2021 (12) TMI 594 - AT - Income Tax

Revision u/s 263 by CIT - assessee claimed deduction under section 54B against the Long Term Capital Gains (LTCG) earned thereon, on purchase of another agriculture land at Ved Karada, Surat - HELD THAT - We have seen the copy of photographs which shows that vacant portion of the land is in cultivation form. The copies of same photographs are available in the assessment record, which were taken at the instance of inspector. No unusual things are seen in these photographs, which may suggest that the said land is used for other than agriculture purpose. We have also seen the copy of the sale deed dated 30.03.2015, executed by assessee in favour of the purchaser, wherein the nature of land is clearly mentioned as agriculture land . Further in the land record in Form-7/12, the nature of land is also mentioned as agriculture. The Sub-Registrar at the time of registration of sale deed has accepted the nature of land as agriculture. And form the other evidence placed before us, the assessee has shown that the land in question was used for agriculture purpose. Considering the aforesaid evidence, wherein the assessee has clearly demonstrated that the land under question was being used for agriculture purpose, therefore, we are of the view that the assessing officer has taken a reasonable and plausible view, which cannot be branded as erroneous. Since, the assessing officer has accepted the explanation of assessee, which was coupled with evidence; the assessing officer may not have thought to pass detailed order on the issue examined by her. In our view, once the contention of the assessee on a particular issue is accepted by assessing officer, the order is not appealable order and no appeal would be filed, against such accepted position as an assessee will not feel aggrieved with it, it is not necessary to give reasons of acceptance of such pleas. So far as the observation of ld PCIT that the assessing officer did nothing to sort out the enquiry to verify the assertion of the assessee and there was failure on the part of Assessing Officer to bring on record the even correct facts or non-conduct of enquiry verification of facts, is concerned, we find that the assessing officer made requisite investigation before allowing relief to the assessee. The investigation conducted and the view adopted by the assessing officer in the present case, if not accepted by the Ld. PCIT, in nothing but change of opinion. It is settled position in law that no revision of assessment order is permissible on mere change of opinion. On the basis of material before the assessing officer, she took reasonable, plausible and legally sustainable view, which cannot be branded as erroneous. There is no doubt that while accepting the claim in the assessment, there may be some loss of revenue, tax can be levied only with the authority of law, and every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the revenue unless the view adopted by assessing permissible in law. Once 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. Hence, the grounds of appeal raised by the assessee are allowed.

Summary

Issues Involved:
1. Legality of the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act.
2. Whether the assessment order passed by the Assessing Officer (AO) under Section 143(3) was erroneous and prejudicial to the interests of the revenue.

Issue-wise Detailed Analysis:

1. Legality of the Order Passed by PCIT under Section 263:
The assessee challenged the PCIT's order dated 04.03.2020, which set aside the AO's assessment order dated 22.11.2017 and directed a fresh assessment. The assessee argued that the PCIT's order was "bad in law and void ab initio." The PCIT had issued a show cause notice under Section 263, questioning the verification of the utilization of land for agricultural activities before its transfer, which was crucial for the deduction claimed under Section 54B. The PCIT believed that the AO's order was erroneous and prejudicial to the revenue's interest due to insufficient verification.

2. Whether the Assessment Order Passed by AO was Erroneous and Prejudicial to Revenue:
The PCIT identified that the assessee sold land for ?2.14 crores and claimed a deduction under Section 54B for purchasing another agricultural land. The PCIT contended that the AO did not properly verify whether the land was used for agricultural activities before its sale, which made the AO's order erroneous and prejudicial to the revenue.

The assessee, in response, provided evidence that the AO had conducted thorough verification, including deputing an inspector to verify the land's agricultural use. The inspector's report and photographs showed ongoing agricultural activities, and the AO considered these findings while allowing the deduction under Section 54B.

The Tribunal examined the facts and submissions. It referred to the Supreme Court's decision in Malabar Industrial Co. Ltd. v. CIT, which established that for the PCIT to exercise jurisdiction under Section 263, the order must be both erroneous and prejudicial to the revenue. The Tribunal also cited the Bombay High Court's ruling in CIT Vs Gabriel India Ltd, emphasizing that an order cannot be deemed erroneous simply because the PCIT disagrees with the AO's conclusion if the AO's view is plausible and legally sustainable.

The Tribunal noted that the AO had made specific inquiries, obtained an inspector's report, and reviewed photographs showing agricultural activities. The Tribunal found that the AO's decision was based on reasonable and plausible evidence, and the order was not erroneous merely because the PCIT had a different opinion. The Tribunal concluded that the AO's order was not erroneous or prejudicial to the revenue, as it was based on a thorough investigation and legally sustainable view.

Conclusion:
The Tribunal allowed the assessee's appeal, holding that the AO's assessment order was not erroneous or prejudicial to the revenue. The PCIT's order under Section 263 was set aside, and the AO's original assessment order was upheld. The Tribunal emphasized that mere differences in opinion do not justify revision under Section 263, and the AO's view, supported by evidence, was reasonable and legally valid.