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2020 (9) TMI 764
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.... 4. Under the facts and circumstances of the case the ld. Pr.CIT has 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 mad....
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..... The order passed by the AO, thus deserves to be set aside to be made a fresh after giving opportunity to the assessee. The order 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....
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....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/-. Since, return has not been filed by the assessee therefore, verification canoe been possible 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/-....
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....nji Trib) 5. Babulal S Solanki vs ITO (2019) 104 Taxmann.com 155 (Ahd. Trib) 6. Daniel Merchants P. Ltd vs ITO, Anrm (SC) (SLP No. 23976/2017 7. Kerala State Electricity Board Ltd. vs DCIT, Circle 1(1), Trivendrum [2019] 111 Taxmann.com 353 (Cochin Trib) 4.7 We have heard the ld. counsels for both the parties and we have also perused the materials 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. Howe....
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....leted after making complete inquiry regarding reasons recorded and there is no lack of inquiry or investigation by the AO on this account. Therefore the observation in this regard while passing the order u/s 263 by ld PCIT that order passed by the AO on 07.12.2017 was passed without conducting necessary inquiries and without verifying necessary details was without any basis or without 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 me....
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....oubt, this presumption is rebuttable, but there must be some material to indicate that the Assessing Officer had not applied his mind. (iv) CIT v. Honda Siel Power Products Ltd. (2011) 33 ITR 547 (Delhi), wherein it has been observed as under:- 18. From the aforesaid discussion, it is apparent that the expression prejudicial to the interest of revenue appearing in Section 263 has to be read in conjunction with 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 ....
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....requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss 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 d....
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....ial to the interest of the revenue because in respect of categorization of income under the head business income versus capital gain income. The nature of transaction was very clear that it was a commercial transaction and it did not fall under the category of capital gain income. Therefore, invocation of jurisdiction u/s 263 on these issues are also incorrect. 4.7.2 The first objection for which the order was passed by the ld Pr. CIT that 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 th....
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....ance with law. Thus the order passed by the learned PCIT deserves to be quashed. 4.7.4 The second objection of the ld PCIT was that the AO did not verify details in respect of brokerage and commission payment of Rs. 150800/-. During the reassessment proceedings the assessee has submitted details of brokerage payment the vouchers and other details are placed on paper book page no. 64 & 65 and TDS was also deducted on brokerage payment treating 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 1971....