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TMI Blog2024 (6) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Ld.PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . Taking into account, the assessee`s facts, as narrated above, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. We note that the AO has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Ld. Pr.CIT was wholly unreasonable, uncalled for and bad in law. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income Tax has grievously erred in assuming that the assessing officer had not verified the deduction claim u/s 54B of the Income Tax Act, 1961 and not made proper inquiry on finalized the order of assessment u/s 143(3) rws. 143(3A) and 143(3B) of the I.T. Act is contrary to the fact of the case. 6. On the facts and in the circumstances of the case as well as law on the subject, the entire proceedings are bad-in-law and invalid as assessment order u/s 143(3) r.w.s. 143(3A) and 143(3B) of the Act for the same year were framed, wherein due inquiry was made. 7. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr, Commissioner of Income Tax has grievously erred in setting aside the assessment order framed u/s 143(3) r.w.s. 143(3A) and 143(3B) of the I.T. Act without pointing out as to how the order is erroneous and prejudicial to interest of revenue. 8. It is therefore prayed that the above proposed proceedings may please be revoked as learned members o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer. However, on perusal of returns of income filed by the assessee for immediately two preceding assessment years as well as ITR for the year under consideration, it was noticed by ld PCIT that the assessee had not offered any agricultural income which shows that no agricultural activity was being carried out by the assessee on the impugned land. The details of agriculture income offered by the assessee are as under: AY Agriculture income 16-17 NIL 17-18 NIL 18-19 NIL 6. The ld PCIT noted that assessee in his reply dated 23.09.2020, during the course of proceedings u/s 143(3) of the Act has submitted that the assessee has used this land for agricultural purposes for more than two years and has now made investment in purchase of new agriculture land before the due date of filing of the return of income, hence the assessee is eligible to claim deduction u/s 54B of the Act. 7. The ld PCIT, therefore noted that the assessee has stated categorically in his submission that he had used the transferred land for agricultural purposes for more than two years as and has purchased new agriculture land before due date of filing of the return of income, hence the assessee is eligible to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take note that the assesse had failed to furnish any cogent supporting documents to substantiate his claim he had used the transferred land for agricultural purposes for more than two years. In view of the above, the ld PCIT held that while finalizing the assessment proceedings, the Assessing Officer required to make inquiry/verification and make addition on the issues of deduction u/s 54B of the Act, which he failed to do so, therefore, the assessment order passed u/s 143(3) r.w.s. 143(3A) 143(3B) of the Act dated 21.01.2021 was treated by ld PCIT to be erroneous in so far as it is prejudicial to the interest of Revenue, and ld PCIT directed the assessing officer to pass fresh assessment order. 10. Aggrieved by the order of Ld. PCIT, the assessee is in appeal before us. 11. Shri P.M. Jagasheth, Learned Counsel for the assessee, begins by pointing out that during the assessment stage, the assessee submitted enough documents and evidence before Assessing Officer in response to various notices issued by Assessing Officer u/s 142(1) of the Act. The Assessing Officer issued notices u/s 142(1) of the Act, on three occasions, vide notices dated 03.02.2020, 28.02.2020 and 08.09.2020 respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld Counsel by way of legal compilation, which we have gone through. Therefore, ld Counsel, submitted that jurisdictional powers exercised by the ld PCIT, u/s 263 of the Act, are entirely on wrong footing, hence order passed by the ld PCIT may be quashed, as the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. 13. On the other hand, Shri Ravi Kant Gupta, Learned CIT-DR for the Revenue submitted that there is no proof that the agricultural activities were carried out by assessee, as the assessee himself has not shown any agricultural income in his return of income. The agricultural income shown by the other members of the assessee, like Hindu undivided family and other members of the family, should not be considered for the purpose of deduction under section 54B of the Act, therefore ld DR contended that the exemption and deduction provisions should be construed and interpreted strictly and if there is a small deviation then in that circumstances the exemption and deduction should not be allowed to the assessee. Therefore, ld DR vehemently argued that since the assessee has himself not shown the agricultural income in his r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 03.02.2020 (pages 10-12 of paper book) (iv) Notice u/s 142(1) dated 20.02.2020 (pages 13-16 of paper book) (v) Notice u/s 142(1) dated 08.09.2020 (pages 17-19 of paper book) (vi) Reply filed by assessee on 23.09.2020 in respect of notices u/s 142(1) of the Act (pages 20-25 of paper book); (vii) Sale deed of agriculture land block No.252-253, more Puna, Tal. Puna, Dist. Surat and Form 7/12 (pages 26-55 of paper book) (viii) Purchase deed of agriculture land for block NO.98B, 127-128 for claiming deduction u/s 54B with Form 7/12 (pages 56- 159 of paper book); and (ix) ITR of Pareshbhai P Patel (HUF) for AYs 17- 18 18-19 (page 163-166 of paper book). These documents and evidences were before the assessing officer except ITR of Pareshbhai P Patel (HUF). We have gone through the above factual documents and evidences and noted that after going through these documents and evidences, the Assessing Officer took a plausible view to allow the exemption claimed by the assessee under section 54B of the Act. 16. It is an undisputed fact that assessee s case was selected for complete scrutiny assessment for examination of following issues viz. (i) investment in immovable property (ii) capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l asset], and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say From the above Section of 54B(1) of the Act, it is vivid that land should be used for two previous years by the assessee, being an individual or his parent or HUF, for agricultural purposes . Here the assessee has fulfilled this condition, as the land was used by the assessee for two preceding previous years for agricultural purposes, and it is not the requirement of Section 54B(1) of the Act, that assessee has to show agricultural income in his return of income. Therefore, the main allegation of the ld PCIT that in order to claim exemption/deduction under section 54B of the Act, the assessee should show agricultural income in the return of income , is not acceptable, and the same is hereby rejected. 19. Considering the above facts, the present order of Assessing Officer passed u/s 143(3) dated 21.01.2021 of the Act c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Ld.PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . Taking into account, the assessee`s facts, as narrated above, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. 20. We note that Co-ordinate Bench of this Tribunal in the case of Shri Sharadbhai Popatbhai Kakadia vs. PCIT in ITA No.29/SRT/2021, order dated 27.04.2022, on the very identical issue, under section 263 of the Act, held as follows: 12. Now adverting to the facts of the present case, there is no dispute that there is no reference about various enquiries or investigations carried out by Assessing Officer while passing the assessment order on 22/12/2017. Before us, the learned AR of the assessee vehemently submitted that during assessment, the Assessing officer made d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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