Income Tax Appellate Tribunal - Nagpur
Shri Kirti Kumar Bhangadiya, Nagpur vs The Principal C.I.T.-(Central), ... on 27 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER LTA, No.255Nag/2016 Asstt. Y¥r.12011-12 ' Shri Kirtikumar Bhanadiya, Vs. | Pr. Commissioner of Income Tax 20-2, House No. 526, Central, Nagpur. Near Gatewel Hospital, Dhantoli Nagpur. | PAN AGYPB1659G | | | | _ _ |___..____ (Appellant) a, __(Respendent) Appetiant by Shri ALR. Ninawe. Respondent by _ "| Shri K. P. Dewani Date of hearing _ pee | | Date of pronouncement | 27/06/2017 4 ORDER
BER P.K. BANSAL, V.P. This appeal has been filed by the assessee agaist the order passed under section 263 of the Income Tax Act 1961 by the Principal Commissioner of Income Tax, Central, Nagpur dated 30/3/2016. The issue involved in this appeal is whether the order passed by the Pr. CIT is illegal, invalid and bad in law.
2. The facts in brief in this appeal are that the return under section 139(1) was filed on 31/1/2013 declaring income of Rs. 84,07,980/- and agricultural income of Rs. 3,60,205/-. The return was processed under section 143(1) on 30/3/2013. Search and seizure operations under section 132 of LT.
Act 1961 was conducted on the residential and business premises of Shri Mitesh Bhangdiya and Shri Kirtikumar Bhangdiya on 19/07/2011.
Subsequently notice under section 153A was issued on 28/12/2012 in response to which the assessee filed the return of income under section 153A on 21/3/2013 on an income of Rs. 84,07,980/-. The order under section 143(3). was passed on 31/3/2014 determining total incame at. Rs. 1,09,43,853/- and agricultural income of Rs. 3,60,205/-. The Pr. CIT noticed from the assessment record and seized record that the assessee has purchased the following lands:
Name of |Name of the |Description ofl[Area [Consideration [Dtofsale | the seller agricultural inHetriAmt {incl of jdeed purchase iand & Kh No stamp + Reg r Exp) Shit. Gyaneshwar Mouza 2.76 |3.47,250/- 6/11/2009 mmy|Kidikumar ijankiram Zade |Navegaonpeth c wBhangdiy a Kh No.92 P Mouza 2.72 [2,62.9207- 5/11/2009 Hari Domaji Navegaonpeth wale Jivtode Kh No.3 Mouza 1.39 |1,31.450?- 5/11/2009 Anandrao J Zade |[Navegaonpeth Kh.No.94 Mouza Tirkhura {1.94 [3,94,130?- 2/Bf2010 Vinod Fulnath Kh. Na. 169/2 Shambharkar Mouza Gardapar|1.21 |7.40.4507- 1/9/2010 Sudhakar Kavadu |Kh.No.99/1 Chokhare [Mouza Gardapar|0 61 |[3.94,3707- 30/8/2010 Dhanpal Kundlik |Kh.No. 90/3 {Titare Kachru Kama ohrirame Kh.No. 100 Mouza Gardapar:0.80 493, 7707- 30/8/2010 Naku! Narayan Kn.No. 90/4 Kemaye Mouza Gardapar|2.96 |23.02.8807- 1/9/2010 Kailash Shankar |Kh.Ne. 100 Chanore Mouza Gardaparj348 [27,00 2007- __|1/6/2010 Manjulabat Kh No.101 Shankar Dhangore Mouza Gardapar|1.91 |7.99.7207- 3O/8/20 10 Marat Budha KhLNo 92/2 Lakhande Moura 0.39 /3.453.2207- efi2fe0io Hemraj Goma)! Kawathala Dandekar & Kh. No, ta4 Others Mouza 1040 [3.67,7407- STITI2010 Pundlik Mahadeo |Kawathala Dandekar Kn.No.114 Natthy Kisan Moura Kavathala |0.42 378. 770+ 2TiFI2010 Rajurkar KhNo. #45 Mouza Kavathala|0.67 |6.06.620/- 26/7/2010 | Sheshraa Kh Noes Chandrabhan Pasare Mouza Kavathala |0.72 6 54, 4560/- 26/7/2010 Frasannakumar KheNe. 66 Prabhakumar Dawle Mouza Kavathalal140 /11.80,9907- 2regig Mayur Kh.No.60/2 Madhukarrao Code q Mouza Kavathala |0.38 34571 OT- 2e/7/2010 4 f Mouza Kavathala [040 _'[3,87.720/- 2777/2010 Chandrashekhar |Kh.No.TS4 Domajt Dandekar [ : Mouza Kayathala |0.52 (4 70780). 29T/2010 Ankosh Dharmaji {Kh.No.94 Nannaware & others Mouza Kavathala 0.15. !|1.36.220/- 29/7/2010 Kawdu Shiva Kh Ne. 109 Shembade Mouza Kavathala [0.54 [4.89 260/- 29/7/2010 Demabai Mahadey |Kh.No 60 Savsakde & Others Mouza Kavathala [130 111.80 060). 1DIB/2010 Jagan Hari Kale |Kh.No.54 Mouza Kavathala|0.92 [834.5507 40/8/2010 Jagan Hari Kale IKh.No.55 Mouza Kavathata [0.13 /4.18.255/- 2T/Bi2010 Manda KANoe. 140 Purushottam Shembekar & Others Mouza Kavathala|1 06 [3.940307 23/8/2010 Prabhakar Khadu [Kh.WNoi1?2 Heiwatkar Mouza Kavathala|0.36 ([3.27.520)- 23/8/2010 | Shriram Kavady Khoo?
Kapse & Other Mouza Kavathala (0.40 [2.62 7807 2 3Bi2010 Prabhakar Khadu (Kh No 113 Helwvatkar Mouza Gardapar |1.6 |9.89.8607 01/41/2010 Ragho Chaudhary |Kh.No.94 Vinod Chokhare |Mouza Gardapar |2.00 |10,50.2807- 30/10/2071 0 KH.Ne: 89 o>.
Mouza Kavthala [0.74 |3.94,0507- 111/201 0 lndumati Kayerkar |Kh.No 104 Mouza Gardapar [0.90 [3.94.0307- 23/08/2010) Janba Mariram (KANG. 93/4 Nanaware [- Mouza Gardapar [0.80 13.94.0307- 23/08/207 G | Shrikirshna Kh.No 93/2 Maniram Nannaware Total 33.25 92,027,861, 0057- Description of land Kh No Area in Hetr Date sale |Consideration deed Amt |Mouza Navegaonpeth Kh [2.76 23/9/2010 1.01, 88,0007 - No.9?
Mouza Navegaonpeth Kh.No 93 |2.72 'Mouza Navegaonpeth Kh.No.g4 11 39 IMouza Tirkhura Kh.No 69/2 '(161 "23/8/2010 38,80,0007- Mouza Gardapar Kh.No. 99/1 1.24 23/9/2010 1,56,72,0007- 1.81 0.89 2.96 Mouza Gardapar Kh.No.101 348 Mouza Gardapar *Kh.No9g2/2(/7.31 yllouza Kawathala Iih.No.184 [0.39 20/8/2010 1,21 ,74,0007-
#wiouza Kawathala Kh.Noi14 |0.40 Mouza Kavathala Kh. No. 145 = 10.42 Mouza Kavathala Kh.No.48 0.67 Mouza Kavathala Kh.No.56 0.72 EaTF
--_---- 6 Mouza Kavathaia Kh.No.6G/2 1.40 I Mouza Kavathala KA.No.100 0.38 IMouza Kavathala Kh.No. 181 10.40 Mouza Kavathala Kh No 94 052 Mouza Kavathala Kh.Noi0g [0.15 Mouza Kavathala Kh.No.60 a.54 Mouza Kavathala Kh.No.54 1.30 Mouza Kavathala Kh.No.55 og2 -
Mouza Kavathala Kh.No.116 0.13 23/8/2010 28,92 000}-
Mouza Kavathala Kh.No.f12 1.06 Mouza Kavathala Kh.No.97 0.36 Mouza Kavathala Kh.No.113 6.40 16 ait 172010 53,87 ,000/-
2.00 O.F4 SOM O2040 10.98, 000s jf IMouza GardaparKn.No Sa 1090. 30/10/2010 35 20.000- é Mouza Gardapar Kh.No.93/2 --*([0.B0 | Total 35.25 5 .27.91,0007- It was also noticed that these jands were soid to M/s, Aparna Infraenergy within a short span of time 10 to 40 days from the date of purchase as detailed below:
Consideration Amt Date gale |Description of land Kh No Area in Hetr dean Mouza Navegaonpeth Kh No.82 Mouza Navegaonpeth Kh.No.93 Mouza Navegaonpeth Kh.No.94 | 2.76 272 1 39 23/G/2010 1,01, 88 0007-
| 1.61 23/9/2010 28.80,0007- IMouza Gardapar Kh.No.00/1 1.21 po Mouza Gardapar Kh.No.90/3 0.81 Mouza Gardapar Kh.No.ga/4 0.80 Mouza Gardapar Kh-No 100 2.96 Mouza Gardapar Kh.No.101 3468 Mouza Gardapar *Kh.No. 82/2 1.34 23/9/2070 | 1,56, 72, 0007- yilouza Kawathala Ijlh.No, 184 0.39 fwicuza Kawathaia Kh No. 114 0.40
----~ Mouza Kavathala Kh. No. 115 0.42 20/8/2010 Mouza Kavathala Kh.No.48 Mouza Kavathala Kh.No.56 O.6F O72 i dp wNMouza Kavathala Kh.No.60/2 aN 1.40 Biouza Kavathala Kh.No. +00 0.38 Souza Kavathala Kh.No.181 Mouza Kavathala Kn.No.94 0.40 0.52 Mouza Kavathala Kh.No.109 0.15 Mouza Kavathala Kh.No.60 0.54 Mouza Kavathala Kh-No.54 1.30 Mouza Kavathala Kh.No.55 O92 1.27.74.0007- Mouza Kavathala Kh.No.110 0.13 23/6/2016 26.92 OOO} Mouza Kayathala Kh.No 119 Mouza Kavathala Kn No 9? 0.36 Mouza Kavathala Kh.No.i13 0.40 Mouza Gardapar Kh No.94 1.6 9/14/2010 53,67 O00; IMouza Gardapar Kh.No.8g 2.00 | Mouza Kavthala Kh.No.104 O74 30/10/2010 10.98.000/- Mouza Gardapar Kh. No.93/1 oso 30/10/2010 25,20 ,000/-
Mouza Gardapar Kh.No.S3/2 0.80 Total ] 35 25 5.27 41,0007.
It was noticed by the Pr. CIT that M/s. Aparna Infraenergy is a firm which was having two partners. Shri Mitesh Bhangdiya father of assessee was partner with 65% of profit with two other partners. This Partnership was econstituted Pithe year 2010 inserting new partners of PHL group. Incoming partners ight capital contribution towards 50% of the stake and the firm agreed to a t up and develop a coal based thermal power plant of 250 MVV at Mouza Kawthala, Tah. Chimur Dist. Chandrapur. Memorandum of agreement dated 24/05/2010 was seized at page Nos. 36 to 52 of item No. 12 of Annexure B-1. Amendment to this agreement dated 09/ 10/2010 was also seized at pages 24 to 35 of item No, 12 of Annexure B-1. As per clause 5 of this agreement firm M/s, Aparna Infraenergy had to purchase 37.02 hectres (approx. 91.43 acres} of freehold jand from Shri Mitesh Bhangdiya and his family members. As per clause 7 of the amended MOA the above stated firm has to purchase 150-200 acres of suitable land for setting up coal based thermal power plant. In pursuance of this, assessee purchased above discussed land and sald the same within the gap of 10 to 40 days to M/s. Aparna Infraenergy. As per the seized document total land admeasuring 35.25 hectres purchased by assessee In july -- Seotember, 2010 and soid to M/s. Aparna Infraenergy in Auqust- September, 2010. The 4.0. has discussed this issue in detail in his order for the assessment year 2010-11 but the addition made by him was deleted by the CIT(A) on the ground that the transaction did not pertain to the assessment year 2010-11 but pertained to assessment year 2011-12. The Pr. CiT was of the opinion that since the land was purchased and sold within a span of 10 to 40 days in August -- September 2010, the income related to the said transaction of land needs te be assessed in assessment year 2011-12, was issued to assessee on 04/03/2016 asking assessee as to why purchase and sale of jand not be treated as adventure in the nature of trade and should nat be taxed in assessment year 2011-12 instead of assessmngent year 2010-11. The assessee submitted the reply which was considered by Pr. CIT but did not agree and took the view that the order passed by the A.O. is 10 erroneous and prejudicial to the interests of the revenue. The Pr. CIT therefore set aside the same by observing as under:
"T have gone through the submissions and found that assessee has purchased and sald land within a span of 10-40 days of 35.25 hectres discussed in the chart referred in preceding paras somewhere in the order. The land is purchased with a view to be used for setting up of coal based thermal power plant of 250MVV on the said land as is evident from the agreement dated 24/05/2010 and amended agreement dated 09/07/2010. As the land is not used for agricultural purpose it appears to be for the purpose ofr commercial activity and hence to be taxed as adventure in the nature of trade, However, before doing so, the AO needs to make on the spot enquiry about utilization of land before purchase and after purchases. He should go through all the relevant documents. In view of discussion made above, the documents seized at the time of search and the discussion made in the assessment order of A.Y. 2010-11, the order for A.Y. 2011-12 ts considered erroneous and prejudicial to the interests of revenue hence » it is set aside for limited purposes, The A.O. is directed to ga through Scythe documents, make the spot verification and then pass order de novo. Rihe order stands set aside."
3. We have heard rival submissions and carefully considered the same along with the orders of tax authorities below. We noticed that the Pr. CIT has found the order passed by the A.O. to be erroneous and prejudicial to the interests of revenue as in his opinion the A.O. has not made any enquiry or examined the issue whether the purchase and sale of the land within span of 10 to 40 days is chargeable to tax . We noted that notice for the assessment year 2011-12 was given by the A.O. under section 142(1) afong with notice.
There was an Annexure at page 8 which reads as under:
ANNEXURE To Notice u's 142(1} dated 07.01.2014 in the case of Shri Karttkumar M Ghanediva for A VY 2006-07 to 2012-13 11 1} Please furnish the details of agriculiure lund purchased specifically in * Chirnur Tehsil. Distt Chandrapur. 'The information should be in follow Ing. format.
Nain? af the | IName of the [Description of [Area in Consideration [Dtof sale purchaser selicr gen. Land ne. | efeer aniounit deed PHN. Kh Ne Shri Kictikumar M Bhiangidiva | | =} Please explain the source of investments against the purchase of agricultural lands along with bank statements.
3} Please ascertain for what purpose the 'agricultural land was purchased and whether the purpose is julfilled?
4) Please furnish the bank accounts of farmers to whom you have made payment against the purchase af their agricultural land.
5) Have you sold ail the agricultural land purchased from farmers to Aparna Intrat:nergy P Lid? If no, then. please furnish the specille details of land unsold ta Aparna InfraEnergy P Lid .
6) Please explain the ancestral agricultural lands in your name? Please produce the documentary proof ie. 7/12 extracts.
7) Whether ancestral agricultural land have been sold out, iF yes, please furnish the oame of buver and date of execution of sale deed. .
8) AS per the seized material. specifically purchase deed in the name of vou, itis seen that very little time of span, you have sold out the agricultural land to Aparna Intrakinerey Pvt Ltd a firm, Please furnish the copies Of agreement to sale and sale deed ofall the jand sold aut to Aparna Infraencrey Pvt Ltd.
The assessée in reply to the said notice vide his letter submitted as under:
"To a The Dy. Commissioner of Income Tax, mig entra! Circle-2(1}. Nagpur.
eesAssessee = = KirtiKumar Mitesh Bhanadiya wf Assess. Year: 2006-07 to 2012-13 MO" PAN: AGYPB1659G Reference <: Notice U/s 142(1) dated 07.01.2014 The assessee now submits the reply of above cited notice.
1. The assessee encloses herewith the details of agricultural Land Purchased specifically in Chimur Tehsil, Dist. Chandrapur, 12
4. The assessee humbly submits that the agricultural Lands are purchased mainly through Banking Channel The assessee has encioses herewith the bank book, wherein the Payment along with the source of the investment is reflecting. The bank statement of the aforesaid bank book is already submitted in our previous submission, Some of the agricultural lands have been purchased through cash out of withdrawal from the bank and gift and advances 'eceived from the family members. The assessee encioses herewith the jedger abstract of Agricultural Jands purchased in support of the submission made.
3. The assesses has purchased and used the Lands for the agricultural Purposes and ihus purpose of acquiring agricultural land is fulfilled.
4. The assessee js unable furnish the bank statements of the Farmers from whom the agricultural Lands has been Purchased as they are refusing to provide the same.
5. The assessee encloses herewith the details of agricultural Lands sold to Aparna Infraenergy . The assessee also states that out of all the agricultural lands purchased by assessee, only a few have been sold to M/s Aparna infraenergy, And there were no further lands unsold to Aparna infraenergy during the previous year relevant to assessment year 2012-13.
=o 6. & 7. There were no ancestral agricultural Lands in the name of P assessee.
a ?. The assessee humbly states that the assessee had purchased the agricultural lands for the agricultural Purpose Only. Part of the agricultural lanc purchased by assessee has been sold to Aparna infraenergy."
In continuation of the reply to the notice dated 07/01/2014 the assessee submitted the details of the agricultural land sold appearing at pages 13 of the paper book as under:
"KIRTIKRUMAR M. BHANGDIYA Reply to point.ng. 5 of notice u/s. 14211) dated 073.01,2014 Agricultural land.sold to Aparna Infracnergy Sr. Wa, | Deseriptien of Land Acre KhNe, Dt. OF Sale Sales Deed Consideration 1 Agriculture Land- Navesaoanpeth 2.76 Hee. ho? FRAGILE TM 8000.00 3 Agriculture Land -Whas vccanpeth 2.72 Hee. Kin i3 Asricubiure Lind-Nasegaanperh 1.29 Hie KAN G4.
Avril Land-Tirkhuea Po Flee. Kh No 169-2 D9. FO V0 78 80,000 00 wil Agri Cand-Gardapar Pe Hee, BN | | Agri. Land-Cardapar WStHee. KANG 99 Awl Land-(rardapar (REQ Hee. Bde Ni Std 20910 Age) LandGardapar 2 Hee. Kb Wa 1dg ; Aur (Land Charda par Sd ahRlee KAN Aur. Land-Gardapar Lal Tie. Rat Wu 16.72 EG Aan, Land-Kawathala O38 lide. RNa] Ba Ia Agri. Land-Kavathata Agri. Land-Kavathala O40 Meco KhoNet 4 0.42 Hee. KA .Nec Ls Agri Land-Kayathala Woe7 tec Kh Wek 2008-20 80 12174000 00 14 I4 red Land-Kyas arhidit 72 Mec. Kh.Na.sé 5 Agr. Land-havathala I 40Hee. KhNo.Gt?
16 Auri. Land -Kavathala - (a8 Hec. Rio. Wg 17 Avi. Land-Kavathihs O40 Heo. KiNG. 8 | Agri: Land-Kavathala (.37-Hee. Kio 94 Age. Land-Kavathala Da Hee. Kieivak BOS
3) Agri. Land-Kavathata 0.54 Hee. KANG.6o 21 Agri. Land-Kavathala. 130Hee. KhNo. 34 22 Agri. Land-Kavathala 0.92 Hee. KhNe 3S 2A AgrlLand-Kavathali Wiailec. Kio. Phe 23082010 a4 CHO) 34 Agri Land-Ravaihala ~ 1.6 Hee, KhNo 112 io . 35 Agri. and-Kavathala 1.36 Flee. KiNo. #4 1 at | Agri Land-RKavathala WA Hee. Ki Neds 38 Avri. Land At Gardapar lélee. KANG OO lOO [53.67.000.00 [24 Agri. Land AtGardapar SMB. Rb Ned KD | 3] Apri, Land At Kavthata O74 llec, KENe. [0d MOTO] 1G.48.000.00 a0. Agr. Land At Gardupar Modes Kaa | Ate | fe 2010 25,2000 00 [32 Adri. Land At Chardapar UROHe. KhNod? | examined the issue regarding purchase and sale of agricultural lands within the span of 10 - 40 days by the assessee. In our opinian under section 263 of the 1.7, Act 1°961 both the conditions for invoking jurisdiction that the order passed by the A.Q. is erroneous and prejudicial to the interests of the revenue must be fulfilled. When the A.O. has taken one of the possible view until and unless the view taken by the A.O. is legal and not sustainable in law, the order of the A.O. can not be regarded to be erroneous. Our aforesaid view is duly supported by the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co Ltd, ¥s, CIT reported in 243 ITR 683 in which it 16 was held as under:
5.
"The pre-requisile to the exercise of jurisdiction by the Commissioner under Section 263 is that the order of the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Assessing Officer is erroneous but is not prejudicial to the revenue -- recourse cannot be had to section 2631}. There can be no doubt that the provision 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. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. [n the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order 'passed by the Assessing Officer. Every loss of revenue as a ponsequence of the order of the Assessing Officer cannot be treated fas prejudicial to the interests of the revenue. For example, if the Assessing Officer has adapted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Assessing Officer is unsustainable in law. Where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same without application of mind as such will be erroneous and prejudicial to the interests of the revenue."
| The learned Departmental Representative before us vehemently relied on the Explanation to section 263 inserted with effect from 1/6/2015. We nave gone through the Explanation to section 263 of I.T. Act 1961 which l?
--
defines the words "erroneous" and "prejudicial to the interests of revenue". As we noticed that the question when an order can be termed as erroneous has been decided by the Hon'ble Bombay High Court in the case of CIT Vs. Gabrial India Ltd., 203 ITR 108 in which the Hon'ble High Court has held as under:
"From the aforesaid definitions itis clear that an order cannot be termed as erroneaus unless it is not in accordance with law. If an income tax officer acting in accordance with the law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not 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 berusal of 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 ata figure higher than the one determined by the Income tax officer. That >, Would not vest the Commissioner with power to examine the . gccounts and determine the income himself at a higher figure. "JN is because the Income tax officer has exercised the quasi tidicial power vested in him in accordance with law and "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 the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has 'been impsed"
The Hon'ble High Court has considered the definitions given to the words '"erranéous", "erroneous assessment" and "erroneous judgment" in Black's Law Dictionary and and accordingiy held that an order cannot be termed as erroneous unless it is not in accordance with law. An order can be termed as "erroneous" only if it is not in accordance with the law.
ene The Hon'ble Delhi High Court has also followed the above said view in thecase of CIT Vs. Sunbeam Auto Ltd (2011)(332 ITR
167). The Hon'ble Delhi High Court has also extracted following observations made by the Tribunal:
* Still further, the Hon'ble Supreme Court in Malabar Industrial Co. (2000) 243 ITR 8&3 has held that when two views are possibie and the Assessing Officer has taken one of the possible view, then the order cannot be held to be prejudicial to the interest of the Revenue. Since the Commissioner of Income tax could not come to a definite finding that the expenditure in question was a capital expenditure in the proceedings under section 263, in our opinion, the order of the assessing officer could not be held to be erroneaus."
In the case of Nagesh Knitweéars P Ltd (2012345 ITR 135), the Hon'bleDelhi High Court has elucidated and explained the scope of the provisions of sec.263 of the Act and the same has been extracted by the Deihi High court in thecase of CIT Vs. Goetze (India) Ltd (361 TTR 505) as under:-
"Thus, in cases of wrong opinion or finding on merits, the Commissioner of Income tax has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the ~, order under section 263 is passed. tn such cases, the order <,qof the Assessing Officer will be erroneous because the order mes not sustainable in law and the said finding must be apecorded. The Commissioner of Income tax cannot remand Sf the matter to the Assessing Officer to decide whether the "findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the Commissioner of Income tax must give and record a finding that the orderfinquiry made is erroneous. This can happen if an enquiry and verification is conducted by the Commissioner of Income fax and he is able to establish and show the error or mistake made by the Assessing officer, making the order unstainabie in law. In some cases possibly though rarely, the Commissioner of Income tax can also show and establish that the facts on record or inferences drawn from facts on fecord per se justified and mandated further enauiry or investigation but the Assessing officer had erroneously not undertaxen the same. However, the said finding must be clear, unambiguous and net debatable. The matter cannat be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneaus is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the matter/ssie to the Assessing Officer would implyand mean the Commissioner of Income tax has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspecUquestion...."
Similar view has been expressed by Hon'ble Madras High Court in the case ofCIT Vs. Amalgamations Ltd (238 ITR 963).While discussing Explanation{a} To Explanation 2 inserted wet. 1/6/2015 The ITAT. Mumbai held in the case of Shri Narayan Tatu Rane in ITA No. 2690/Mum/2016 vide order dated 6/5/2016 as under:
"The law interpreted by the High Courts makes it clear that the Ld Pr. CIT, before holding an order to be erroneous, should have conducted necessary enquiries or verificatian in arder to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted course of action of the Ld Pr. CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. The Ld Pr CIT has taken support of the newly inserted Explanation 2(a) to sec. 263 of the Act. Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.ef. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order. without conducting any enquiry or verification in order to establish that the assessment order ig not sustainable in law and order for revision. He can also farce the AO to conduct the enquiries in the manner preferred enquiry in a particular manner as desired by him, Such a 20 by Ld Pr. CIT, thus prejudicing the independent application of mind of the AQ. Definitely, that could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case ofParashuram Pottery Works Co. Ltd Vs. ITO (1977})(106 (TR 7} that there must be a point of finality in all legal proceedings and the stale issues should not be reactivitated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity, Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made, In our considered view, this pravison shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CU cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-a-vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of 4 Explanation 2 to sec. 263 is whether the AO has passed ithe order after carrying our enquiries or verification, which #7 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. tn our view, it is the responsibility of the Ld Pr. CU to show that the enquiries or verification conducted by the AO was not in accordance with the enquires 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 2fa) shall have retrospective or brospective application shall not be relevant.
In the instant case, as noticed earlier, the AO has accepted the explanations of the assessee, since there is no fool proof evidence te link the assessee with the document and Mis RNS infrastructure Ltd, from whose hands it was 21 Fr seized, also did not implicate the assessee. Thus, the ° assessee has been expected to prove a negative fact, which / is humanely not possible. No other corroborative material Was available with the department to show that the explanations given by the assessee were wrong or incorrect. Under these set of facts, the AO appears to have been satisfied with the explanations given by the assessee and did not make any addition. We have noticed that the Hon'ble Supreme Court has held in the case of Centra! Bureau of Investigation Vs. V.C. Shukla and Others (Supra) that the entries in the books of account by themselves are not sufficient to charge any person with lability. Hence, in our view, it cannot be held that the assessing officer did not Carry out enquiry or verification which should have been done, since the facts and circumstances of the case and the incriminating document was not considered to be strong by the AO to implicate the assessee. Thus, we are of the view that the assessing officer has taken a plausible view in the facts and circumstances of the case. Even though the Ld Pr. CIT has drawn certain adverse inferences from the document, yet it can seen that they are debatable in nature. Further, as noticed earlier, the Ld Pr. CIT has not brought any material on record by making enquiries or verifications to substantiate his inferences. He has also not shown that the view taken by him is not Sustainable in law. Thus, we Shes, are of the view that the Ld Pr. CiT has passed the impugned BRO. Hence we are of the view that the Ld Pr. CIT was not Austified was not correct in taw in holding that the impugned " assessment orders wera erroneous,"
6. in the instant case, as noticed earlier, the AO has accepted the explanations of the assessee, since there is no fool proof evidence to link the In the instant case we note that the assessee has duly submitted all the details of purchase and sale of lands being in the nature of agricultural lands. Therefore, it cannot be said that the A.O. has not examined the issue. In our view the A.O, has duly examined the issue and has taken a possible and cogent view that the purchase and saie of agricultural lands cannot be taxed. It is not the case where GL 22 the order has been passed without making aay enquiry or verification which could have been made by a prudent man. The Pr. CIT while passing the order under section 263 viewed that the order passed by the A.O. is erroneous and prejudicial to the interest of revenue but he has not Drought out as to what is error in the order and how the A.O. has not made enquiry. He has simply observed that since the transaction of purchase and sale of agricultural lands had taken place during the assessment year 2011-12, therefore, it should be taxed during the said assessment year. On this basis, in our opinion, it cannot give the jurisdiction to Pr. CIT under section 263 to revise the assessment and that too when the 4.0. has examined the purchases and sate of the agricultural land and taken one of the possible view. We, therefore, set aside the order passed by the Pr, CIT(A) under section 263 of the I.T. Act, 1961, In the result, the appeal of the assessee is allowed.
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SHMARIIT SINGH) ( P. K. BANSAL } " Judicial Member Vice President Dated 7/06/2017 *Singh Copy of the order forwarded to:
I. The Appellant
2. The Respondent 3 Concerned CIT
4. The CIT(A) Ze.
Lens one &, "IPMBIR
5. D.R., Agstt Reuistrar AURORE i ty a, Peg:
toe (nua Kile & ~t