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2019 (8) TMI 1058 - AT - Income TaxRevision u/s 263 - provisions of section 69 of the Act are applicable - HELD THAT - Ld. Pr. CIT has not made any enquiry from Smt. Smriti Chauhan. Except that the accounts of Ms. Chauhan, no other evidence supporting that the assessee had not advanced a sum of ₹ 59,73,000/- to Ms. Chauhan. The Ld. Pr. CIT has accepted the disclosure of ₹ 59,23,000/- by Ms. Smriti Chauhan. CIT has not observed any other defect, error or mistake in the assessment order sought to be revised. Under these undisputed facts, the action taken by the Ld. Pr. CIT could not be sustained. The law is well settled that the order of the A.O. should be erroneous and so far it is prejudicial to the interest of the revenue. In the case in hand, the Ld. Pr. CIT could not bring on record material evidence suggesting that the figure of the loans and advances as claimed by the assessee is incorrect and the figure of loans and advances as disclosed by Ms. Smriti Chauhan is correct. In the absence of the same and looking to the smallness of figure, the Pr. CIT ought not to have revised the order for the assessment year 2011-12. One of the argument of the revenue was that no prejudice is caused to the assessee - Decided in favour of assessee Revision u/s 263 - Availability of deduction u/s 54B - order being barred by limitation - HELD THAT - We do not find any merit in the ground raised by the assessee as the impugned order is well within limitation as prescribed under the law. The order so revised was passed on 23.3.2016. The impugned order u/s 263 is dated 16.11.2017. As per the section 263(2) of the Act, no order can be passed u/s 263(1) of the Act after the expiry of 2 years from the end of the financial year in which the order sought to be revised was passed. In the present case, the impugned order was passed on 16.11.2017, which is well within time. Hence, ground No.1 is dismissed being devoid of any merit as the law speaks of the order sought to be revised but not the issue decided. Deduction u/s 54B - The basis of treating the agricultural land by the Pr. CIT as capital asset is that no evidence was placed on record proving that the agricultural activity was being carried out by the assessee. We find that a bare reading of section 54B of the Act makes it clear that for being eligible for deduction u/s 54B of the Act, the land ought to have been used for agricultural purposes for 2 years immediately preceding the date on which the transfer took place. The assessee has not brought any material on record suggesting that the land was being used for agricultural purposes. Pr. CIT has merely restored the issue to the A.O. for decision afresh. Under these undisputed facts, no interference is called for. However, the assessee is at liberty to produce evidences in support of his claim for deduction. The grounds raised in this appeal are dismissed.
Issues Involved:
1. Initiation of proceedings under Section 263 of the Income Tax Act. 2. Applicability of Section 69 of the Income Tax Act. 3. Justification of the order being erroneous and prejudicial to the interest of the revenue. 4. Limitation of the order passed under Section 263. 5. Eligibility for deduction under Section 54B of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Initiation of Proceedings under Section 263: The assessee challenged the initiation of proceedings under Section 263, arguing that the order passed by the Assessing Officer (A.O.) was neither erroneous nor prejudicial to the interest of the revenue. The Pr. CIT observed discrepancies in the loans and advances declared by the assessee and a third party, leading to the invocation of Section 263. The tribunal found that the Pr. CIT did not conduct any inquiry or verification to substantiate the claim that the order was erroneous. The tribunal cited the Delhi High Court ruling in ITO Vs. DG Housing Projects Ltd., emphasizing that the CIT must record reasons for finding an order erroneous and prejudicial to the interest of the revenue. Consequently, the tribunal held that the initiation of proceedings under Section 263 was unsustainable. 2. Applicability of Section 69: The Pr. CIT applied Section 69, stating that the difference in the loan amount declared by the assessee and the third party indicated unexplained investments. The tribunal clarified that Section 69 applies when investments are not recorded in the books of accounts, which was not the case here. The tribunal concluded that the Pr. CIT misdirected himself in applying Section 69, as the loans were recorded and disclosed. Therefore, the tribunal set aside the Pr. CIT's order and restored the original assessment order. 3. Justification of the Order Being Erroneous and Prejudicial to the Interest of the Revenue: The Pr. CIT argued that the A.O.'s failure to note the discrepancy in the loan amount made the order erroneous and prejudicial to the revenue's interest. The tribunal found that the Pr. CIT did not provide any material evidence to prove the assessee's claim was incorrect. The tribunal emphasized that an order is not erroneous unless the CIT records reasons and provides evidence for such a finding. The tribunal, therefore, held that the Pr. CIT's action was not justified and allowed the assessee's appeal on this ground. 4. Limitation of the Order Passed under Section 263: The assessee contended that the order passed under Section 263 was barred by limitation. The tribunal found that the order was passed within the prescribed two-year period from the end of the financial year in which the original order was passed. Therefore, the tribunal dismissed the assessee's ground on limitation, finding no merit in the objection. 5. Eligibility for Deduction under Section 54B: For the assessment year 2012-13, the Pr. CIT revised the order based on the observation that the land sold by the assessee was not used for agricultural purposes, making the deduction under Section 54B inapplicable. The tribunal found that the assessee failed to provide evidence that the land was used for agricultural purposes for the required two years preceding the sale. The Pr. CIT restored the issue to the A.O. for re-examination. The tribunal upheld the Pr. CIT's decision, allowing the A.O. to reframe the assessment after examining the issue. The tribunal dismissed the assessee's appeal on this ground, allowing the assessee to present evidence to support the claim for deduction. Conclusion: The tribunal allowed the assessee's appeal for the assessment year 2011-12, setting aside the Pr. CIT's order and restoring the original assessment. For the assessment year 2012-13, the tribunal dismissed the assessee's appeal, upholding the Pr. CIT's decision to re-examine the issue of deduction under Section 54B. The tribunal's order was pronounced on 21.08.2019.
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