2022 (1) TMI 346 - AT - Income Tax

Tribunal overturns Commissioner's revision order, finding Assessing Officer's decision not erroneous

M/s. Perfect Krushi Market Yard Pvt. Ltd. Versus Pr. CIT-2, Nashik.

The Tribunal allowed the appellant's appeal, setting aside the Principal Commissioner's revision order u/s 263 of the Income Tax Act. The Tribunal found ... Revision u/s 263 by CIT - exemption u/s 10(26AAB) - HELD THAT:- Allowing the claim for exemption u/s 10(26AAB) by discussing the nature of the claim made by the assessee of the assessment order. This facts would clearly show that the AO had examined the claim/considered the information/explanation filed during the course of assessment proceedings took a view that claim of the assessee u/s 10(26AAB) is allowable. Nor can it be said that the AO did not consider the provisions of section 10(26AAB) - the order cannot be termed as ‘erroneous’ for want of enquiry on the issue which is sought to be revised by the ld. Pr.CIT. The ratio of decision of Jurisdictional High Court in the case of CIT vs. Nirav Modi [2016 (6) TMI 1004 - BOMBAY HIGH COURT]; MOIL Ltd. vs. CIT, [2017 (5) TMI 258 - BOMBAY HIGH COURT], Idea Cellular Ltd. vs. DCIT, [2008 (2) TMI 146 - BOMBAY HIGH COURT] is squarely applicable to the facts of present case. The very premise of the order of ld. Pr.CIT is wrong. There is nothing on record to say that the view taken by the Assessing Officer is unsustainable under the law - in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] clearly held that when the Assessing Officer adopts one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the AO is unsustainable in law. Therefore, the assessment order cannot be termed as ‘erroneous and prejudicial to the interests of the Revenue’ - Pr.CIT was not justified in exercising the power of revision u/s 263 of the Act and, accordingly, the order of the ld. Pr.CIT passed u/s 263 is hereby set-aside. Thus, the issue raised in grounds of appeal by the assessee stands allowed. Issues:Validity of revision order u/s 263 of the Income Tax Act, 1961 regarding exemption u/s 10(26AAB) for the assessment year 2015-16.Analysis:The appellant, a company incorporated under the Companies Act, 2013, filed an appeal against the order of the Principal Commissioner of Income Tax-2, Nashik, passed u/s 263 of the Income Tax Act, 1961, for the assessment year 2015-16. The appellant claimed exemption u/s 10(26AAB) of the Act. The Principal Commissioner observed that the Assessing Officer allowed the exemption without verifying if the appellant was constituted under any law for regulating the marketing of agricultural produce. The Principal Commissioner set aside the issue for fresh adjudication. The appellant contended that it was established to carry on the business of APMC/Board as per the license granted by the Government of Maharashtra. The Assessing Officer examined the claim during assessment proceedings and took a plausible view. The appellant challenged the revision order, arguing that the Assessing Officer conducted a thorough enquiry and the order was not erroneous or prejudicial to revenue.The issue before the Tribunal was the validity of the revision exercised by the Principal Commissioner u/s 263 of the Act. The Tribunal referred to relevant Supreme Court decisions emphasizing that for revision, the assessment order must be both erroneous and prejudicial to revenue. It was noted that if the Assessing Officer considered one of the possible views, the order cannot be termed as erroneous. The Tribunal found that the Assessing Officer had conducted necessary enquiry and verification regarding the exemption claim u/s 10(26AAB). The case was selected for scrutiny assessment specifically for this purpose. The Tribunal highlighted that the Assessing Officer issued detailed queries and the appellant provided explanations supported by relevant documents. The Tribunal concluded that the Assessing Officer's order was not erroneous as he had considered the provisions of section 10(26AAB) and the claim was allowable. The Tribunal set aside the Principal Commissioner's revision order, stating that the Assessing Officer's view was sustainable in law, and the order was not prejudicial to revenue.In conclusion, the Tribunal allowed the appellant's appeal, setting aside the Principal Commissioner's revision order u/s 263 of the Act. The Tribunal found that the Assessing Officer's order was not erroneous or prejudicial to revenue, as he had conducted a thorough enquiry and considered the relevant provisions before allowing the exemption claim u/s 10(26AAB) for the appellant company.