale of agricultural land for his son's education. The AO's failure to verify these transactions led the CIT to deem the assessment order as erroneous and prejudicial to revenue interests under section 263.4. The CIT highlighted the absence of registered sale deeds for the land transactions, questioning the genuineness of the deals. The AO's failure to conduct necessary verifications and inquiries was considered a flaw justifying the CIT's intervention under section 263.5. The assessee's appeal before the tribunal reiterated explanations provided earlier. The counsel emphasized the thorough examination conducted during scrutiny assessment and argued against the CIT's jurisdiction based on a mere change of opinion.6. The tribunal observed that the AO had followed due process during scrutiny assessment, issuing notices under relevant sections and examining information provided by the assessee. The notarized sale agreements for agricultural land were accepted as per local practices, and the CIT's differing opinion alone was deemed insufficient for invoking section 263.7. Citing precedents like CIT vs. Arvind Jeweller and CIT vs. Gabriel India Ltd, the tribunal emphasized the importance of the AO's consideration of explanations and material provided by the assessee. Since the AO had applied his mind and made a reasoned decision, the tribunal allowed the assessee's appeal against the CIT's order under section 263.This detailed analysis covers the issues raised in the legal judgment comprehensively, outlining the arguments presented by both parties and the tribunal's reasoning in reaching its decision.