TaxTMI 
TaxTMI 
2015 (3) TMI 565
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....urposes. As per the judicial decision in this regard the compensation received cannot be assessed as agricultural income. As the impugned assessment order was erroneous and prejudicial to the interests of revenue, the assessee was asked to furnish an explanation as to why the assessment order should not be set aside/modified or a suitable order under section 263 of the IT Act be passed. 3. After hearing the ld. Counsel for the assessee CIT observed that the assessee filed most of the submissions which were filed before the AO. From the submissions it is seen that the two pieces of land were described in the 7/12 extracts as 'Gairan' (i.e. land for cattle rearing) and 'Ranshet'(i.e. open land with weeds only). This shows that the land was not utilized for cultivation/agricultural purposes. As against these the assessee had produced four panchnamas signed by Talati of Pune dated 24/4/2007, wherein it was stated that the pipeline had been laid down in these areas. The number of trees, their age etc. were also given in these panchnama. However, it was observed by the CIT that this document did not bear the any seal or stamp of the authorities/Talati and the AO did not seem to have a....
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.... have produced authentic records in support of fruit bearing trees claimed to have existed on the land. k) On 27.10.2007 the assessee issued several receipts for having received compensation. 3.2.1 CIT also observed that the assessee did not produce the order passed by the competent authority determining the compensation to be paid for land and trees. 3.3 Further it was observed by the ld.CIT that the assessee had mentioned that she had received Rs. 8,69,812/- vide cheque No.001224 dated 27/10/2007 drawn on Bank of India as per Xerox copy of the cheque on record and another cheque of the same amount vide cheque No.001228 dated 27/10/2007. The AO never verified as to why the amount of Rs. 8,69,812/- received by cheque No.001224 is not accounted for by the assessee in the total compensation amount received. 3.4 The assessee's only proof of agricultural produce is the panchnamas and the receipts dated 27/10/2007 issued by the assessee. In all these receipts dated 27/10/2007 there was only mention of fruits and forest trees and no specific details of trees were given. No other relevant records in support of trees frown on land were produced by the assessee . Sale bills of t....
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....if any, before the AO along with particulars of the appeal filed and progress if any. The assessee had shown Rs. 18,92,800/- towards land based on the receipts issued by the assessee and the balance amount towards trees which needs to be verified by the AO. Ld. CIT further directed the AO to examine the correctness of the compensation amount received by the assessee, bifurcate the amount toward agricultural produce based on documentary evidence, apportion the amount towards land and then assess capital gain. Against this, the assessee is in appeal before us. 4. We have heard both the parties and perused the material on record. We have carefully considered the rival submissions in the light of material placed before us and also gone through all the judgements cited by the parties before us. First we take up the legal issue with reference to the jurisdiction of invoking the provisions of section 263 of the Act by the learned CIT. The scheme of the IT Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to erroneous order of the assessing officer, the Revenue is losing tax lawfully payable by a person, it will....
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....n medical science to matters of sensation, whether there is no corresponding cause to produce it. In its ordinary use it denotes an unaccountable error in judgement or fact, especially in one remarkable otherwise for accurate information and right decision. It is exceptional error or mistake in those otherwise not likely to be deceived." 4.3. In order to ascertain whether an order sought to be revised under Section 263 is erroneous, it should be seen whether it suffers from any of the aforesaid forms of error. In our view, an order sought to be revised under Section 263 would be erroneous and fall in the aforesaid category of "errors" if it is, inter alia, based on an incorrect assumption of facts or an incorrect application of law or non-application of mind to something which was obvious and required application of mind or based on no or insufficient materials so as to affect the merits of the case and thereby cause prejudice to the interest of the revenue. 4.4. Section 263 of the Income-tax Act seeks to remove the prejudice caused to the revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo moto proceedings either where....
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....f the facts stated and the genuineness of the claims made in the return when the circumstances of the case are such as to provoke inquiry. Arbitrariness in either accepting or rejecting the claim has no place. The order passed by the Assessing Officer becomes erroneous because an enquiry has not been made or genuineness of the claim has not been examined where the inquiries ought to have bee n made and the genuineness of the claim ought to have been examined and not because there is anything wrong with his order if all the facts stated or claim mad e therein are assumed to be correct. The Commissioner may consider an order of the Assessing Officer to be erroneous not only when it contains some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereo-typed order which simply accept s what the assessee has stated in his return and fail s to make enquiries or examine the genuineness of the claim which are called for in the circumstances of the ca se. In taking the aforesaid view, we are supported by the decisions of the Hon'ble Supreme Court in Rampyari Devi Saraogi v. CIT (67 ITR 84) (SC), Smt. Tara Devi Aggarwal v. CIT (88 ITR 323) (SC),....
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....y an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances or arbitrariness and ensures a degree of fairness in the process of decisionmaking. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is n....
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....simply accepts what the assessee has stated in his return or where he fails to make the requisite enquiries or examine the genuineness of the claim which is called for in the circumstances of the case. 5. In this case the AO issued notice to the assessee under section 143(3) on 6.8.2009 and notice under section 142(1) notice on 27/7/2010. The assessee participated in the assessment proceedings. To various enquiries of the AO the assessee furnished information to the satisfaction of the AO specifically vide assessee's counsel dated 27/7/2010. The assessee furnished full details of income derived at Rs. 53,23,339/- from agricultural land located at Mondvane Village and it was stated to the AO that the said amount of Rs. 53,23,339/- received as compensation on acquisition of rights of use from the owner of the land was exempt in view of agricultural land under section 10(1) read with section 2(1A) and section 2(14) of the I.T. Act. 5.1 After considering the reply of the assessee and material brought on record the AO came to the conclusion that the impugned receipt is not taxable and treated as exempt from tax. For this view of the AO, CIT cannot find fault and he cannot impose h....