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TMI Blog2023 (11) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Rakesh Kumar Vs. CIT [ 2018 (12) TMI 1718 - ITAT DELHI] wherein, it was held that when the AO has raised specific question on the issue of verified required details then it cannot be said that the assessment order is erroneous and prejudicial to the interest of the revenue. In our considered opinion, in such a condition the conclusion drawn by the ld PCIT to set aside the assessment order is not correct and sustainable. Decided in favour of assessee. - SHRI C.M. GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER For the Appellant : Sh. Raghav Sharma, CA and Ms. Chandrima Chaudhury, Adv For the Respondent : Sh. Amitabh Kumar Sinha, CIT DR ORDER PER C. M. GARG, J. M.: 1. This appeal has been filed by the assessee against the order of the ld PCIT, Noida dated 25.03.2022 for AY 2017-18. 2. The assessee has raised the following grounds of appeal:- 1. That the impugned order of learned PCIT u/s 263 of the Income Tax, 1961 is illegal in holding that contract farming agreement was not reliable. The reasons given by her are contrary to facts and law 2. That the Ld. PCIT is also not justified in holding that agreement bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the observation of the PCIT in para 4.6 is also wrong by adopting incorrect criteria. He further submitted that considering the facts on record and the legal position, the PCIT is wrong in directing the AO to make addition instead of directing the AO for adjudicating the issue after giving proper opportunity of hearing and considering the material evidences, which have already been furnished before the PCIT and further evidence which may be furnished by the assessee in support of the claim. 4. Drawing our attention towards show cause notice issued by Ld PCIT vide dated 03.02.2022, the ld counsel submitted that the ld PCIT has picked up the sole issue for invoking revisionary jurisdictional i.e. net agricultural income of Rs. 97,74,720/- which was considered and adjudicated by the AO after sufficient and adequate enquiry by way of issuance of notice dated 12.04.2019 along with questionnaire wherein, AO specifically asked the assessee to furnish details and documentary evidence regarding agricultural income earned during FY 2016-17. The ld counsel submitted that the said notice was replied by the assessee vide letter dated 06.06.2019 enclosing Annexure 1 to 8 available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est of the revenue. The ld CIT DR submitted that the Ld PCIT in para 4.1 to 4.8 evaluated the factual position of claim of assessee and thereafter find that the AO accepted the version of the assessee without making any inquiry or verification. The ld CIT DR submitted that the AO by accepting un-substantiated, vaying and disjointed claims of the assessee, failing to conduct detailed and legitimate inquiries and thus AO utterly failed to conduct meaningful investigation/examination the claim of the assessee essential to determine the actual total taxable income of assessee. Therefore, the ld PCIT was correct in setting aside the assessment order particularly when the AO has failed to notice of all relevant facts and also failed to examine the correctness or otherwise of the claims and assertion by the assessee regarding exempt agricultural income. The ld PCIT submitted from the assessment it is clearly evident that the AO has failed to apply his mind and discharge his duty as Assessing Officer, therefore, the ld PCIT rightly held that the assessment order is erroneous and prejudicial to the interest of revenue. The ld CIT DR finally submitted that the appeal of the assessee being de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The ld PCIT has also alleged that agreement between the assessee and purchaser Avyunkta Industries Pvt. Ltd is neither registered and nor notarized and company has struck off from Registrar of Companies records and company was not engaged in any agricultural activity. The ld counsel by placing copies of record of ROC submitted that the assessment was completed by AO on 04.07.2019 and company has been struck off w.e.f. 25.02.2019 therefore, it was accepted to AO to take a note of the fact that purchaser has been struck off from the ROC records. We are in agreement with the contention of the ld counsel of the assessee that is wrong to allege that the purchaser M/s. Avyukta Industries Pvt. Ltd was not engaged in the business of agricultural activity on the other hand, it is amply clear that the said company was engaged in purchase and marketing of agricultural produce in bulk which is in consonance with the memorandum of association of the company supported with audited balance sheet which was produced before ld PCIT and the same has been overlooked while passing the impugned revisionary order. 9. In the second show cause notice dated 21.02.2022 the ld PCIT also alleged that exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural income shown by the assessee was occurred due to the reason that almost major part of vegetable were sold to said firm but some vegetables have also been sold in the open market in cash therefore, the agricultural income has been shown in the higher side and the same has been deposited in the bank account of the assessee as cash. Sale proceeds of agriculture produce/ vegetables. 11. In view of the above noted point raised by the ld PCIT in the show cause notices and the reply of the assessee we find that the discrepancy or deficiency of documentation which was out of purview of limited scrutiny cannot be taken as basis for alleging the assessment order is erroneous and prejudicial to the interest to the revenue. So far as the earning of agricultural income is concerned the AO has make sufficient enquiry by issuing notice u/s 142(1) of the Act and after considering the detailed reply of assessee supported with documentary evidences copy of which is available at page 44 to 79 of the assessee s paper book. From covering letter of said reply we clearly note that the assessee submitted power of attorney in original, copy of income tax return, details of agricultural income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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