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2022 (5) TMI 103 - AT - Income TaxRevision u/s 263 by CIT - Exemption u/s 54B and short term capital gain - HELD THAT - There is no dispute that there is no reference about various enquiries or investigations carried out by Assessing Officer while passing the assessment order on 22/12/2017. Before us, the learned AR of the assessee vehemently submitted that during assessment, AO made detailed enquiries and accepted the claim of assessee on exemption u/s 54B as well as short term capital gain - We find that during the assessment proceedings, the Assessing Officer issued various notices for seeking information and evidence with regard to the claim of exemption u/s 54B as evident from the show cause notice dated 10/11/2017 and 13/11/2017 and 29/11/2017. The assessee furnished his reply and also filed evidence that agriculture land sold by the assessee was used for agriculture activities as evident from extract of 7/12. Thus, the issue was examined by Assessing Officer and on his satisfaction, no addition was made. So far as other issue regarding sale and purchase of other properties i.e. flat in Life Style building, the Assessing Officer vide his notice dated 13/11/2017 required necessary details. 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 office, 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. Similar view has been taken by Hon'ble Jurisdictional High Court in CIT Vs Nirma Chemical Works Ltd 2008 (2) TMI 373 - GUJARAT HIGH COURT - Appeal of assessee allowed.
Issues Involved:
1. Initiation of proceedings under section 263 of the Income Tax Act, 1961. 2. Assumption of jurisdiction under section 263. 3. Violation of principles of natural justice. 4. Allegation of the assessment order being a mere "change in opinion." 5. Verification of capital gain disclosure and exemption claimed under section 54B. 6. Validity of the assessment proceedings under section 143(3). 7. Setting aside of the assessment order without pointing out specific errors. Detailed Analysis: 1. Initiation of proceedings under section 263 of the Income Tax Act, 1961: The assessee contested the initiation of proceedings under section 263 by the Principal Commissioner of Income Tax (PCIT), arguing that the proceedings were initiated without proper grounds. The PCIT initiated proceedings on the basis that the assessment order was erroneous and prejudicial to the interests of the revenue, as the Assessing Officer (AO) allegedly did not conduct proper verifications or enquiries. 2. Assumption of jurisdiction under section 263: The PCIT assumed jurisdiction under section 263, claiming that the AO did not verify the capital gains disclosed by the assessee on the sale of properties and the exemption claimed under section 54B. The assessee argued that the AO had indeed conducted necessary enquiries and verifications during the assessment proceedings, and thus, the assumption of jurisdiction by the PCIT was erroneous. 3. Violation of principles of natural justice: The assessee argued that the principles of natural justice were violated as the grounds for initiating action under section 263 were not mentioned in the show cause notice issued by the PCIT. The PCIT proceeded with the revision without providing the assessee an adequate opportunity to present their case. 4. Allegation of the assessment order being a mere "change in opinion": The assessee contended that the order under section 263 was merely a "change in opinion" by the PCIT. The original assessment order under section 143(3) was argued to be neither erroneous nor prejudicial to the interests of the revenue, and thus, the PCIT's action was unreasonable and uncalled for. 5. Verification of capital gain disclosure and exemption claimed under section 54B: The PCIT observed that the AO did not verify the capital gains disclosed by the assessee on the sale of agricultural land and a residential flat, nor did the AO verify the exemption claimed under section 54B. The assessee, however, provided evidence that the AO had issued multiple notices and received detailed replies, including necessary documents and proofs, which were examined before accepting the claims. 6. Validity of the assessment proceedings under section 143(3): The assessee argued that the entire proceedings were valid as the assessment order under section 143(3) was framed after due inquiry. The AO had issued notices and received detailed replies from the assessee, which were considered before finalizing the assessment. 7. Setting aside of the assessment order without pointing out specific errors: The PCIT set aside the assessment order without pointing out specific errors or how the order was erroneous and prejudicial to the interests of the revenue. The assessee argued that the PCIT merely held a different opinion without substantiating how the AO's order was erroneous. Judgment: The Tribunal considered the submissions of both parties and reviewed the relevant case laws. It was noted that the AO had indeed conducted detailed enquiries and verifications during the assessment proceedings. The Tribunal referred to the principles laid down in various judgments, including Malabar Industrial Co. Ltd. v. CIT and CIT vs. Gabriel India Ltd., which emphasized that an order cannot be termed erroneous unless it is not in accordance with law and that mere differences in opinion do not justify revision under section 263. The Tribunal concluded that the AO had taken a reasonable and plausible view, which could not be branded as erroneous. The twin conditions for invoking section 263—error in the order and prejudice to the interests of the revenue—were not fulfilled in this case. Therefore, the order passed by the PCIT was set aside, and the appeal of the assessee was allowed. Order: The appeal of the assessee was allowed, and the order pronounced on 27/04/2022 was placed on the Notice Board.
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