2015 (9) TMI 1652 - AT - Income Tax

Revision u/s 263 - Nature of land sold and the cash deposited in the bank account - capital asset or agricultural land - HELD THAT - From record it is clear that the AO made the investigation with regard to sale of the land and the cash deposited in the bank account of the assessee and family members. After making necessary inquiries, the AO accepted the returned income. He has also recorded that the land sold was not a capital asset within the meaning of section 2(14). The assessee submitted an agreement before the Assessing Officer which he has duly taken into cognizance and accepted the contents of the same as genuine. As per this agreement, the assessee has sold 5.35 hectares of land which he agreed to sell at ₹ 4,51,000/- per bigha. He has received cash of ₹ 1,50,000/- as advance on 6.10.2007 and cash of ₹ 55,50,000/- on 15.10.2007. The balance amount was to be received by 15.1.2008 and then assessee was bound to do registration in purchaser's name or in any person's name whom the purchaser wanted to get it registered. The assessee submitted this agreement before the AO which he has duly apprised and accepted the contents as true to explain the transaction in the assessee's bank account as he has not made any addition to that effect. In such a situation, any contrary view taken by the CIT with regard to the contents of the agreement for sale of the land shall amount to change in the view on the same issue. CIT himself was not sure about these transactions and he directed the Assessing Officer to examine the issue and make necessary inquiry and investigation and after ascertaining all the facts take decision as per law. This itself shows that the CIT himself was not sure regarding the erroneous of the order of the AO. AO has adopted a plausible view and the CIT was not justified in invoking the provisions of section 263. - Decided in favour of assessee.

Summary

Issues:
Condonation of delay in filing appeal due to ignorance about the filing process and difficulty in contacting the tax practitioner; Assessment of income tax return declaring income and agricultural income; Scrutiny of cash deposits in bank account and sale of agricultural land; Validity of CIT's order under section 263 of the Income Tax Act.

Condonation of Delay:
The appeal filed by the assessee was delayed by 39 days, leading to a challenge based on limitation. The assessee, a doctor practicing in a village, explained the delay was due to residing away from the tax practitioner's location and lack of knowledge about the appeal process. The Tribunal, considering the circumstances, condoned the delay attributing it to ignorance and difficulty in contacting the tax practitioner, allowing the appeal to be heard.

Assessment of Income Tax Return:
The assessee, an individual, filed a return declaring income and agricultural income. During scrutiny, it was found that a significant cash deposit was made in the bank account, raising questions about the sale of agricultural land. The Assessing Officer accepted the returned income after investigating the sale of land and cash deposits, concluding that the land sold was not a capital asset. However, the CIT initiated proceedings under section 263, setting aside the Assessing Officer's order for further inquiry.

Validity of CIT's Order under Section 263:
The Tribunal reviewed the Assessing Officer's investigation and acceptance of the returned income, emphasizing the genuine nature of the sale agreement submitted by the assessee. The Tribunal found the Assessing Officer's view plausible and criticized the CIT's intervention under section 263, stating that the CIT's uncertainty and direction for further inquiry indicated a lack of justification for invoking the provision. Consequently, the Tribunal set aside the CIT's order and reinstated that of the Assessing Officer, allowing the appeal.

This judgment highlights the importance of justifying interventions under section 263 of the Income Tax Act and the significance of thorough investigation and assessment in income tax proceedings.