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TMI Blog2022 (6) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon ble High Courts in this regard. Delhi High Court in the case of CIT Vs. Sunbeam Auto [ 2009 (9) TMI 633 - DELHI HIGH COURT] made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. Thus the principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Assessing Officer adopts one of the course perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brief facts are that the assessee is an individual and deriving income from salary, House property, share of profit from partnership, capital gain and from other sources. The assessee during the year sold an agricultural property bearing survey number 131 situated at Gota for Rs. 3 Crores and earned capital gain of Rs. 2,48,30,920/- only. Against the capital gain, the assessee claimed exemption under section 54B of the Act on account of purchase of new property for Rs. 4.51 Crores at Vejalpur Talluka, Ahmadabad. The assessee for the year under consideration declared total income at Rs. 83,18,760/- after claiming various deduction and exemption including exemption under section 54B of the Act as discussed above. The Return of income of the assessee was selected for complete scrutiny under CASS on account of large deduction/exemption claimed under section 11(1A), 54, 54B, 54C, D, EC, EE and F of the Act etc. The AO after verifying the claim of the assessee accepted the return of income in the assessment framed under section 143(3) of the Act dated 9th August 2019. 4. The Ld. PCIT from assessment records found that the new property purchased by the assessee at Talluka Vejalpur Ahma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the land is vacant and there was boundary wall constructed on the same. The inspector also received report from Talati stating that no crop was grown on said land. The said land on the date of purchase by the assessee already included in the town planning scheme and was allotted final plot number 50 by Ahmadabad Urban Development Authority. 4.4 The learned Pr. CIT also received a report from Bhaskaracharya National Institute for Space Application Geo-Informatics Gandhinagar under the Ministry of Electronics and Information Technology which is being used to remote sensing technology, provides data with respect to any particular survey numbers and activity carried out at that survey number. As per the report, the land bearing survey number 131 at Gota Taluka Daskori sold by the assessee, there was construction work carried out from 2014 to 2018. Similarly, the land bearing old survey number 376/2 purchased by the assessee was largely vacant and from 2015 some construction activity was carried out. 4.5 Thus, it was clear that neither the land sold/transferred by the assessee was neither used for the agricultural activity nor the new land property purchased by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in the present case relates whether the assessment order has been passed by Ld. AO without making inquiries or verification with respect to the deduction/exemption claimed under section 54 of the Act as discussed above and hence the assessment is erroneous insofar prejudicial to the interest of the Revenue and thus requiring revision by Pr. CIT u/s 263 of the Act. 8.1 An inquiry made by the Assessing Officer, considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various Hon ble High Courts in this regard. 8.2 Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.), made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. 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. 15. Thus, even the Commissioner conceded the position that the Assessing Officer made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of lack of inquiry . 8.3 The Hon ble Bombay High Court in case of Gabriel India Ltd. [1993] 203 ITR 108 (Bom), discussed the law on this aspect in length in the following manner: The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(a) shall have retrospective or prospective application shall not be relevant. 8.5 The Hon ble Supreme Court in recent case of Principal Commissioner of Income-tax 2 v. Shree Gayatri Associates*[2019] 106 taxmann.com 31 (SC), held that where Pr. CIT passed a revised order after making addition to assessee's income under section 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of such on-money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was liable to be dismissed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income-tax does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law, or the AO has completely omitted to make any enquiry altogether or the order demonstrates non-application of mind. 8.8 Now in the facts before us, in the case of the assessee the AO during the course of assessment proceedings, made enquiries on this issue and after consideration of written submissions filed by the assessee and documents / evidence placed on record, the Ld. AO framed assessment under section 143(3) accepting the return of income. This fact can be verified from the notices under section 142(1) of the Act by the AO and submission in reply of such notices. i. Notice dated 17-01-2019: Please furnish working of capital gain along with copy of purchase and sale deed thereof. Please justify the claim of exemption u/s.54B of Rs.24830920/- Please also furnish copy of purchase deed. ii. Notice dated 18-04-2019 Please also furnish details of agricultural income shown in return of income A.Y. 2017-18, A.Y. 2015-16. Please furnish the evidences regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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