TaxTMI 
TaxTMI 
2020 (9) TMI 764
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....s erred in giving direction for following issues which has already dealt by the AO in the order passed u/s 148/143(3) of the I.T. Act, 1961. (i) Issue regarding sale of land as business income. (ii) Expenditure incurred on brokerage and commission for sale of land. (iii) Interest income (iv) Proprietor's capital. 2.1 During the course of hearing, ld.AR of the assessee submitted that he has filed the revised grounds of appeal under rule 11 r.w.s. 22 of the Income Tax Appellate Tribunal Rules, 1963.The revised grounds of appeal of the assessee are as under:- ''1. For that the order u/s 263 is bade in law for the reason that the proceedings u/s 147 initiated itself was bad in law, the order u/s 147/143(3) was not maintainable since no assessment can be made for making rowing and fishing enquiry and an invalid assessment cannot be set aside u/s 263. 2. For that the order u/s 263 is also otherwise bad in law for the reason that no addition was made for the reasons recorded for reopening of the assessment u/s 147 and as such no other addition could have been made by the AO therefore, the ld. CIT cannot direct the AO to enquire and make addition on various issues. 2.2 Since ....
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....er of the AO is, accordingly, set aside.'' 4.2 Against this order of the ld. Pr. ld. CIT, the assessee has preferred an appeal before us on the grounds mentioned hereinabove. 4.3 The ground Nos. 1 to 4 raised by the assessee are interrelated and interconnected and relate to challenging the order of the ld. Pr.CIT passed u/s 263 of the Act. Therefore, we thought it fit to dispose off these grounds through a common order. 4.4 During the course of hearing, the ld.AR of the assessee reiterated the same arguments as were raised by him before the ld Pr.CIT and he has also filed the written submissions to this effect as under:- ''Main Ground No. 1 to 4- 1. Under the facts and circumstances of the case the learned Pr.CIT erred in passing the order u/s 263 of the IT Act 1961 which is void ab-initio deserves to be quashed. 2. Under the facts and circumstances of the case the Learned Principal Commissioner of Income Tax has erred and passing the order U/s 263 of Income Tax Act, 1961 on the grounds which are not prejudicial to the interest of the Revenue or erroneous. 3. Under the facts and circumstances of the case the Learned Principal CIT has erred in giving the findings on the i....
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....le at this time. Looking to the facts mentioned above, I have reasons to believe that the income to the extent of Rs. 46,80,000/- has escaped assessment within the meaning of section 147 of the IT Act, 1961. Therefore it is fit case to issue notice u/s 148 of the Income Tax Act, 1961." In the reasons recorded in the first para the learned AO has mentioned that the assessee not filed the return which is not correct. The assessee has originally filed return on 29.09.2010 copy of which is placed on paper book page no. 1. The learned AO further mentioned that he issued letter u/s 133(6) of the Act for calling some information, this letter was never received by the assessee. In the next para of reasons recorded the learned AO further mentioned that it was noticed that the assessee sold immovable property valued of Rs. 23,40,000/- and further sub registrar valued (final value) this property at Rs. 46,80,000/-. This fact was correct and the assessee has shown this transaction of sale of property in the return filed originally on 29.09.2010. So the reasons were not recorded by appreciating the correct facts as well as proper application of mind. In the last para of the reasons re....
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....placed on record, deliberated upon judgements cited by the parties as well as the orders of the Revenue authorities. From the facts, we noticed that the assessee is an individual and had filed return for the year under consideration originally on 29.09.2010 declaring total income at Rs. 45,52,440/-. Subsequently notice u/s 148 was issued on 29.03.2017 and in compliance thereof the assessee filed the income tax return on 03.11.2017 declaring the income at Rs. 45,52,440/-. Copy of the IT return along with the computation of income is available on paper book page number 8 to 12. The assessment was completed u/s 148/143(3) dated 07.12.2017 on the same income. Subsequently the ld Pr. CIT-2 had issued notice u/s 263 of the Act on 07.08.2019. for which assessee replied the notice vide reply dated 22.08.2019. However, the ld Pr. CIT was not convinced with the reply filed by the assessee and therefore, set aside the order passed by AO dated 07.12.2017. We noticed from the record that during the reassessment proceedings the AO had made all the necessary inquires and investigation which were necessary to complete the assessment. During the assessment proceeding, the AO had issued various que....
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....ithout any evidence on record. 4.7.1 We are further of the view that If on a particular issue there are two views and one possible view was taken by the AO then in that eventuality it cannot be said as erroneous. As per the facts of present case, which we have discussed above, the assessee had purchased agriculture land, got it converted into the industrial land and developed it and sold it. The transaction is of purely commercial nature and the income/profit earned out of this transaction is purely business income. The assessee has wrongly shown this income under the head of capital gain which was actually business income. So the AO has accepted this as business income. The finding of the ld Pr. CIT in this regard may be other possible view as categorized as capital gain income but this does not mean that the order passed by the AO is erroneous because the AO has taken the view which is possible one. On this proposition, we draw strength from the following decisions. (i) Malabar Industrial Co Ltd. vs. CIT (2000) 243 ITR 83 (SC) (ii) Vesuvius India Ltd vs. CIT (2002) 54 SOT 172 (ITATKolkata) (iii) C I T-1 Jaipur vs M/S Green Triveni Developer on 24 October, 2017- HIGH COURT....
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....h the expression 'erroneous' and that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. In cases where the Assessing Officer adopts one of the courses permissible in law or where two views are possible and the Income Tax Officer has taken one view, the Commissioner of Income Tax cannot exercise his powers under Section 263 to differ with the view of the Assessing Officer even if there has been a loss of revenue. Of course, if the Assessing Officer takes a view which is patently unsustainable in law, the Commissioner of Income Tax can exercise his powers under (23 of 23) [ ITA- 114/2015] Section 263 where a loss of revenue results as a consequence of the view adopted by the Assessing Officer. It is also clear that while passing an order under Section 263, the Commissioner of Income Tax has to examine not only the assessment order, but the entire record of the profits. Since the assessee has no control over the way an assessment order is drafted and since, generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only those point....
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....of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the Revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the ld. Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the Interests of the Revenue unless the view taken by the ITO is unsustainable in law. An order of assessment passed by the ITO without making necessary enquiries on certain important points connected with the assessment would be erroneous and prejudicial to the interests of the Revenue, when the ITO is expected to make an enquiry of a particular item of income and he does not make an enquiry as expected, that would be a ground for the ld. Pr. CIT to interfere with the order passed by the ITO since such an order passed by the ITO is erroneous and prejudicial to the interests of Revenue, but the ITO had made enquiries in regard to the nature of the expenditure incurred by the assessee who had given detailed explanation in that regard by a fetter in writing and all these are part of the record of the cas....
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....hat the assessee has sold the land of same area which was purchased and in the original return filed the transaction for the land sale was shown under the head capital gain whereas in the return filed in reopening proceedings it was shown as business income and the same was accepted by the AO and he had not examined this issue. 4.7.3 The finding of the ld. Pr. CIT are not correct because the assessee has purchased agriculture land measuring 36/68 part of 0.86 hectare whereas she sold the 3600 square meter industrial plot. So the land sold and land purchased was not same and the finding in the order u/s 263 is not correct. The important fact which has been ignored by the ld. PCIT is that in computation of income filed with the original return the assessee has made a mistake that he has shown the land transactions under the head capital gain income whereas the transaction was purely a business transaction. The object behind the purchase of land is to convert it into the industrial land and after development sale it on good price for earning profit. The assessee has purchased agriculture land on 30.01.2008. Copy of purchase deed is available on paper book page no. 28 to 33. Subseque....
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....g the transaction as business transaction. Therefore the expenditure incurred on brokerage and commission was fully verifiable and the detail was submitted during the reassessment proceedings. Therefore this objection was also not sustainable. 4.7.5 The third objection of the ld PCIT was that Interest received are shown as Rs. 5,28,165/- as against the interest received of Rs. 3,30,030/-. The other income shown Rs. 7,42,196/- as against the Rs. 1,63,925/-. During the assessment proceedings the assessee has submitted details of interest received and other incomes which are as under: - Particulars Individual capacity Entered in the books of the firm Difference Reason Interest received 528165 331030 197135 Rs. 331030/- are shown in credit of P&L A/c of the firm Other income 163925 742196 578271 The income of Rs. 163925/- is not shown in Gupta Trading Co and directly shown in individual computation. The reason for the difference was duly explained and the learned AO has verified the same. Therefore again this objection was not acceptable for invoking the provisions of section 263 of the Income Tax Act, 1961. 4.7.6 The last objection of the Learned PCIT was that Pro....