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TMI Blog2015 (3) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken one possible view. More so, when a transfer of land in similar area was considered, by Co-ordinate Bench of this Tribunal in the case of ITO vs. Amrutilal B. Shah [2013 (12) TMI 1102 - ITAT MUMBAI] wherein held that the definition of capital asset provided in section 2(14)(iii) is not met. There is no notification issued by the Central Government in this regard calling the same being a capital asset. Under these circumstances, the land in question is rightly held by the assessee as agricultural land. It is borne out from the records of the Revenue Department that the lands in question are described by the District Collector, Jamnagar as agricultural lands as evident from the extraction given above. As such, there is no incriminating material in the possession of the Assessing Officer to hold that the land in question is capital asset within the meaning of section 2(14) of the Act. Regarding the onus related issues, we find that the same keep changing depending on the information furnished by the assessee and also gathered by the Revenue from time to time. Thus we annul the order passed by ld. CIT u/s. 263 - Decided in favor of assessee. - ITA NO.3647/Mum/2013 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure Ltd. (RGTICL) project for acquiring the right of user of land wherein it was specifically mentioned that any objection should be brought to the notice of Reliance Gas Transportation Infrastructure Ltd.(RGTIL )within 21 days. It was after a span of two years vide letter dated 17/4/2007, the assessee had applied for compensation. It was seen from the panchnamas dated 24.4.2007, that the pipeline had been laid down. 3.2 Chronology of events taken from assessee s submission are as follows:- a) RGTIL issued notice dated 19.4.2005 to be replied within 21 days. b) Assessee did not reply c) Another notice was sent by RGTIL dated 2.5.2006 seeking documentary evidence for crops on the land, for the purpose of determining compensation. d) No reply was received from assessee, neither any documentary evidence filed. e) Assessee sent letter on 17.4.2007 - but never mentioned about the notice received by her. f) Assessee simply informed that mere 10 acres of land were taken on which there were trees and fruits. Since the work of pipeline had been completed, assessee requested for compensation for land and trees. g) Assessee prepared four panchnamas for both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese documents submitted by the assessee. The AO should have verified the same from the Land Revenue Records of the Gram Panchayat of Mandvane Village, Karjat Taluka about the status or existence of cultivation, at any time, on these lands. The assessee had not produced any authentic records such as proof of expenses incurred for cultivation, manpower employed, sale of produce to APMC etc. The ld. CIT was of the opinion that mere claim of the assessee that in the earlier years also she had shown agricultural income in her returns could not be taken as proof, in the absence of maintenance of accounts, sales bills of the produce etc. for yester years. 3.5 Ld. CIT observed that the assessee had also claimed that there was no transfer of land as she had retained ownership of the land and the same lands were shown as assets in her returns. It was thus, contended by the assessee that there is no liability to pay capital gain tax, there being no transfer/conveyance of the land. 3.6 As per the provisions of section 2(47)(ii) and (iii) of the Act the extinguishment of right therein or the compulsory acquisition thereof under any law amounts to transfer of capital asset. 3.7 It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 if he is satisfied that the order of the assessing officers sought to be revised is (i)erroneous; and also (ii) prejudicial to the interests of the revenue. The word erroneous has not been defined in the Income Tax Act. It has been however defined at page 562 in Black s Law Dictionary (seventh Edition) thus; erroneous, adj. Involving error, deviating from the law . The word error has been defined at the same page in the same dictionary thus: error No. 1 : A psychological state that does not conform to Objective reality; a brief that what is false is true or that what is true is false . 4.1 At page 649/650 in P. Ramanatha Aiyer s Law Lexicon Reprint 2002, the word error has been defined to mean- Error: A mistaken judgement or deviation from the truth in matters of fact, and from the law in matters of judgement error is a fault in judgement, or in the process or proceeding to judgement or in the execution upon the same, in a Court of Record; which in the Civil Law is called a Nullityie (termes de la ley). Something incorrectly done through ignorance or inadvertence S.99 CPC and S.215 Cr.PC. Error, Fault, Error respects the act; fault respect the agent, an error m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie warrant ed. The Commissioner will be well within his powers to regard an order as erroneous on the ground that in the circumstances of the case, the Assessing Officer should have made further inquiries before accepting the claim made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral in giving a decision on the basis of evidence produced before it, the role of an Assessing Officer under the Income-tax Act is not only that of an adjudicator but also of an investigator. He cannot remain passive in the face of a return, which is apparently in order but calls for further enquiry. He must discharge both the roles effectively. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The scheme of assessment has undergone radical changes in recent years. It deserves to be noted that the present assessment was made under Section 143(3) of the Income-tax Act. In other words, the Assessing Officer was statutorily required to make the assessment under section 143(3) after scrutiny a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall the orders passed without applying the principles of natural justice or without application of mind. In our humble view, arbitrariness in decisionmaking would always need correction regardless of whether it causes prejudice to an assessee or to the State Exchequer. The Legislature has taken ample care to provide for the mechanism to have such prejudice removed. While an assessee can have it corrected through revisional jurisdiction of the Commissioner under Section 264 or through appeals and other means of judicial review, the prejudice caused to the State Exchequer can also be corrected by invoking revisional jurisdiction of the Commissioner under Section 263. Arbitrariness in decision-making causing prejudice to either party cannot therefore be allowed to stand and stare at the legal system. It is difficult to countenance such arbitrariness in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. 4.6 Similar view was earlier taken by the Hon ble Supreme Court in Siemens Engg. Mfg. Co. Ltd. v. Union of India AIR 1976 SC 1785. It is settled law that while making assessment on assessee, the ITO acts in a quasi- judicial capacity. An assessment order is amenable to appeal by the assessee and to revision by the Commissioner under Sections 263 and 264. Therefore, a reasoned order on a substantial issue is legally necessary. It was held that orders, which are subversive of the administration of revenue, must be regarded as erroneous and prejudicial to the interests of the revenue. If the Assessing Officers are allowed to make assessments in an arbitrary manner, the administration of revenue is bound to suffer. If without discussing the nature of the transaction and materials on record, the Assessing Officer had made certain addition to the income of the assessee, the same would have been considered erroneous by any app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilal B. Shah 22 ITR (Trib.) 668(Mum.), it was held as follows: 7. We have heard both the parties, perused the orders of the Revenue authorities and the papers filed before us. We find that it is not the case of the Revenue that the land in question is located within 8 kms from the municipal limits of Jamnagar or not. The land in question is located beyond 8 kms of the municipal limits of the Jamnagar. It is also an undisputed fact that the land in question was located beyond 19 krns from the centre of the city of Jamnagar. On this issue alone, the definition of capital asset provided in section 2(14)(iii) is not met. There is no notification issued by the Central Government in this regard calling the same being a capital asset. Under these circumstances, the land in question is rightly held by the assessee as agricultural land. It is borne out from the records of the Revenue Department that the lands in question are described by the District Collector, Jamnagar as agricultural lands as evident from the extraction given above. As such, there is no incriminating material in the possession of the Assessing Officer to hold that the land in question is capital asset within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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