TaxTMI 
TaxTMI 
2023 (3) TMI 668
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....y accepted by Learned Assessing officer as agricultural income after in-depth examination of facts of the case. 4) That the order passed by the Ld. CIT u/s. 263 of the I.T. Act, 1961 was arbitrary, bad in law and unjust. 5) That the assessee craves leave to urge such other ground or grounds before or at the time of hearing of appeal." 3. The brief facts of the case are that the assessee filed return of income for assessment year 2017-18 declaring total income of Rs. Nil. The assessment was completed under section 143(3) of the Act assessing the income at Rs. 14,32,782/- 4. The PCIT observed that the assessee had shown gross agricultural income of Rs. 40.43 lakhs and agricultural expenses of Rs. 11.77 lakhs and thereby the net agricultural income was declared at Rs. 28.65 lakhs. The assessee had shown that the entire agricultural income was out of cotton sales, however, on examination of revenue records it was noticed that the assessee had only sold groundnut crop. Accordingly, there was mismatch between what was declared by the assessee in the return of income and what was coming from the revenue records. The AO also had noticed the above discrepancy at the time of assessment....
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.... submitted that the issue regarding the taxability of agricultural income has already been adjudicated and considered by the AO during the course of assessment proceedings, and therefore once the AO has already applied his mind to the issue during the course of assessment proceedings, the PCIT cannot again take up this issue in 263 proceedings only with a view to revise/enhance the original assessment order. In response, the DR relied upon the observations made by the PCIT in the 263 order. 6. We have heard the rival contentions and perused the material on record. In our considered view, the issue before us is twofold: firstly, we observe that this issue has already been examined by the AO during the course of assessment proceedings. The AO, during the course of assessment proceedings, called for the relevant records, also issued notices to the persons to whom the alleged cotton sales were made and after due consideration of material on hand, treated 50% of the agricultural income as unaccounted income taxable under section 68 r.w.s. 115 BBE of the Act. Therefore, in our view it is not a case where the AO had not made due enquiries and also not the case where the AO had not applie....
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....ot visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawf....
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....is its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 6.4 Before deciding the issue, it would be useful to refer to some Supreme Court decisions on this subject which would throw useful light on the scope of enquiry under Explanation (a) to section 263 of the Act. 6.5 The Supreme Court of India in the case of Principal Co....
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....order was set aside by Tribunal holding that AO had made detailed enquiries in respect of on-money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was liable to be dismissed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revisional order under section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's onmoney transactions and Tribunal thus set aside revisional order passed by Commissioner. The High Court upheld Tribunal's order. The Supreme Court while dismissing the SLP filed by the Department held as under: "We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer ....
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....bunal set aside revisional order passed by Commissioner. The High Court upheld order passed by Tribunal. The Supreme Court on consideration of above facts held that SLP filed against High Court's order was to liable to be dismissed. The Supreme Court made the following observations, while passing the order: "It is by now well settled that, the Commissioner can exercise revisional powers under Section 263 of the Act only when it is found that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. In the present case, the Tribunal noted the observations of the Assessing Officer in the order of remand to the effect that Jain munis do not advocate spread of religion through use of computers, source of electronic media is usually shunned, very small section of the community uses computer technology for religious purposes as plenty of printed literature is available in the market. All these factors led to the market value of the CDs declining dramatically. It was on account of these reasons, that the assessee had incurred substantial loss arising out of reduction in the value of stock lying at the end of the year. The Tribunal, therefore ....