TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 865
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.... 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has erred in violating the principles of natural justice by not the mentioning the grounds for initiating actin u/s 263 of the Income Tax Act, 1961 in the show cause notice issued. As such the order passed u/s 263 is void ab-initio. The action of the Ld. CIT was wholly unreasonable, uncalled for the bad in law. 4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s 263 is merely 'change in opinion'. The order u/s 143(3) r.w.s. 143(3A and 143(3B) of the Income Tax Act passed by the Ld AO does not in any way represent erroneous order. The action of the Ld. Pr.CIT was wholly unreasonable, uncalled for and bad in law. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income Tax has grievously erred in assuming that the assessing officer had not verified the deduction claim u/s 54B of the Income Tax Act, 1961 and not made proper inquiry on finalized the order of assessment u/s 143(3) rws. 143(3A) and 143(3B) of the I.T. ....
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.... (649057+520437) 0 0 6,07,66,506/- 5. The ld PCIT noted that the following conditions should be satisfied to claim the benefit of section 54B of the Act: * The benefit of Section 54B is available only to an individual or a HUF * The asset transferred should be an agricultural land. The land may be long term capital asset or short- term capital asset. The agricultural land should be used by the individual or his parents for agricultural purpose at least for a period of two years immediately preceding the date of transfer. In case of HUF the land should be used by any member of HUF. Within a period of two years from the date of old land the taxpayers should acquire another agricultural land. As per the above conditions, the land transferred should be agricultural land which should be used for agricultural purpose at least for a period of two years immediately preceding the date of transfer. However, on perusal of returns of income filed by the assessee for immediately two preceding assessment years as well as ITR for the year under consideration, it was noticed by ld PCIT that the assessee had not offered any agricultural income which shows that no ag....
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....e light of provision of section 54(2) of the Act which he has failed to do so and has not disallowed the deduction claimed u/s 54 of the Act which shows lack of application of mind by the Assessing Officer. The Assessing Officer has to follow the provisions laid down in the Act. The principle of strict interpretation of taxing statues was best enunciated by Rowlatt J. in his classic statement in Cape Brandy Syndicate v. I.R.C. (1 KB 64, 71): "In a taxing statue one has to look merely what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax." 9. Considering the above facts, ld PCIT issued a show cause notice bearing DIN No.ITBA/COM/F./17/2022-23/1050165949(1) dated 27.02.2023 and was duly served upon the assessee. In compliance with the above show cause notice, the assessee has failed to furnish any reply. Therefore, ld PCIT noted that the Assessing Officer was required to make inquiry and verification on the above mentioned issue and make addition, which he has failed to do so. The Assessing Officer failed to take note that the assesse had failed to furnish any cogent supporting documents to substantiate his cla....
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....me. In this connection, Ld. Counsel for the assessee submitted that agricultural land owned by the family members and the agricultural income was shown by the family members of assessee in Pareshbhai P. Patel (HUF). The Ld. Counsel for the assessee, argued that main requirement and emphasis to claim exemption under section 54B of the Act, is that the agricultural land should be used exclusively for agricultural purposes. The assessee has stated that agricultural income was shown by one of the family entities, that is, Pareshbhai P. Patel (HUF), and assessee has produced Form No.7/12 and Form No.6, relating to agricultural activities, and in these revenue records (Form No.7/12 and Form No.6), it is clearly mentioned that land is 'Kheti layak' , that is, used for agricultural purposes. Hence, ld Counsel contended that assessee`s land was agricultural land and it was being used for agricultural purposes, since last many years prior to its sale, hence assessee is entitled to claim exemption/deduction u/s 54B of the Act. For this, ld Counsel relied on many judgements/case laws, which is submitted by the ld Counsel by way of legal compilation, which we have gone through. Therefore, ld Co....
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.... for the Revenue also submitted that Income Tax Return of HUF, wherein the agricultural income has been shown by the assessee, was not before the Assessing Officer. The Ld. CIT-DR for the Revenue further pointed out that Assessing Officer has not conducted enquiry in relation to the main issue raised by the Ld.PCIT. The Ld. CIT-DR also pointed out that just to collect the information from the assessee and put in the assessment folder does not mean to conduct sufficient enquiry. Therefore, ld CIT-DR argued that order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue, on account of non application of mind, hence ld PCIT has rightly exercised his jurisdiction u/s 263 of the Act, hence order passed by him u/s 263 of the Act may be upheld. 15. We have heard both the parties and perused the materials available on record. We note that assessee submitted before us following documents and evidences, which were also submitted before the assessing officer during the assessment proceedings, viz:(i) ITR along with computation of income for AY 2018-19 (page 1-4 of paper book) (ii) Notice u/s 143(2) dated 28.09.2019 ( vide page 5-9 of paper book) (iii) Not....
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....ers of family, namely, Shri Pareshbhai P Patel (HUF) was showing agricultural income. So instead of showing agricultural income by all the family members, one of the family members was showing agricultural income, so it is a sufficient compliance on the part of assessee to claim such deduction u/s 54B of the Act. 18. In addition to this, the Ld. Counsel submitted that only the condition to be fulfilled to claim the deduction u/s 54B is that "land was being used" by the assessee for agricultural purposes and it is not necessary that assessee has to show agricultural income in his return of income. Therefore, at this juncture, we are of the view that it is useful to quote the provisions of Section 54B of the Act, which reads as under: "54B. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. (1) Subject to the provisions of sub-section(2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee, being an individual or his parent or a Hindu Undivided Family for agricultural pur....
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.... Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the Assessing Officer can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii) Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the Assessing Officer has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the Assessing Officer can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that ev....