2023 (9) TMI 672 - AT - Income Tax

Revision u/s 263 - deduction u/s 54B - No specific enquiry with regard to the land use prior to its date of sale i.e. whether the land which was sold was used for agricultural purposes or not - HELD THAT - Assessee was in possession of two properties, one of which was sold during the impugned year under consideration. Further, it is observed that the counsel for the assessee has contended that the assessee has shown agricultural income as is evident from the return of income for the past assessment years, however, no enquiry was made whether such agricultural income was with respect to the land which was sold by the assessee during the impugned year under consideration, against which the assessee has claimed deduction under section 54B - As observed that the assessee has not made any specific enquiry with regard to the land use prior to its date of sale i.e. whether the land which was sold was used for agricultural purposes or not. On perusal of the assessment records, it is seen that no specific details regarding the land use was submitted before the assessing officer during the course of assessment proceedings. Therefore, we are of the considered view that adequate enquiries were not made by the assessing officer during the course of assessment proceedings in respect of satisfaction of the conditions of eligibility to claim of deduction u/s 54B. Principal CIT has correctly observed that during the course of assessment, the assessee only produced copy of 7/12, which does not establish the actual use of land for agricultural purposes, so as to claim benefit of deduction u/s 54B - Accordingly, looking into the facts, we find no infirmity in the order of Principal CIT so as to call for any interference. Decided against assessee.

Summary

Issues involved:
The jurisdiction of Principal Commissioner under section 263 of the Income Tax Act, 1961 and the correctness of the assessment order framed under section 143(3) of the Act.

Jurisdiction of Principal Commissioner under section 263:
The appeal was time-barred by 49 days due to the corona pandemic period, but the delay was condoned after considering the circumstances. The appellant challenged the assumption of jurisdiction by the Principal Commissioner under section 263, arguing that the order was bad in law.

Correctness of assessment order under section 143(3):
The Principal Commissioner set aside the assessment order, citing errors by the assessing officer in not adequately verifying the claim of deduction under section 54B of the Act. The appellant contended that necessary inquiries were made during assessment proceedings, but the Principal Commissioner found the assessment order to be erroneous and prejudicial to the Revenue's interests.

Details of the Judgment:
The assessment was completed with additions under sections 50C and disallowance under section 54B. The Principal Commissioner noted discrepancies in the claim of deduction under section 54B related to the sale of urban agricultural land. The assessing officer did not delve into the eligibility of the deduction, leading to the Principal Commissioner's decision that the assessment order was flawed.

The appellant argued that sufficient inquiries were made during assessment proceedings, pointing to the notices issued and information provided. However, the Departmental Representative highlighted the delayed submission of details by the appellant, limiting the assessing officer's ability to conduct thorough inquiries.

After considering the arguments, the Tribunal found that the assessing officer did not adequately investigate the use of the land for agricultural purposes before its sale, a key requirement for claiming deduction under section 54B. The Tribunal concurred with the Principal Commissioner's assessment that the appellant failed to substantiate the claim with proper evidence, such as the actual use of the land for agricultural purposes.

Consequently, the Tribunal dismissed the appeal, upholding the Principal Commissioner's decision. The order was pronounced on 19-07-2023.