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TMI Blog2023 (5) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that AO has not conducted proper enquiry during the assessment stage. In fact, assessing officer has applied his mind. Assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders u/s 263 of the Act, merely because he has different opinion in the matter. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. Therefore, in the assessee`s case, it cannot be said that it is a case of 'lack of inquiry'. As well established that the impugned order passed u/s. 143(3) of the Act, was passed by AO, after calling for relevant information and after detailed examination of the same. 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 order, so it cannot be termed as err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that order passed by Pr. Commissioner of Income-tax u/s 263 of the I.T. Act, 1961 setting aside the order of Assessing Officer and directing assessing officer to pass fresh assessment order may please be quashed. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 4. The facts of the lead case which can be stated quite shortly are as follows: The assessee before us is an individual and filed her return of income for assessment year 2017-18 on 10.03.2018, declaring total income at Rs.23,95,640/-. Thereafter, the assessee s case was selected for scrutiny through CASS, and assessment under section 143(3) of the Act was framed on 05.12.2019 accepting the return of income filed by the assessee. 5. Later, Ld PCIT has exercised his jurisdictional power u/s 263 of the Act. The ld PCIT, after going through the assessment records, noticed that assessee had sold a land at Block No.627/A, 628/A 629/A, TP84 FP 223, Moje Mota Varachha, Surat City, old tenure Non-agricultural land for a total consideration of Rs.7.15 crores and the assessee s share being Rs.2,19,50,050/- to a firm Build Tech Enterprise. After deduction of inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The assessee stated that the previous owner Shri Natvarbhai Dolatbhai Desai of the land had applied for conversion of part of land into non- agriculture land and District Development Authority vide order No.355/2066 dated 06.05.2006 has given N.A permission for part of land admeasuring 5509 square meter out of total area of 22864 square meter. Shri Natvarbhai Dolatbhai Desai had sold this part and parcel of the land to M/s Princes Place Construction Pvt Ltd. The assessee further stated that the balance remaining part and parcel of land admeasuring area 17255 square meter was sold by the assessee along with three other co-owners as agriculture land. (ii) It is further submitted by the assessee that the assessee and other three co-owners are farmer and as per Land Revenue Act, agriculture land can be purchased by farmer only. (iii) The assessee further argued that agriculture income during the A.Y. 2016-17 was not shown in return of income as the agriculture produce in the form of green grass was given free of cost to charity organization Shree Khoda Dhor Panjarapol Vav, managed by Shri Vav Jain Swetamber Murtipujak Sangh. 7. However, ld PCIT has rejected the contention of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same query as raised by ld PCIT in his revision order under section 263 of the Act. In response to notice under section 142(1) of the Act, the assessee submitted its reply with documentary evidences such as expenditure incurred by the assessee on agricultural activities, bills and vouchers, the crop grown by the assessee on land etc. The Assessing Officer has examined these documentary evidences, applied his mind and then framed the assessment order, therefore such assessment order which was framed after making due enquiry should not be erroneous and prejudicial to the interest of Revenue. 10. Shri Sapnesh R Sheth, also submitted that in case of one of the co-owners, namely, Shri Ravjibhai Becharbhai Dhamelia, the appeal effect of the order passed u/s 263 was given by the Assessing Officer vide order dated 06.03.2023 passed by the Assessing Officer u/s 143(3) r.w.s. 263 of the Act, wherein while giving the appeal effect of the order of ld PCIT, the Assessing Officer has allowed deduction under section 54B of the Act, as claimed by the assessee. Therefore, Ld. Counsel contended that the Revenue has accepted the claim of deduction u/s 54B of the Act, in case of one of the co-owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has issued another notice u/s 142(1) of the Act, which is placed at page No. 59 of the paper book wherein the Assessing Officer made enquiry about the issue raised by the Ld.PCIT. In response to said notice, assessee submitted her reply, which is placed at page No.62 of the paper book, wherein assessee has explained and narrated the facts about exemption u/s 54B of the Act in respect of agricultural land so sold by her. The Assessing Officer has also issued notice u/s 142(2) of the Act, dated 15.01.2019, which is placed at page No. 64 of the paper book, wherein the Assessing Officer made enquiry about the exemption/deduction u/s 54B of the Act. Thus, we note that assessee has produced adequate proof and evidences before Assessing Officer. The Assessing Officer, after making detailed enquiry framed the assessment order. 13. The assessee also furnished the certificate issued by Talaati Kam Mantri, Gram Panchayat Mota Varachha, which is placed at page No. 39 of the paper book. The assessee has been doing agricultural activities for two years, before sale of such land hence, assessee is entitled to claim deduction u/s 54B of the Act. The Ld. Counsel for the assessee submitted before B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly had sold the said agriculture lands of his own registered with Block No.627 (Survey No.655/3) of said Moje Mota Varachha admeasuring area 4980.00 square meter, land registered with Block No.628 (Survey No.655/2) of said Moje Mota Varachha admeasuring area. 14. From the above sale deed, it is vivid that Shri Natwarbhai Dolatbhai Desai, along with other lands owned by him, applied for seeking permission for non- agriculture usage of area 2294.00 Square Meters from the land registered with Revenue Block Number: 627 (Survey Number 655/3), 1675.00 Square Meter are from the land registered with Revenue Block Number: 628 (Survey Number: 655/2), 1540.00 Square Meter are from the land registered with Revenue Block Number: 629 (Survey Number; 655/1). It means prior to seeking permission for non-agriculture usage, these lands were being used by the co-owners for agricultural purposes. 15. We note that in case of one of the co-owners, namely, Shri Ravjibhai Becharbhai Dhamelia, the appeal effect of the order of ld PCIT passed u/s 263 of the Act, was given by the Assessing Officer, vide order dated 06.03.2023 passed by the Assessing Officer u/s 143(3) r.w.s. 263 r.w.s. of the Act, wherein th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of agricultural land, ledger account copy of bank account for transaction done for amount of sale and purchase of land. The entire working of capital gain with deduction u/s 54B by justifying his claim. The total agricultural land as on 06.05.2006 was 22764 square meter, and out of this the previous owner, Shri Natvarbhai Dolatbhai Desai has converted 5509 square meter as non-agriculture land vide order no.355/2066 dated 06.05.2006 and this land was sold to M/s Princess Palace Construction Pvt. Ltd. The balance land was 117255 square meter was left as agricultural land and this land was sold by all the three co-owners as agricultural land. The assessee has also submitted copy of the agricultural land purchased to justify his claim for deduction u/s 54B of the I.T. Act 1961. 4. The assessee was issued notice u/s 142[1]as per the above dates for giving details by giving copy of sale deed of agricultural land, copy of purchase deed of agricultural land, ledger account, copy of bank account for transaction done for amount of sale and purchase of land. The entire working of capital gain with deduction u/s 54B by justifying his claim. The total agricultural land as on 06.05.2006 was 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it was held as follows: 11. On a conspectus of these cases, several factors are discernible which were considered as relevant and which were weighed against each other while determining the true nature and character of the land. It may be useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. Those factors are: (1) Whether the land was classified in the Revenue records as agricultural and whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? (4) Whether the income derived from the agricultural operations carried on in the land before any rational proportion to the investment made in purchasing the land? (5) Whether the permission under s. 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and, by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter. Several factors enter into account in determining the value of an agricultural land such as the nature of the soil and its fertility, the type of crop for which the land is situated or is adaptable, the size of the land and the practicability of the use of mechanized implements in order to procure better yield, the proximity to village and availability of transport facilities, the availability of irrigation facility and power and, above all, the scarcity of the land in the area. Personal, social and economic considerations also influence, perceptibly or otherwise, the valuation of an agricultural land in our country. All these factors will have to be investigated into and a finding of fact will have to be recorded on each of the relevant aspects by the fact-finding authorities. In the absence of such findings, no presumption can ordinarily be raised, merely because high price is realized, that the land could never have been sold as an agricultural land for genuine agricultural user or purposes. 13. Against the aforesaid background, let us turn to the question whether, on the facts and in the circumstances of the present case, the land in question was an agricultural land. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use. If, for any reason the sale transaction had not gone through or the conditions laid down in the permission issued under s. 63 had not been satisfied, the permission would have been treated as cancelled. There is no evidence on record to show that there was any development in the surrounding area or that the land itself was developed prior to its sale. The land is located on the outskirts of the Billmora town but it was not situated within the municipal limits. The land must, therefore, be to the date of its sale. There is no evidence or material on record to indicate that the price offered for the land by the vendee, even proceeding on the basis that the intended user on his part was non-agricultural, would not have been offered by an agriculturist who wanted to purchase the land for purely agricultural user. There being no evidence on record as regards the nature of the soil, its fertility, its suitability and adaptability for raising cash crops, the irrigation facility and such or similar factors which, as earlier pointed out, have a great bearing on the valuation of an agricultural land, it would be hazardous to come to the conclusion that the price offered was such that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 CIT 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 . 21. Thus, from the assessee`s facts, it is abundantly clear that during the assessment stage, the Assessing Officer asked the assessee to furnish the details and documents which are placed in paper book. In response, the assessee submitted reply which is placed at paper book. Thus, all the documents, details and the explanations required by the Assessing Officer were submitted by the assessee. Just because the Assessing Officer does not bring these documents and details in his assessment order does not mean that assessing officer has not conducted proper enquiry during the a ..... 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