TaxTMI 
TaxTMI 
2025 (6) TMI 945
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....he circumstances of the case, Ld. Pr. CIT erred in declaring the assessment order framed by the Ld. AO u/s 143(3) as erroneous in so far as it is prejudicial to the interest of revenue for invoking the provisions of section 263 of I.T. Act, 1961 without providing a fare opportunity of being heard to the assessee as in the show cause notice no specific deficiency in the enquiry made by Ld. AO has been identified and only vague allegation that claim of agricultural income of Rs. 58,17,777/- has not been verified properly was made. Order so framed may kindly be declared as void ab initio as contrary to the statutory provision. 2. On the facts and in the circumstances of the case, Ld. Pr. CIT erred in invoking the provisions of section 263 of Income Tax Act, 1961 without providing fare opportunity of being heard to appellant even though it was specifically submitted in response to show cause notice that "In case your good self has identified any specific mistake or deficiency in the efforts of Ld. AO, it is respectfully requested to communicate same so that specific submission on that point can be made. In absence of identified deficiency in the assessment order/ assessment proceedin....
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.... draft assessment order issued on 31.03.2021 during the course of assessment proceedings. The AO, before framing final assessment has proposed an addition of Rs. 14,98,869/- through Draft Assessment Order for variance and non-acceptance of three receipts which has been claimed as agricultural income. However, after considering submission of the assessee in response to the Draft Assessment Order, the proposed addition was not made. Thus, the AO passed the assessment u/s. 143(3) read with section 143(3A) and 143(3B) of the Act accepting the returned income. 4. The learned PCIT has picked up the assessment order for proceedings u/s. 263 of the Act and he issued a show cause notice stating thereto as under :- "On perusal of the assessment record it was found that the claim of agricultural income of Rs. 58,17,777/- has not been verified properly and remained unverified and the same should have been disallowed and added back to the total income as unexplained money u/s 69A of the IT Act & to be taxed at special rate u/s 115BBE of the IT Act, 1961. Which resulted in under charge of tax and interest having total tax effect of Rs. 58,50,128/-. " 4.1 The Id. PCIT-1, Jodhpur, having not s....
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....in issues disputed before us is whether there was lack of enquiry on the part of the AO while passing the assessment order u/s. 143(3) in considering detailed submissions and documentary evidence in support of agricultural income shown at Rs. 58,17,777/-, warrant the Ld. PCIT to hold it erroneous in so far as it is prejudicial to the interest of revenue. In the present case, the learned CIT exercised his revisionary powers under section 263 of the Act. Let's refer to the said powers as under : "(i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interests of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it is only when an order is erroneous, that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice for the require mentor order being erroneous. . (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interest of the Revenue....
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....ous and prejudicial to the interest of revenue by any stretch of imagination. These documentary evidences have been placed on record before us in paper book from page nos. 3 to 455. The assessee's AR further argued that the Id. PCIT-1, Jodhpur while passing the order u/s. 263 of the Act 13.03.2024 expressed his apprehension regarding cost/expenses claimed by the assessee for earning agricultural income to the extent of Rs. 68.92 lacs and period of sale of Maize, however, the PCIT has not sought any explanation from the assessee on this point/aspect, which have been pointed out in the order u/s. 263 of the Act and hence, it is the violation of principle of natural justice. We find no mention in the impugned order that neither any specific query or explanation was sought during the course of proceedings u/s. 263 of the Act nor any specific show cause mentioning facts regarding cost/expenses claimed by the assessee for earning agricultural income to the extent of Rs. 68.92 lacs and period of sale of Maize were issued to the assessee. 8.2 In the instant case, as has rightly pointed out by the assessee that initial show cause was seeking the assessee's explanation regarding the....
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....l land in acre. 3. Whether Agricultural land is owned or held on lease? Please furnish copies of supporting State Govt. records for holding of the land. 4. Whether Agricultural land is irrigated or rain fed. 5. Name of district along with PIN code in which Agricultural land is situated. 6. Copy of Khatauni (crop records maintained by State Govt.). 7. Documentary evidences regarding of sale of agricultural products/crops along with copy of contracts, if any. 8. Documentary evidences with regard to following Expenses: Seed, Fertilizer, Pesticides, Labour Charges, Water Bill, Electricity Bill, Processing cost, Depreciation on fixed assets, and Cess Other Taxes, Int. on working capital. 9. In case of land held on lease, the amount and documentary evidence of lease rent paid. 10. In case Agricultural income is declared first time then date & source of investment in land, if any 11. Details of sale of immovable property during the year, if any. 12. Nature & details of total income, if any. 13. Details of Kisaan Credit Card with transactions statement 14. Cash flow statement. 15. Copy of bank statement to support the claim. 16. Justify your claim of exemption....
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....he AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law." 11. We are further guided by the Gujarat High Court judgment in the case of CIT vs. Arvind Jewellers [2003] 259 ITR 502, wherein the Division Bench referring to the judgment of the Supreme Court in the case of Malabar Industrial Co. Ltd. has observed that the provisions of Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. The Hon'ble Supreme Court judgment has also made it clear that the phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue. It is further....