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TMI Blog2020 (9) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction was purely a business transaction. The object behind the purchase of land is to convert it into the industrial land and after development sale it on good price for earning profit. Transaction of purchase and sale and conversion is purely a business transaction and the assessee has wrongly shown it as capital gain which has been corrected vide filing the revised return copy of which is placed on paper book. By filing return in response to notice u/s 148 the assessee has corrected her mistake and shown this transaction in business income. AO has examined all the issues regarding sale of lands. All the details were submitted before the learned AO. The assessment order passed by AO was neither erroneous, nor prejudicial to the interest of the revenue. Revision under section 263 by PCIT was not justified as all the four issues questioned by PCIT were thoroughly examined by AO during the assessment proceedings, and after considering relevant facts and explanations furnished by assessee had chosen to accept the claim of the assessee and hence, the same could not be termed as non consideration of issues or AO had failed to carry out required enquiries, which ought to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 263 of the Income Tax Act, 1961 on the grounds mentioned hereinbelow. 1. Under the facts and circumstances of the case, the ld. Pr.CIT erred in passing the order u/s 263 of the I.T. Act, 1961 which is void ab initio deserves to be quashed. 2. Under the facts and circumstances of the case the ld. Pr.CIT has erred in passing the order u/s 263 of the Act on the grounds which are not prejudicial to the interest of Revenue or erroneous. 3. Under the facts and circumstances of the case the ld. Pr.CIT has erred in giving the findings on the issues which has already been decided by the AO. 4. Under the facts and circumstances of the case the ld. Pr.CIT has erred in giving direction for following issues which has already dealt by the AO in the order passed u/s 148/143(3) of the I.T. Act, 1961. (i) Issue regarding sale of land as business income. (ii) Expenditure incurred on brokerage and commission for sale of land. (iii) Interest income (iv) Proprietor s capital. 2.1 During the course of hearing, ld.AR of the assessee submitted that he has filed the revised grounds of appeal under rule 11 r.w.s. 22 of the Income Tax Appellate Tribunal Rules, 1963.The revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, I hold that the order passed by the AO on 7-12-2017 was passed without conducting necessary inquiries and without verifying necessary details which AO ought to have done considering the issues involved and the facts of the case as mentioned in para 5 above. The order passed by the AO on 7-12-2017 is therefore, held to be erroneous and prejudicial to the interest of the Revenue. The order passed by the AO is also held to be erroneous and prejudicial to the interest of Revenue in terms of clause (a) (b) of Explanation (2) to Section 263 of the Act. The order passed by the AO, thus deserves to be set aside to be made a fresh after giving opportunity to the assessee. The order of the AO is, accordingly, set aside. 4.2 Against this order of the ld. Pr. ld. CIT, the assessee has preferred an appeal before us on the grounds mentioned hereinabove. 4.3 The ground Nos. 1 to 4 raised by the assessee are interrelated and interconnected and relate to challenging the order of the ld. Pr.CIT passed u/s 263 of the Act. Therefore, we thought it fit to dispose off these grounds through a common order. 4.4 During the course of hearing, the ld.AR of the assessee reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and unjust because of the following reasons- 1. The learned AO has completed the re-opened assessment by considering the reasons recorded for re-opening of the assessment. The reasons recorded are as under: - As per AST System (AIR information), it has been found that the above mentioned person has not filed return of income for AY 2010-11. Further issued letter regarding information sought u/s 133(6) of the Act is also not complied by the said person. Later on, it was noticed that the assessee sold immovable property valued of ₹ 23,40,000/- and further sub registrar valued (final value) this property at ₹ 46,80,000/-. Since, return has not been filed by the assessee therefore, verification canoe been possible at this time. Looking to the facts mentioned above, I have reasons to believe that the income to the extent of ₹ 46,80,000/- has escaped assessment within the meaning of section 147 of the IT Act, 1961. Therefore it is fit case to issue notice u/s 148 of the Income Tax Act, 1961. In the reasons recorded in the first para the learned AO has mentioned that the assessee not filed the return which is not correct. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to this effect praying that the findings recorded by the ld.Pr.CIT in the impugned order is in order for which the ld. DR relied on the following case laws. 1. CIT vs Sun Engineering Works Ltd., 64 Taxmann.com 442 (SC) 2. CIT vs A Samarapuri Chetty Ratnam and Abdul Hadi, 64 Taxmann.com 344 (Mad. H.C) 3. CIT vs Jacob J Thaliath, 344 ITR 279 (Kerala) 4. Gigabyte Technology (India) (P) ltd vs CIT (2015) 53 Taxmann.com 30 (Panji Trib) 5. Babulal S Solanki vs ITO (2019) 104 Taxmann.com 155 (Ahd. Trib) 6. Daniel Merchants P. Ltd vs ITO, Anrm (SC) (SLP No. 23976/2017 7. Kerala State Electricity Board Ltd. vs DCIT, Circle 1(1), Trivendrum [2019] 111 Taxmann.com 353 (Cochin Trib) 4.7 We have heard the ld. counsels for both the parties and we have also perused the materials placed on record, deliberated upon judgements cited by the parties as well as the orders of the Revenue authorities. From the facts, we noticed that the assessee is an individual and had filed return for the year under consideration originally on 29.09.2010 declaring total income at ₹ 45,52,440/-. Subsequently notice u/s 148 was issued on 29.03.2017 and in compliance thereof the assessee fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in the return filed originally on 29.09.2010 which was subsequently corrected by the assessee in the return filed on 30.11.2017. We also noticed that all these facts were brought in to the notice of the AO during the reassessment proceedings vide letter dated 29.11.2017 which is placed on paper book at page no. 8. The AO accepted the submission of the assessee and assessed it on returned income. So, the assessment was completed after making complete inquiry regarding reasons recorded and there is no lack of inquiry or investigation by the AO on this account. Therefore the observation in this regard while passing the order u/s 263 by ld PCIT that order passed by the AO on 07.12.2017 was passed without conducting necessary inquiries and without verifying necessary details was without any basis or without any evidence on record. 4.7.1 We are further of the view that If on a particular issue there are two views and one possible view was taken by the AO then in that eventuality it cannot be said as erroneous. As per the facts of present case, which we have discussed above, the assessee had purchased agriculture land, got it converted into the industrial land and developed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions / disallowances are made, the mere absence of the discussion of the provisions of Section 80IB(13) read with Section 80IA(9) would not mean that the Assessing Officer had not applied his mind to the said provisions. As pointed out in Kelvinator of India (supra), when a regular assessment is made under Section 143(3), a presumption can be raised that the order has been passed upon an application of mind. No doubt, this presumption is rebuttable, but there must be some material to indicate that the Assessing Officer had not applied his mind. (iv) CIT v. Honda Siel Power Products Ltd. (2011) 33 ITR 547 (Delhi), wherein it has been observed as under:- 18. From the aforesaid discussion, it is apparent that the expression prejudicial to the interest of revenue appearing in Section 263 has to be read in conjunction with the expression 'erroneous' and that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. In cases where the Assessing Officer adopts one of the courses permissible in law or where two views are possible and the Income Tax Officer has taken one view, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause, the first of the two requirements namely, (i) the order is erroneous and (ii) the same is also prejudicial to the Interests of the Revenue, is not satisfied. Similarly, if an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the Revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the ld. Pr. CIT does not agree, it cannot be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable in this case. Therefore, it is proved that the conditions to invoke the powers u/s 263 of the Act are not satisfied and hence, the ld. Pr. CIT had erred in invoking the scope of provisions of 263 of the I.T.Act, 1961. Further, assuming for a moment, but not accepting in order to invoke section 263 of the Act , the other conditions, which is to be satisfied is that the order should be prejudicial to the interest of the revenue because in respect of categorization of income under the head business income versus capital gain income. The nature of transaction was very clear that it was a commercial transaction and it did not fall under the category of capital gain income. Therefore, invocation of jurisdiction u/s 263 on these issues are also incorrect. 4.7.2 The first objection for which the order was passed by the ld Pr. CIT that the assessee has sold the land of same area which was purchased and in the original return filed the transaction for the land sale was shown under the head capital gain whereas in the return filed in reopening proceedings it was shown as business income and the same was accepted by the AO and he had not examined this issue. 4.7.3 The finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT was not justified as all the four issues questioned by PCIT were thoroughly examined by AO during the assessment proceedings, and after considering relevant facts and explanations furnished by assessee had chosen to accept the claim of the assessee and hence, the same could not be termed as non consideration of issues or AO had failed to carry out required enquiries, which ought to have been carried out in accordance with law. Thus the order passed by the learned PCIT deserves to be quashed. 4.7.4 The second objection of the ld PCIT was that the AO did not verify details in respect of brokerage and commission payment of ₹ 150800/-. During the reassessment proceedings the assessee has submitted details of brokerage payment the vouchers and other details are placed on paper book page no. 64 65 and TDS was also deducted on brokerage payment treating the transaction as business transaction. Therefore the expenditure incurred on brokerage and commission was fully verifiable and the detail was submitted during the reassessment proceedings. Therefore this objection was also not sustainable. 4.7.5 The third objection of the ld PCIT was that Interest received are show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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