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2022 (11) TMI 1288 - AT - Income TaxRevision u/s 263 - exemption u/s 10(1) - CIT setting aside the assessment order passed by the Ld.AO, with a direction, to carry out fresh examination of the claim of agricultural income claimed to be exempt by the assessee under section 10 (1) - HELD THAT - Before us, the assessee has not filed any agreement, showing the lands being leased in favour of the assessee. It is submitted that these were the documents filed by the assessee in reply to the query raised by the AO at the time of original assessment proceedings. Even there are no agreements placed before us that reveals ownership in land by the assessee, on which farming was carried out. From the materials placed before the Ld.AO it is prima facie inferred that the no details are filed by the assessee and the Ld.AO has not verified the exemption claimed by the assessee under section 10(1) of the Act. Thus, in our view, the original assessment is completed without proper enquiries, that necessitated the Ld.Pr.CIT to issue section 263 of the Act. We draw support from the decision of Hon ble Karnataka High Court in case of CIT vs. Infosys Technologies Ltd. 2012 (1) TMI 76 - KARNATAKA HIGH COURT Therefore in our view, the decisions relied by the Ld.AR are distinguishable on facts with that of assessee. We therefore do not fine any infirmity in the action of the Ld.Pr.CIT in invoking the provisions of section 263 - Decided against assessee.
Issues:
1. Validity of the proceedings initiated under section 263 of the Act by Ld.Pr.CIT. Analysis: The case involved an appeal arising from an order passed under section 263 of the Income Tax Act, 1961. The assessee, a company engaged in R&D of germ plasm and seed production, filed its return declaring a loss after claiming agricultural income and deduction under section 35(2AB). The assessing officer disallowed the deduction claimed, resulting in a revised taxable income. The Principal Commissioner of Income Tax (Pr.CIT) initiated proceedings under section 263, questioning the exemption claimed on agricultural income. The Pr.CIT's contention was that the AO did not conduct sufficient inquiries into the agricultural income claimed by the assessee. The assessee argued that all relevant details were provided during the original assessment proceedings, and the AO had raised specific queries regarding the exempt income. The assessee contended that the revisionary jurisdiction should not be invoked merely due to a lack of detailed discussion in the original assessment order. The assessee highlighted agreements with farmers and the nature of agricultural operations carried out, emphasizing that the activities qualified for exemption under section 10(1) of the Act. However, the CIT.DR argued that the lack of detailed inquiry by the AO rendered the assessment order erroneous and prejudicial to revenue. The Tribunal examined the submissions and found that the AO did not adequately verify the exemption claimed under section 10(1). The Tribunal referenced the decision of the Hon'ble Karnataka High Court in a similar case and upheld the Pr.CIT's decision to invoke section 263. Ultimately, the Tribunal dismissed the assessee's appeal, upholding the Pr.CIT's order under section 263. The Tribunal emphasized the importance of proper verification and upheld the revisionary proceedings based on the inadequacy of inquiries conducted by the AO. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the validity of the proceedings initiated under section 263 of the Income Tax Act.
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