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TMI Blog2020 (9) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... out as to what other enquires were required to be made by the Assessing Officer in the facts and circumstances of the case, has set aside the order of the Assessing Officer and remanded the matter back to the file of the Assessing Officer for passing of the assessment order afresh. The above action of the Ld. PCIT cannot be held to be justified. Merely because the Assessing Officer has not discussed about the enquires made by him in detail in the assessment order is no ground to hold that the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue. PCIT in this case wrongly exercised revision jurisdiction u/s. 263 - Decided in favour of assessee. - ITA No. 597/CHD/2019 - - - Dated:- 28-2-2020 - N. K. Saini, Vice President and Sanjay Garg, Member (J) For the Appellant : Ashwani Kumar, CA For the Respondents : C. Chandrakanta, CIT, DR ORDER Sanjay Garg, Member (J) The present appeal has been preferred by the assessee against the order dated 29.01.2019 of the Pr. Commissioner of Income Tax, Patiala [hereinafter referred to as' PCIT'] agitating the action of the PCIT in passing the impugned order u/s. 263 of the I.T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to the aforesaid notice dated 19.12.2018, the assessee filed reply on 15.01.2019. The relevant submissions of the reply are as under:- In this regard our humble submissions are as under:- 1. Agriculture Income:- That during the course of assessment proceedings the Ld. A.O. enquired about Agri. Land and Agri. Income. That your honour the assessee submitted evidence regarding holding of land of 37.5 acre which is very much on the file. Photocopy of WILL was attached with the reply. The assessee debited purchase price of agri. Land purchased during the year under consideration in its regular books of accounts. Evidence in this regard is on the file. The assessee submitted J form and copy of account of the commission agents through whom agri. Produce was sold during the course of assessment proceedings. Moreover the assessee received sale proceeds through cheque. The assessee also submitted that even lease of Land is ₹ 50000/- to 55000/- per acre. The person takes Agri. Land on lease to earn income. Your honour the assessee has credit agri. Income on actual basis. In the last year agri. Income was net ₹ 66724/- per acre and the Ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured loan is not part of limited scrutiny. It shows that no proper enquiries were made before issue of show cause notice u/s. 263(1) of the I.T. Act. In view of above noted facts the Ld. A.O. Circle, Sangrur after making vast inquiries passed order under section 143(3) of the I.T. Act, 1961. Order passed under section 143(3) is not erroneous and prejudicial to the interest of the revenue. Moreover, the Ld. A.O. Barnala assessed the case of the assessee under section 143(3) of the IT. Act, 1961 for the A.Y. 2014-15 vide order dated 29.02.2016 and found no discrepancy on these issues. In the case of Malabar Industrial Co. Ltd., Vs. CIT (2000) 109 Taxman 66 (SC) the Honorable Supreme Court held that if the order is not erroneous but is prejudicial to the revenue the commission cannot take action under section 263(1) of the I.T. Act, 1961. So, it is prayed that proceedings under section 263(1) may not be initiated. 5. The Ld. Counsel, therefore, has submitted that vast inquiries were made by the Assessing Officer in respect of the aforesaid issues. He has further explained that it was duly explained to the Ld. PCIT that the agricultural income shown by the assessee was from h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.......... 8. The sum and substance of the above reproduced section 263(1) can be summarized in the following points: 1) The Commissioner may call for and examine the record of any proceeding under the Act; 2) If he considers that the order passed by the AO is (i) erroneous; and (ii) is prejudicial to the interest of Revenue; 3) He has to give an opportunity of hearing in this respect to the assessee; and 4) He has to make or cause to make such enquiry as he deems necessary; 5) He may pass such order thereon as the circumstances of the case justify including, (i) an order enhancing or, (ii) modifying the assessment or (iii) cancelling the assessment and directing a fresh assessment. 9. In our view, as per the provisions of section 263, as enumerated above, after getting the explanation from the assessee, the Ld. PCIT was supposed to examine the contention of the assessee. Before passing an order of modifying, enhancing or cancelli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous and prejudicial to the interest of Revenue. 10. It is pertinent to mention here that a deeming fiction has been created in section 263 of the Act by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 wherein it has been mentioned that where the Commissioner is of the opinion that the AO had passed the order without making enquiries or a claim has been allowed without enquiring into the claim or that the same is not in accordance with any order or direction or instruction issued by CBDT, that order of the Assessing Officer shall be deemed to be erroneous in so far as its prejudicial to the interest of Revenue. 11. The deeming provisions of Explanation to section 263 does not confer unbridled and unchartered arbitrary powers on the CIT to any or every order of the Assessing Officer as erroneous and prejudicial to the interest of Revenue. If the assessment order has been passed in accordance with law and after proper and necessary inquiries made as per facts and circumstances of the case, the exercise of revision jurisdiction u/s. 263 will not be justified. The Coordinate Mumbai Bench of the Tribunal in the case of Narayan Tatu Rane vs. Income Tax Officer (2016) 70 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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