TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 1146
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....nd considered during the original assessment proceedings concerning AY 2016-17. The assessee has challenged the assumption of jurisdiction by the PCIT under Section 263 of the Act on the ground that the Assessment Order under revision is neither erroneous nor prejudicial to the interest of the revenue. 3. Briefly stated, the assessee filed return of income for AY 2016-17 declaring total income at Rs. 14,35,500/-. The case was selected for scrutiny on the reasons for verification of large deductions claimed under Section 54-B, 54-C, 54-D, 54-G of the Act and whether deductions from capital gains have been claimed correctly. The assessment was completed under Section 143(3) of the Act allowing the deductions claimed. Thereafter, the PCIT called for the assessment records and opined that the assessment order so passed is erroneous insofar as prejudicial to the interest of the Revenue. A show cause notice was issued to assessee seeking his response. It will be pertinent to reproduce the show-cause notice issued by the PCIT for appreciation of controversy. "To, RAMDEV MANDHANI C-295, SHAILENDRA NAGAR 492001, Chhattisgarh India PAN/TAN: AAGHR5208F AY: 2016-17 DIN & Notice ....
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.... 1961, unless the context otherwise requires, the term, "capital asset" does not include agricultural land in India, not being land situated: (a) in any area which is comprised within the jurisdiction of a municipality (whether knows as a municipality, municipal corporation, notified area committee, town are committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially: (I) not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation: For the purpose of this sub-clause, "population" means the population according to....
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....ts and necessary evidences. An absence of any submission or reply shall lead to the conclusion that you have no objection for the proposed action and the proceedings shall be finalized accordingly. Your submission/reply may kindly be sent through the e-mail on or before 15/03/2021. If you wish to appear personally or through your authorized representative, personal hearing may kindly be availed on 15/03/2021 at 11:00 am in the office of PCIT-1, Central Revenue Building, Civil Lines, Raipur." It was alleged by the PCIT that deductions claimed under Section 54-B by the assessee on transfer of agricultural land has been wrongly allowed by the AO and without application of mind. A revision order was passed by which the PCIT accordingly set aside the assessment so completed and remanded the issue back to the file of the AO for fresh adjudication thereof. 4. Aggrieved, the assessee preferred appeal before the Tribunal. 5. When the matter was called for hearing, two fold contentions were raised on behalf of the assessee. 5.1. Firstly, it was contended that the assessee has not received the show-cause notice under Section 263 at all and, therefore, no appearance could be made befor....
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....of the Act and observed that the agricultural land is situated within the Raipur Municipal Corporation and is thus a capital asset. In defense, the learned Counsel submitted, at the outset, that the controversy is on account of deductibility under Section 54B of the Act and has no connection with parameters of Section 2(14) of the Act. The learned Counsel submitted that if the agricultural land is outside specified distance of 8 kilometers of the Raipur Municipal Corporation, the asset will not be a 'capital asset' at the first place and gains arising would be totally exempt from taxation. In such a situation, the question of deductibility under s. 54B of the Act would not arise at all. The learned Counsel pointed out that the land in question is agricultural land as can be seen from the sale deed placed at page No. 16 of the paper book. It was further contended that all the conditions stipulated under s. 54B of the Act are fully satisfied in the instant case and the deductibility under Section 54B of the Act as claimed by the assessee was rightly allowed by the AO after taking cognizance of relevant facts placed on record. It was pointed out that land was used for agricult....
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....pal allegation of the PCIT is that the land sold and then purchased by the assessee is not an agricultural land. The land sold giving rise to capital gains on which deduction under Section 54-B has been alleged to fall under the limits of municipality, i.e. Raipur Municipal Corporation. It is further observed that there is no certificate from the Land Revenue Authorities that the land sold and purchased are situated at more than specific distance from the limits of municipality bodies as described in Section 2(14)(iii) of the Act. It is further alleged that the land was sold to a builder which would mean that the land would be used for non-agricultural purposes and for commercial operation after sale. In this backdrop, it is alleged that the deduction taken by the assessee under Section 54-B of the Act is irregular and the gains arising on the sale of land is liable for taxation as LTCG without any deduction claimed under Section 543 of the Act. 8.1. We find the observations of the PCIT neither here nor there. It is manifest that the PCIT has proceeded on a total misconception of law in the given set of facts. Where the agricultural sold land situated is outside the municipal limi....
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....claimed. No other notice was served. Palpably, it is a case of total lack of opportunity to the assessee to defend its case. A question would arise as to whether a failure to give a reasonable opportunity to the assessee of being heard was only a procedural irregularity in such gross circumstances and thus curable and did not render the order passed by the PCIT ab initio void and non est in law per se. 10. In the case of Tata Chemicals Limited vs. DCIT, ITA No. 3127/Mum/2010, order dated 30.06.2011, the co-ordinate bench after making reference to the decision in the judgment in Maneka Gandhi vs. Union of India, AIR 1978 SC 597, and other judgments observed that the order which infringes the fundamental principle, passed in violation of audi alteram partem rule, is a nullity. When a competent Court or authority holds such an order as invalid or sets it aside, the impugned order becomes null and void. Once it is concluded that the order in question is null and void, it is not for the adjudicating authority to advise the Commissioner as to what should he do. He is always at liberty to do whatever action he can take in accordance with the law, but a life to null and void order by remi....