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2024 (3) TMI 514 - AT - Income TaxRevision u/s 263 - as per CIT AO without making enquiries and verification reached the finding that the appellant fulfills the condition for availing exemption u/s. 10(37) on account of compulsory acquisition of agricultural land - HELD THAT - The assessment proceeding is completed by verification capital gain earned by the assessee on alleged sale of land as an exempt income u/s 10(37) - The assessee had provided details during proceeding. In the present case specific issue relating to exemption of capital gain earned by the assessee claiming exemption u/s 10(37) of the Act allowed by the AO. However, mere change of opinion of ld. PCIT in respect of issue cannot be reason to invoke revisionary powers under section 263. As decided in Reliance Payment Solutions Ltd 2022 (4) TMI 160 - ITAT MUMBAI fact remains that the specific issue raised, in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the Assessing Officer. Merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order erroneous and prejudicial to the interest of the revenue - Appeal of the assessee is allowed.
Issues Involved:
1. Invocation of power under section 263 of the Income Tax Act by the Commissioner of Income Tax. 2. Validity of the assessment order passed under section 143(3) by the Assessing Officer. 3. Jurisdictional authority of the Commissioner of Income Tax under section 263. Summary: 1. Invocation of Power under Section 263: The assessee contended that the Commissioner of Income Tax (CIT) erred in invoking power under section 263 of the Income Tax Act and cancelling the order passed under section 143(3) by the Assessing Officer (AO). The CIT assumed jurisdiction under section 263 without the condition precedent for such assumption being present in the appellant's case. The CIT's order was challenged as being without jurisdiction and ab-initio void. The assessee argued that the order passed by the AO was neither erroneous nor prejudicial to the interest of revenue, making the invocation of section 263 wholly illegal and beyond jurisdiction. 2. Validity of the Assessment Order under Section 143(3): The AO completed the assessment under section 143(3) after conducting proper inquiry and investigation. The AO accepted the assessee's claim that the capital gains earned on the alleged agricultural land were exempt under section 10(37) of the Act. The CIT initiated proceedings under section 263, stating that the AO erroneously allowed the exemption from taxability of capital gain arising out of compensation, relying on the provisions of the RFCTLAAR Act read with Circular No. 36/2016 issued by CBDT. The CIT argued that the RFCTLAAR Act came into force from 1st January 2014, and the exemption was not applicable to the assessee's case. 3. Jurisdictional Authority of the CIT under Section 263: The assessee responded to the CIT's notice, arguing that the AO had already examined the issue and accepted the claim of non-taxability based on Circular No. 36/2016 and the provisions of the RFCTLARR Act, 2013. The assessee provided necessary documents to support their claim. The CIT, however, was not satisfied with the submission and set aside the assessment order, directing the AO to frame the assessment order de novo by conducting fresh inquiries and verification. The Tribunal observed that the AO had thoroughly examined the issue and accepted the explanation provided by the assessee. Mere change of opinion by the CIT could not be a reason to invoke revisionary powers under section 263. Conclusion: The Tribunal held that the CIT's invocation of section 263 was beyond jurisdiction as the AO had already examined the issue and accepted the assessee's claim based on proper inquiry and investigation. The appeal of the assessee was allowed, and the order of the CIT was set aside. The assessment order passed by the AO under section 143(3) was upheld.
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