TaxTMI 
TaxTMI 
2025 (10) TMI 1231
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....d none of the conditions laid down in Explanation-2 of section 263 are fulfilled. (3). The Ld. PCIT has erred in passing the order u/s 263 without verifying the records submitted during the course of proceedings under section 263. (4). The appellant reserves its right to add, amend, alter or modify any of the grounds at or before the time of final hearing. 2. The facts of the case which can be stated quite shortly are as follows: the assessee before us is hindu undivided family (HUF). The assessee had filed his return of income for assessment year (A.Υ.) 2020-21, on 25.08.2020, declaring total income of Rs. 19,29,090/- and agricultural income of Rs. 60,87,400/-. This assessee`s case was selected for limited scrutiny under in CASS on the issue of "Large Agricultural Income". The Assessment was finalised u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961, on 08.09.2022, accepting returned income. 3. Later on, the Learned Principal Commissioner of Income-tax (in short "Ld PCIT") exercised his jurisdiction under section 263 of the Income-tax Act, 1961. The ld.PCIT noted that during the course of assessment proceedings, the assessing officer verified the ....
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....st years and subsequent years around 35% of the Gross Agriculture income as against which for the current year is around 33%. These facts are verifiable from the records. The declared Gross Agriculture income and Agriculture Expenses have been accepted for all these years, since inception, and have not been disputed by department. Besides, agricultural income is exempt from tax and even if revenue expenses associated with agricultural income is disallowed, then agricultural income would increase and consequently, it would be exempt from tax, hence, there is no loss of revenue. 5. However, ld. PCIT rejected the above contention of the assessee and observed that during the year under consideration, the assessee has shown gross agriculture income of Rs. 91,08,490/- and incurred expenses of Rs. 30,21,090/- thereby declaring net agricultural income of Rs. 60,87,400/- in income tax return (ITR) filed and the same has been shown as exempt income. The assessee has claimed agricultural expenses of Rs. 30,21,090/-, however, on verification of the documentary evidences submitted, it was noticed that the submitted evidences were only for Rs. 42,531/-. Hence, it was noted by ld. PCIT that th....
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.... MB data, instead of entire supporting for agriculture expenses, random supporting for such expenses was uploaded. However, the physical set of entire agriculture expenses were produced before the ld. PCIT. It would also be found from the quantum of agriculture expense that the quantum for the year under consideration is below that of last 6 to7 years. Therefore, in assessee`s case, the assessment order passed under section 143(3) read with Section 144B is neither erroneous nor prejudicial to the interests of revenue. The order was passed after a detailed and thorough examination of the relevant facts and submissions, and there is no demonstrable error in the application of law or process. The alleged insufficiency of inquiry, even if presumed for argument's sake, cannot by itself constitute an error under Section 263 of the Act, unless coupled with specific and quantifiable prejudice to revenue, which is conspicuously absent in the assessee`s case, under consideration. We note that the assessing officer conducted a detailed examination of the documents and explanations provided, including a verification of the agricultural income and expenses when matched with earlier year`s i....
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....of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is, therefore, obvious that when the circumstances are not such as to provoke an inquiry, he need not put every proposition to the test and probe everything stated in the income tax return. In a way, his role in the scrutiny assessment proceedings is somewhat akin to a conventional statutory auditor in real life situations. Of course, an Assessing Officer cannot remain passive on the facts which, in his fair opinion, need to be probed further, but then an Assessing Officer, unless he has specific reasons to do so after a look at the details, is not required to prove to the hilt everything coming to his notice in the course of the assessment proceedings. When the facts as emerging out of the scrutiny are apparently in order, and no further inquiry is warranted in his bona fide opinion, he need not conduct further inquiries just because it is lawful to make further inquiries in the matter. A degree of reasonable faith in the assessee and not doubting everything coming to the Assessing Officer's notice in the assessment proceedings cannot be said to be lacking bona fide, and ....
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....xable income and thus have no impact on revenue. Even if, the agricultural expenses were re-evaluated or disallowed, it would not alter the assessee's taxable income since the agricultural income itself remains exempt. Therefore, there is no measurable loss to the exchequer arising from the assessment order. 11. We note that the assessee has shown agricultural income, which is reproduced below, by way of chart: COMPARATIVE CHART FOR GROSS AGRICULTURE INCOME - AGRICULTURE EXPENSES FOR VARIOUS YEARS Sr. No. Assessment Year Gross Income Expenses Net Income % NEW LAND PURCHASE 1 2023-24 6282679 2300000 3982679 32.06 2 2022-23 8105796 2600000 5505796 32.07 3 2021-22 9002110 2550000 6452110 28.32 4 2020-21 9108490 3021090 6087400 33.16 7.3 ACRE 2019 16-04-2019 20-12-2019 28-01-2019 5 2019-20 3668672 1402679 2265993 38.23 6 2018-19 4921086 1925650 2995436 39.13 We not....