SMT. INDERMEET BAINS W/O SH. D.S. BAINS, BATHINDA V. PR. COMMISSIONER OF INCOME TAX , BATHINDA

ITA 250/ASR/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0365 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-09-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Opportunity of being heard; Set aside
• Section: 263; 63; 143(3); 2(14); 205; 64; 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 250/Asr/2019 Assessment Year: 2011-12 Smt. Indermeet Bains W/o Sh. D.S. Bains, Bathinda [PAN: ACZPB 9945L] Vs. Pr. Commissioner of Income Tax, Bathinda (Appellant) (Respondent) Appellant by : Sh. Sudhir Sehgal & Sh. P.N. Arora, Adv. Respondent by: Sh. Amlendu Nath Misra, CIT DR Date of Hearing: 28.09.2022 Date of Pronouncement: 19.10.2022 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the order dated 28.03.2019 passed by the Ld. Pr. Commissioner of Income Tax, Bathinda in respect of Assessment Year 2011-12. 2. The assessee has raised the following grounds of appeal: ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 2 “1. That the learned Principal Commissioner of Income Tax (PCIT), Bathinda has erred in assuming jurisdiction under section 263 of the Income Tax Act (the act) and thereby setting aside the order of Assessing Officer (AO) made under section 143(3) read with section 263 of the Act with direction to frame the assessment de novo. 2. That the learned PCIT, Bathinda has failed to appreciate the various replies and submissions supported with documentary evidences filed by the assessee appellant during the course of proceedings before him as well as during the first and second assessment proceedings u/s 143(3) read with section 263 of the Act. 3. That the learned PCIT, Bathinda has failed to consider the fact that the assessment was made u/s 143(3) read with section 263 of the Act after due application of mind and verification made by the concerned AO and, therefore, the finding of the learned PCIT, Bathinda that the assessment having been framed without application of mind by the AO is against the facts and circumstances of the case. 4. That the learned PCIT, Bathinda has erred on facts and in law by holding that the AO has not brought on record evidence regarding classification of land as agriculture land without appreciating the explanations/evidence furnished by the assessee appellant and independent enquiry made through Inspector by the AO and certificate issued by the Revenue Authority during the first assessment proceedings and second round of assessment in response to order u/s 263 of the Income Tax Act. 5. That the learned PCIT, Bathinda has erred on facts and in law by holding that the apparent motive of the assessee for purchase of land was to earn profit without appreciating that the land purchased/sold has been used only for agricultural purpose till date i.e. 28-03- 2019 the date on which order u/s 263 of the Act has been passed. 6. That the learned PCIT, Bathinda has erred on facts and in law by invoking the provisions of section 263 of the Act again in respect of the assessment which has been made in response to assessment cancelled earlier u/s 263 of the Act. 7. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of.” ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 3 3. Briefly, facts are that assesse filed return of income for the assessment year 2011-12 on 31.03.2012 declaring income of Rs.43,49,622/- (including STCG Rs.26,72,454/-) + agricultural income of Rs. 14,50,000/-. The Assessing Officer (in short “the AO”) completed assessment u/s 143(3) on 04.03.2014 at an income of Rs.44,49,622/-. Subsequently, the Principal Commissioner of Income Tax (in short “the PCIT”) by Order u/s 263 dated 27.04.2015 set aside the assessment order dated 04.03.2014 with the directions to the AO to decide the case afresh after giving due opportunity of being heard to the assessee. Thereafter, in compliance to notice u/s 263, scrutiny assessment u/s 143(3) of the Income Tax Act, 1961 was completed by the DCIT, Circle-I, Bathinda vide his order dated 30.12.2016 at the income already assessed at Rs.44,49,622/-+ Agricultural income of Rs. 14,50,000/-. 3.1 This is 2 nd time, the PCIT, Bhatinda set aside the assessment order, invoking the provisions of section 263 of the Act, in respect of the assessment made u/s 143(3) r.ws. 263 of the act. He observed that perusal of records revealed that there were some deficiencies and irregularities in the said assessment order. Therefore, a notice u/s 263 of the Income Tax Act, 1961 was issued for the assessment year 2014-15 on 14.03.2019. The relevant observations are reproduced as under:- ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 4 “(i) Assessment u/s 143(3) of the Act in this case was completed on 04.03.2014 on the total income of Rs. 44,49,622/- plus agriculture income of Rs. 14,50,000/-. This order was set aside u/s 263 of the Act by the Pr. Commissioner of Income Tax, Bathinda with directions to decide the issues mentioned in the order afresh on merits and in accordance with the law. As per this order, the AO inter-alia was required to examine nature of land on which capital gain has been claimed exempt and as to whether the sale transaction of land is in nature of trade as per order of Hon’ble Gujrat High Court in the case of Commissioner of Income Tax Vs. Siddarth J. Desai (1983) 139 HR 628 (Guj.). For this purpose, the Pr. CIT noted 13 criterias. In compliance to the directions, assessment u/s 143(3)/263 of the Act was framed on 30.12.2016 at the returned income. (ii) Brief facts of the case are that the assessee purchased 39 Kanal 7 Marlas land for Rs. 2,99,10,000/- for the financial year 2008-09 and out of which land measuring 29 Kanal 6 Marlas was sold for Rs. 5,12,75,000/- to Sh. Kamal Singh, Sh. Ranjeet Singh and Sh. Rabir Singh, H.No.407, Guru Teg Bahadur Nagar, Jalalabad. Thus, the capital gain on the sale of this land comes at Rs. 2,90,04,020/-. However, the capital on sale of land was claimed exempt stating the sale of agriculture land. As per report of State Govt. Authorities, the land in question is located at a distance of 3 Kms. From the municipal area of Mohali, which clearly means the land in question is clearly capital asset as per provisions of section 2(14). As per provisions of section 2(14) of the Act read with Notification No.9447 dated 06.01.1994, agriculture land situated within area falling within 1 kilometer on either side of Mohali Kakar upto distance of 6 kilometers from Municipal limit on that road falls within the definition of capital asset. (iii) The land in question is located near Chandigarh Airport. In the assessment order passed in compliance of order u/s 263 on 30.12.2016, these issues do not seem to have examined as to whether the land is question is capital asset within the meaning of section 2(14) of the Income Tax Act and no findings on the same have been given. Thus, the assessment order seems to be erroneous and prejudicial to the interest of revenue. (iv) As per order of Pr. CIT, Bathinda 13 criterias/test has been mentioned in this order and the tests seem to be applicable in assessee’s case for treating the transaction in nature of trade as per Giijrat High Court decisions are as under: ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 5 (a) The land was actually purchased ordinarily was not used for agriculture purposes during the year under reference. The assessee disclosed agriculture income of Rs. 14,50,000/- and that pertains to 86 acres land in village Khudian and out of which 60 acres was under Kinwoo cultivation and assessee has also filed necessary details for this agriculture income where in the agriculture income of land proposed to be sold is not appearing. (b) The user of land is not a agriculturist and this is clearly a stop gap arrangement and actual purpose was to earn income from sale of land as within 2 years, the land is question is sold. (c) The income derived from agriculture land operations is only in namesake as no income disclosed from said land and investment in the land comes at Rs. 2,99,10,000/- during financial year 2008-09. (d) The intention of the purchaser of the land is not for agriculture purpose but the same was to earn profit from sale of land as evident from the facts of the case. (e) The land was situated is developed area s nearby A irocity and Airport. (f) The land was purchased by the assessee and the same was not purchased for agriculture purposes. Thus; the issue in the light of 13 parameters mentioned in the order u/s 263 as envisaged in the order of the Hon’ble Gujrat High Court does not seem to have been examined.” 3. In response to the said notice, Shri Parshotam K. Singla, Advocate, the authorized representative of the assessee has appeared, argued the case and also filed written submissions. 6. Regarding the issue of capital asset, it has been contended that the land sold was agricultural and not a capital asset. AO had made elaborate enquiries in this regard and also examined the information filed by the assessee in the shape of Girdawari, certificate from revenue authorities etc. The contention of the assessee is not acceptable. AO has not brought on record evidence regarding classification of said land that the said land was agricultural and subject to payment of land revenue. AO did not examine whether the income derived from ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 6 the agricultural operations carried on in the land bore any rotational proportion to the investment made in purchasing the land. For claiming exemption, it was also a condition that the said land was required for agricultural purpose for a long period whereas the said land was with the assessee for two years. Therefore apparent motive of the assessee for purchase of land was to earn profit rather than of doing any agricultural activities. AO did not make necessary enquiries and application of mind on the entire facts and law on the issue. This basic issue involved has thus not been inquired into by the AO.” 4. The Ld. Counsel for the assesse, Shri Sudhir Seghal has objected to the action of the PCIT, Bhatinda in 2 nd time set asiding the assessment order, invoking the provisions of section 263 of the Act, in respect of the assessment made u/s 143(3) r.ws. 263 of the act. He contended that the learned PCIT, Bathinda has erred in assuming jurisdiction under section 263 of the Income Tax Act (the act) and thereby setting aside the order of Assessing Officer (AO) made under section 143(3) read with section 263 of the Act with direction to frame the assessment de novo; that he has failed to appreciate the various replies and submissions supported with documentary evidences filed by the appellant assesse during the course of proceedings before him as well as during the first and second assessment proceedings u/s 143(3) read with section 263 of the Act; that he has failed to consider the fact that the assessment was made u/s 143(3) read with section 263 of the Act after due application of mind and verification made by the concerned AO and, therefore, the finding of the learned PCIT, ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 7 Bathinda that the assessment having been framed without application of mind by the AO is against the facts and circumstances of the case; that the Ld. PCIT, Bathinda has erred on facts and in law by holding that the AO has not brought on record evidence regarding classification of land as agriculture land without appreciating the explanations/evidence furnished by the assessee and independent enquiry made through Inspector by the AO and certificate issued by the Revenue Authority during the first assessment proceedings and second round of assessment in response to order u/s 263 of the Income Tax Act; that he has erred on facts and in law by holding that the apparent motive of the assessee for purchase of land was to earn profit without appreciating that the land purchased and sold has been used only for agricultural purpose till date i.e. 28-03- 2019 the date on which order u/s 263 of the Act has been passed and that the learned PCIT, Bathinda has erred on facts and in law by invoking the provisions of section 263 of the Act again in respect of the assessment which has been made in response to assessment cancelled earlier u/s 263 of the Act. The counsel stated before the bench that a detailed reply was submitted to the PCIT, placed in the ‘Paper Book’ at pages 25 to 31 and submitted that the Assessing Officer had passed the order after due application of mind and considered all the issues, which were there in the ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 8 earlier order of the PCIT u/s 263, dated 28.04.2015. However, the Ld. PCIT being not satisfied with the reply of the assessee, again set aside the order as passed by the Ld. Assessing Officer vide order, dated 30.12.2016 and directed the Assessing Officer to frame the assessment again after examining all the relevant issues vide order, dated 28.03.2019. 5. The Ld. Counsel argued that the Assessing Officer, who passed the order u/s 263/143(3), dated 30.12.2016 has taken into consideration all the directions as issued by the Ld. PCIT and also done complete verification and enquiries as directed by the Ld. PCIT in the first order u/s 263, dated 28.04.2015 which are borne out from the facts on record. 5.1 At the time of hearing, the Ld. Counsel of the assessee referred to a certified copy of ‘order sheet entries’, depicting the ‘sequence of events’ in framing the assessment (‘Paper Book-II,’ pages 83 to 84), and it was argued that the assessment proceedings were initiated on 04.10.2016 by issuing a questionnaire, dated 11.10.2016 and concluded on 30.12.2016 where the assessee’s counsel appeared on various dates, and filed requisite details and the case was discussed. The Ld. Counsel particularly referred to ‘order sheet entries’ to substantiate the fact that detailed ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 9 verification/enquiries were made before completing the assessment and some of the order sheet entries, the Ld. Counsel relied upon are as under:- “02.12.16 Appeared Sh. PK Singla, Advocate, filed reply, which has been examined w.r.t. facts of the case. Case partly discussed. A/R is requested to produce latest Jamabandi/Gurdwari of the land in question. Next date given is 14.12.2016. 05.12.2016 Inspector was deputed to make field enquiries, who submitted his report, which is placed on record. 14.12.2016. On request of the A/R, case is adjourned to 21.12.2016. 30.12.2016 Present Sh. P.K. Singla, Advocate, A/R of the “A”. Filed certificate of the Tehsildar SAS Nagar, alongwith latest Jamabandi and Girdwari. Case discussed.” 5.2 It was also argued by the Ld. Counsel that during assessment proceedings, the Assessing Officer had also looked into the notification, dated 06.01.1994 of Central Govt., about the ‘agricultural land’ in the vicinity of urban areas, (copy placed at pages 77 to 82 of the ‘Paper Book’ and at page 80 to 81), wherein it has clarified by the ‘Central Govt.’ about the agricultural land, situated on the outskirt of Mohali and that no ‘capital gain’ is chargeable, if the agricultural land is located within ‘one kilometer on the either side of Mohali-Kharar Road, upto the distance of 6 kilometers from ‘Municipal limits’ on that Road’ and, accordingly, it was pleaded that ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 10 since the ‘agricultural land’ was not located in that notified area, the capital gain is exempt on sale of agricultural land by the assessee. 5.3 The Ld. Counsel of the assessee explained from the above ‘order sheet entries’, that the ‘latest Jamabandhi and Gardavari’ was obtained by the Assessing Officer in order to substantiate that land before sale was being used for agricultural purposes and further, the Inspector was deputed to make the enquiries about the status of land before and after sale of land and a detailed report was given by the Inspector, from the ‘State Land Revenue Department’, confirming the fact that the agricultural land, is located beyond 6 Kms from ‘Municipal Committee Limits’ as per copy placed in the ‘Paper Book’ at pages 85 to 85A. Copies of the ‘Jamabandhi’ ‘Gardavari’ had also been placed during assessment proceedings to substantiate the fact, that the land was still being used for agricultural purposes as per pages 86 to 92 of the ‘Paper Book’ and the report of Inspector, who was deputed to make on the spot verification, referred hereinabove reads as under:- “Sir, Sub: Submissions of report in the case of Smt. Indermeet Bains W/o Sh. D.S. Bains, Bathinda [ACZPB9945L] w.r.t. assessment proceedings for the A.Y. 2011-12. ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 11 As directed, I visited Vill: Bakarpur to make field enquiries in respect of land owned/sold by the assessee. On my visit, it transpires that the land sold in question was agricultural land and is still under agricultural operations. Printouts of the photos taken through mobile are enclosed herewith for your kind perusal. This is for your kind information. Submitted Sir, Sd/- 5/12/16 (Supreme Kothari) Inspector O/o the DCIT, Circle-1, Bhatinda” 5.4 It was vehemently argued, on the strength of above said documents, that the report of Inspector alongwith photographs, as verified by the Inspector, copies of which have been placed in the ‘Paper Book’ at pages 93 to 97, clearly prove that the land was being used for the purposes of agricultural and, further the AR placed reliance, on the detailed replies filed before the Assessing Officer as placed in the ‘Paper Book’ pages 98 to 101 during assessment proceedings. Thus, all such replies, verifications, as made had been considered by the Ld. Assessing Officer, while framing the assessment under consideration and the directions as contained in the 1 st Revision Order u/s 263 of the Ld. PCIT, dated 27.04.2015. 5.5 It was further argued by the Ld. Counsel that before assumption of jurisdiction u/s 263, the Ld. PCIT sought a report from the Assessing ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 12 Officer, who had framed the assessment, about the nature of enquiries made by him, consequent to the first order u/s 263, dated 27.04.2015 passed by the then PCIT and a detailed reply, dated 07.06.2018, both on facts and on law, was submitted by the AO demonstrating that the case was, thoroughly, examined and complete verification was made as per the report of the then DCIT, Bathinda, placed at paper book pages 42 to 48 and thus, the Ld. Counsel relied upon the said report of the then DCIT, for the preposition that the AO had made in depth enquiries as desired by Ld. PCIT in his 1 st Revision order passed under section 263 of the act, dated 28.04.2015. 6. Thus, the Ld. Counsel argued that the above report of then DCIT, is part of the record for the purposes of 263 and after taking into consideration, the replies filed by the assessee, during assessment proceedings, detailed examination/verification as made by the DCIT and all the issues, which were directed by the then PCIT in his order u/s 263, dated 28.05.2014, were examined and thus, the Assessing Officer had duly applied his mind and taken a plausible view. Further, the counsel relied upon on number of judgments as per separate ‘paper book’ filed before us, that if the Assessing Officer had examined each and everything and detailed enquiries have been made, then assumption of jurisdiction u/s 263 ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 13 cannot be upheld. A list of the some adjournments, relied upon by the Ld. Counsel is reproduced hereunder:- i). Copy of judgment of ITAT, Chandigarh Bench, Chandigarh in the case of M/s. Venus Texspin Ltd. in ITA No. 793/Chd/2017 vide order dated 12.12.2017 on the issue of u/s 263. ii). Copy of the judgment of ITAT, Chandigarh Bench, Chandigarh in the case of Surinder Pal Singh in ITA No. 57/Chd/2021 vide order dated 31.01.2022 on the issue of u/s 263. iii). Copy of the judgment of ITAT, Chandigarh Bench, Chandigarh in the case of Sanjay Jain & Others in ITA No. 140/Chd/2021 vide order dated 23.03.2022 on the issue of u/s 263. iv). Copy of the judgment of ITAT, Chandigarh Bench, Chandigarh in the case of Surinder Kaur in ITA No. 86/Chd/2021 vide order dated 06.05.2022 on the issue of u/s 263. v). Loil Continental Foods Ltd. vs. Pr. CIT in ITA No. 577/Chd/2019 Chd-Trib. vi). CIT vs. Hindustan Marketing & Advertising Co. Ltd. 341 ITR 180 Delhi-HC vii). Commissioner of Income Tax vs. Anil Kumar Sharma 335 ITR 180 Delhi- HC. 7. Further, the Ld. Counsel of the assessee relied upon on the judgment of Hon’ble Bombay Court, in the case of ‘Sh. Nirav Modi’ reported in 71 Taxmann.com 273, wherein the order u/s 263 was set aside, since the Ld. Assessing Officer had examined the issue in depth and that judgment has been upheld by the Hon’ble Apex Court in a decision, reported in 77 Taxmann.com 15 and it was held that, where the view has been taken by the Assessing Officer, after making proper/requisite enquiries, the order u/s 263 cannot be sustained. Copy of the said judgment has been placed in ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 14 Paper Book at pages 217 to 226 of Paper Book. The assessee also relied upon the judgement of Hon’ble Apex Court in the case of PCIT, Surat Vs Shreeji Prince Pvt. Ltd., wherein, it was held that if the Assessing Officer had made the requisite enquiries and, then, the invoking explanation-2 to section 263 cannot be taken into consideration and the Assessing Officer having taken a plausible view, the assessment as framed by the Assessing Officer cannot be considered to be erroneous and prejudicial to the interest of revenue. 8. Again, the Ld. Counsel, relied upon the judgment of Jurisdictional Bench of ITAT Amritsar Bench, Amritsar in the case of Sh. Jaswinder Singh (Copy filed) in ITA No.115/Asr/2016 for Asstt. Year 2011-12, dated 21.02.2022, wherein, it was held that the Assessing Officer had made requisite enquiries and called for the detailed information and relying upon the decision of Hon’ble ‘Apex Court’ in the case of Nirav Modi, as cited supra, cancelled the order as passed by the Ld. PCIT u/s 263. Further, reliance was made on another order of the jurisdictional ‘Amritsar Bench’ in the case of KBB Nuts Private Ltd. n ITA No. 217/Asr/2019 vide order, dated 20.09.2021 (Copy filed), wherein on similar facts and circumstances, the order u/s 263 was set aside as the Assessing Officer has taken a plausible view after requisite enquiries having been made. ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 15 9. The Ld. Counsel also relied on the judgment of ‘Nagpur Bench’ of the ITAT in the case of ‘Kalpa Construction Co.’, the copy has been placed at pages 227 to 243 of Judgement Set-II, for the preposition, that where the order u/s 143(3)/263 was passed by the Assessing Officer, consequent to the directions as given by the Ld. PCIT u/s 263 as in the present case of assessee and since, the later order has been passed by the Assessing Officer u/s 143(3)/263 is in accordance with the directions of the Ld. PCIT in his order u/s 263, dated 04.03.2014, therefore, in such an order, there could possibly be no error, since it was an order consequent to the order of the ‘superior authority’ and under such circumstances, such an order can never be erroneous order. It was further argued that the ITAT in the above case relied upon the judgment of ‘Bombay High Court in the case of ‘Brihan Mahasrashtra Sugar Syndicate Ltd. & Another’, reported in [1987] 165 ITR 279. The Ld. Counsel also relied upon the judgment of ‘Madras Tribunal’ in the case of A. Kannan Vs ITO in ITA No.31/Mds/2017, which copy of the order has been placed before us at pages 244 to 253 of Judgement Set-II, in which, it was held that in the 2 nd round after the 1 st 263, the Ld. Assessing Officer had made proper enquiries and, thus, it was held that, when the Ld. Assessing Officer examined the matter as instructed by the Commissioner, then it can be said that the Assessing Officer has made the ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 16 requisite enquiries and taken a plausible view and Hon’ble Court set aside the 2 nd revision order passed by Ld. PCIT. 10. On merits, the Ld. Counsel relied upon the judgment of Jurisdictional High Court decision in the case of S.K. Kainthal, copy of which has been placed at pages 205 to 210 of ‘Judgment Set’ and, in which, it has been held that if the agricultural land has been sold at substantial profit at a higher price and the fact that the such land was being used as agricultural land in the earlier years and at the time of sale also, no such capital gain could arise. The counsel prayed that in view of the factual matrix and judicial precedents, the order as passed by the Ld. PCIT, both on legal and on merit was liable to be set aside. 11. Per contra, the Ld. CIT (DR) at the very outset pointed out that nothing is borne out from the order of the Assessing Officer as passed u/s 143(3)/263 vide order dated 30.12.2016, as to what enquiries/verifications have been made and it appears that, whatever, was submitted by the assessee during the course of assessment proceedings was accepted, without due application of mind or any verification as desired by the Ld. PCIT in the earlier order u/s 263, dated 27.04.2015. The order as passed by the Ld. AO was cryptic and the Ld. PCIT has very rightly set-aside the same. It was further argued by the Ld. CIT (DR) that no compliance has ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 17 been made by the Ld. AO to the directions of the Ld. PCIT as contained in the order as passed u/s 263 vide order dated 27.04.2015. He relied upon the impugned order of the Ld. PCIT u/s 263 that no apparent enquiries as required have been made. 12. In the rejoinder, the Ld. Counsel of the assessee argued that, each and everything cannot form part and parcel of the assessment order and he referred the order sheet entries to substantiate that the detailed enquiries have been made by deputing Inspector and calling of information from the Revenue Department about the status of the land sold and, therefore, the AO has taken a conscious decision, that the land was agriculture land. The Ld. Counsel relied upon the judgment of the Bombay High Court in the case of CIT vs. Gabriel India reported in (1993) 203 ITR 108 for the preposition that, merely because the assessment order in question is not a detailed order and the Assessing Officer has not mentioned item-wise finding, regarding the claim of the assessee, that itself, does not mean that the Assessing Officer had not made enquiries in this respect. The Ld. Counsel also relied upon the judgment in the case of Loil Continental Foods Ltd. in ITA No. 577/Chandi/2019, copy of which have been placed at page 64 to 100 of the ‘judgment set’ and at page no. 99 of Paper Book, wherein it has been held that, it is the discretion of the AO, how to pass an ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 18 assessment order and if, not much have been discussed in the order of the Assessing Officer, then the same can be verified from the replies and other evidences as per the record of the Assessing Officer and, thus, it was pleaded that the order of the Ld. PCIT be set-aside. 13. We have heard both the sides, perused the record, the impugned order of the Ld. PCIT u/s 263, the brief synopsis, paper book and arguments as advanced by the Ld. Counsel of the assesse, and the arguments of the Ld. CIT (DR). From the above said arguments of both the sides, the admitted sequence of events in respect of the passing of the 2 nd 263 order (impugned order) by the PCIT are as under: SEQUENCE OF EVENTS: Sr. No. Date Event 1. 31.03.2012 Income Tax Return Filed at an income of 43,49,622+14,50,000 Agriculture income 2. 04.03.2014 Assessment order passed u/s 143(3) of The Act, wherein addition of Rs. 1,00,000 was made to the returned income of assessee on account of low household expenses, copy placed at pages 1 to 3 of Paper Book-I. 3. 28.05.2014 Notice issued u/s 263 of the Act against the order passed, dated 04.03.3014 on following issues: Issue of claim of exemption of Rs. 5,12,75,000 as exempt capital gain on sale of agriculture land Issue of nature of land on which capital gain has been claim exempt and evidence of agricultural activity carried on such land ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 19 Issue of source of purchase of land under consideration way back in 2008 Issue of source of earnings to the tune of Rs. 6,70,000 and Rs. 2,52,897 on account of interior designing and other professional receipts respectively Issue of substantial investment made by assessee in a trust namely Athena Education Trust, Chandigarh. Issue of short term Capital gain of Rs. 26,72,454 on account of trading in shares Issues of evidences related to agricultural income Copy of the notice u/s 263 is placed at pages 4 to 5 of the Paper Book. 4. Copy of the reply submitted to the PCIT u/s 263 ( Ist Revision) is placed at pages 6 to 8 of Paper Book. 5. 27.04.2015 Order passed u/s 263 of the Act, wherein case of the assessee was set aside to the file of the AO to verify the issues mentioned in above notice. Copy is placed at pages 9 to 16 of the Paper Book. 6. 30.12.2016 Copy of assessment order passed u/s 143(3)/263 wherein income already assessed vide original assessment order dated 04.03.2014 was accepted by the Ld. AO after making requisite enquiries as per directions of the PCIT u/s 263 vide order, dated 27.04.2015 as per copy placed at pages 19 to 21 of the Paper Book. 7. 24.08.2017 Order passed by Hon’ble ITAT in the case of assessee against the order dated 27.04.2015u/s 263 of the Act (Ist order) wherein appeal filed by the assessee stands withdrawn. Copy placed at pages 17 to 18 of the Paper Book. 8. 07.06.2018 Copy of report from the O/o DCIT-Circle 1, Bathinda to JCIT wherein, it has been stated that issue of taxability of land sold by assessee has ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 20 been discussed in detail. Copy placed at pages 42 to 48 of the Paper Book. 9. 10.07.2018 Comments of JCIT on the report of DCIT-Circle 1, Bathinda stating that the order of AO dated 30.12.2016 is as erroneous and prejudicial and it was recommended to PCIT to revise the said order u/s 263. Copy placed at pages 49 to 50 of the Paper Book. 10. 14.03.2019 One the basis of report of JCIT, Notice issued u/s 263 of the Act against the assessment order passed u/s 143(3)/263 on following issues: Issue of claim of exemption of Rs. 5,12,75,000 as exempt capital gain on sale of agriculture land Issue of nature of land on which capital gain has been claim exempt and evidence of agricultural activity carried on such land Issue of source of purchase of land under consideration way back in 2008 Copy placed at pages 22 to 24 of the Paper Book. 11. 26.03.2019 Reply to the notice issued u/s 263 of the Act in continuation to the notice dated 14.03.2019. Copy placed at pages 25 to 36 of the Paper Book. 12. 28.03.2019 Order passed by PCIT u/s 263 of the Act wherein case of the assessee was set aside to the file of the AO. Copy placed at pages 37 to 41 of the Paper Book. 14. It is apparently clear from the above table and the paper book pages 42 to 48 filed before us that before the action u/s 263, could be taken, the CIT(E) had called for a detailed report from the AO, who examined and ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 21 clarified at length that each and every issue as was required to be verified by the Ld. PCIT vide order u/s 263 dated 27.04.2015, had been verified by way of enquiry through the Inspector and from the Revenue department. It is noted that the AO has categorically certified during the course of assessment proceedings, that the land was sold as agriculture land and is located beyond 1km on the side of Mohali-Kharar Road, and beyond the distance of 6kms from the Municipal Limits on that road, duly supported even with the photographs of the land in question, the Inspector clicked which proved that the land was still being used for agricultural purposes. Thus, the report of the Ld. Assessing Officer as placed before us, is self- explanatory and as submitted to the Ld. PCIT before issue of ‘Show Cause Notice’ u/s 263, confirms to the fact that, detailed/requisite enquiries were made during the assessment proceedings. For further clarity, the relevant portion of the aforesaid report of the Ld. Assessing Officer dated 07.06.2018, prior to the issue of the notice u/s 263, is being reproduced as under: “The issue involved in this case was that the assessee purchased 39 Kanal 7 Marlas land for Rs.2,99,10,000/- in the financial year 2008-09 (On 17.03.2008 and 13.04.2008) and out of which land measuring 29 Kanal 6 Marlas was sold for Rs.5,12,75,000/- on 07.07.2010 to Shri Kewal Singh, Ranjeet Singh and Ranbir Singh, Jalalabad. The assessee has claimed exemption of Rs.5,12,75,000/- as non-taxable capital gains. The Pr.CIT, Bathinda in its order u/s 263 has interalia observed that the purchase and ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 22 sale of land transactions are regular business transactions of the assessee in the real estate business. The Pr.CIT, Bathinda in its order has also discussed the case of Hon'ble Gujrat High Court in the case of CIT Vs. Siddarth J.Desai(1983) 139 ITR 628 (Guj.) 15. It is evident from the assessment Order that the assessee was not in the business of the real estate and the transaction in question is an isolated transaction as the assessee is not doing business of real estate Accordingly, the ratio of judgment of Hon'ble Gujarat High Court in the case of CIT vs. Siddarth J. Desai (1983) 139 ITR 628 (Guj.), is not applicable to the facts of the present case. The Gujrat high court has laid down 13 tests which are required to determine whether the land in question is an agricultural land or not. The said queries and answers are as under: (i) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue Yes, the land in question was an agriculture land. Asper registered, the nature of land was mentioned as chahi land. Further the revenue office has issued certificate that land in question was an agriculture land. Hence, in the revenue record, the nature of land was agriculture land on the date of transfer. (ii) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? Yes, the land was actually used for agriculture purpose at that time. The copy of registered deed certificate from and state revenue office shows the land ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 23 was agriculture one. Further the report of the inspector regarding land that, it is still under agriculture operation also supports the fact (iii) The assessee was holding this land for a period of more than 2 years. Thus it was not a temporary character or by way of a stop-gap arrangement. The assessee was holding this land for a period of more than 2 years. Thus it was not a temporary character or by way of a stop-gap arrangement. (iv) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? No. (v) Whether, the permission under s. 65 of the N.A 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 land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? N.A. (vi) Whether the land, on the relevant date, had ceased to be put to agricultural use? Whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent or If temporary nature? No. The land was agriculture land and in fact till date of assessment, it was still agricultural land, as it is seen from the report of the inspector. (vii) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? No,it is used for agricultural purpose. ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 24 Whether the owner meant or intended to use it for agricultural purposes? (viii) Whether the land as was situated in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area where such as would indicate that the land was agricultural? As per photo graph taken by the inspector, it is seen that the physical characteristics, surrounding situation and use of the lands in the adjoining area where such as would indicate that the land was agricultural. (ix) Whether the land itself was developed by plotting and providing roads and other facilities? (x) Whether there were any previous sales of No portions of the land for non-agricultural use? (xi) Whether permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non- agriculturist was for non-agricultural or agricultural user? (xii) Whether the land was sold on yardage or on average basis? No. (xiii) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield? - ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 25 16. Thus it is proven fact that it was agriculture land, and the land was used for agricultural purpose and thereby attracts no capital gain on the sale thereof. Also on the facts, the case of CIT vs. Siddarth J. Desai (1983) 139 ITR 628 (Guj.) is distinguished as the land in that case was sold to a Housing society. 17. The other question arises is that whether the said land is located within specified limits of municipality according to government notification No.9447 dated 06.01.1994, which prescribes limit of municipalities etc. for considering the land as agricultural land, as per provisions of section 2(14). The Village Bakarpur is situated in SAS Nagar (Mohali) district and as per notification of Mohali, the limb has been prescribed as under: Mohali (SAS Nagar) Area falling within 1 Km. on either side of Mohali Kharar Road up to a distance of 6 Km. from Municipal Limit on that road. 18. From the above, it is evident that any land situated within these limbs would not be treated as exempt agricultural land for the purpose of capital gain u/s 2(14) of the Act and thus any sale of such land would attract capital gain taxes liability. In the present case, the land in village – Bakarpur, does not fall under this criterion and hence it is an exempted ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 26 agricultural Land from capital gain. In our view, no capital gain was liable on the sale of agriculture land by the assessee. 19. in the case of ‘G. Venkataswami Naidu & Co. Vs. CIT’, (1959) 25 ITR 594 (SC), the Hon'ble Supreme Court held that If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it as a profit, it would be clear case of capital accretion and not profit derived from an adventure in the nature of trade. 20. In another case of ‘Janab Abubucker Salt Vs. CIT’, (1962) 45 ITR 37- (Madras HC), the Hon'ble High Court held that- "One of the essential elements in an adventure in the nature of trade is the intention to trade; that intention must be present at the time of purchase. The mere circumstances that a property is purchased in the hope that when sold later on it would leave a margin of profit, would not be sufficient to show an intention to trade at the inception." 21. The Hon'ble High Court of Punjab and Haryana in the case of ‘CIT Vs. Harjit Singh Sangha’, (2013) 37 taxmann.com 63 upheld the finding of the Tribunal as follows: In the totality of the above said facts and circumstances and the evidence perused by us, the nature of land being agricultural land stands established; ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 27 a) as the said land was part of notified forest area where admittedly no other activities except agricultural, if allowed, could be carried out; b) Girdawari of the landholdings of the assessee proves the stand of the assessee that it was agricultural land and also the notification issued for the urban usage/non-agricultural activities certifies that [11:33 am, 07/10/2022] nick jones: prior to its notification the said land was used for agricultural -purposes. The land being registered In Land Revenue Records as Agricultural land, then there is no basis for holding the said land and as not agricultural land. We find support from the ratio laid down by the Chandigarh Bench of the Tribunal in DCIT v. A.P. Paper Mills Limited (supra). Accordingly, we hold that the nature of the land was sold by the assessee as on the date of its sale was agricultural land, which was acquired by the assessee in the year 1995 and was sold during the year under consideration. The said asset being held by the assessee cannot be said to be a business asset and its sale in small plots of land to different purchasers is not adventure in the nature of trade, in the absence of the assessee having floated the same or having developed its land for the purposes other than agricultural land. Further for converting the usage, prior permission is required from the authorities and in the absence of any permission being obtained by the assessee from PUDA authorities in respect of the land sold, merely because of land is sold in small plots to persons who intended its residential use, does not change the nature of land sold in the hands of the assessee and its taxability. We find support from the ratio laid down by the Hon'ble Patna High Court in the cases of Addl. CIR v. Tarachand Jain, 123 ITR 567 (Pat), which has been referred to by the Chandigarh Bench of the Tribunal in DCIT v. M/s A.P. Paper Mills Limited (supra). The relevant extract of the said judgment is as under: ‘the land may lie near an urban area and the land may have fetched a good price, may hold good in cases of agricultural land also. Since the land has been recorded in the official records as agricultural land, if department wanted to show that the entry was wrong, it should have given concrete facts in that direction. For example, it could have shown that the land lay within the municipal limits of the town of Ranchi or that the assessee had made his entire plot of land into parcels and was selling each one of them for the purpose of constructing a house thereof. The facts that the purchaser has purchased It for the purpose of constructing his house has no relevance because so far as the seller is concerned, he ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 28 will be deemed to have parted with the agricultural land in the form of agricultural land, unless it is proved otherwise. The department has not brought up any such material on the record by which it could be said that the criteria adopted by the Tribunal for determining the character of the agricultural land was wrong. In view thereof we hold that the gain arising on the sale of the aforesaid agricultural land cannot be taxed as income from business. Considering the above facts, the assessment u/s 143(3) was made vide order dated 30.12.2016 after providing proper opportunity to the assessee in the assessment order, the income already assessed at Rs.44,49 622/- (including STCG Rs.26,72,454/-) + agriculture income of Rs. 14,50,000/4s accepted. 22. The Chandigarh Bench of the ITAT in the case of Sanjay Jain & Sons, Bathinda in ITA No. 140/Chandi/2021 vide order dated 23.03.2022 and Surinder Kaur in ITA No. 86/Chandi/2021 vide order dated 06.05.2022, observed and held that, if there is due application of mind, and the Assessing Officer has taken a conscious decision, based on the adequate enquiries and other details furnished, then the order as passed by the Ld. Assessing Officer cannot be set-aside. 23. With regard to the arguments of the Ld. CIT (DR) that the assessment order as passed by the Ld. Assessing Officer does not have elaborate discussion, we have through the judgment of the Hon’ble Bombay High Court, in the case of ‘Gabriel India Ltd.’ as cited ‘supra’ is quite relevant to the issue in hand, and further, the relevant findings in the case of ‘Loil Continental Foods’ in ITA No. 577/Chandi/2019, para 17 of ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 29 that order is being reproduced as under for the preposition, that even if the assessment order is silent on the various issues, the facts can be borne out from the questionnaire and replies filed during the course of assessment proceedings and the following relevant findings of the coordinate bench in the above case is being reproduced as under: “17. The ld.CIT made reference to the Explanation-2 to Section 263and also decision of Hon’ble Supreme Court in the case of CIT Vs. Amitabhachan, 384 ITR 200. It is pertinent to note that Explanation-2of section 263(1) would help the ld. Commissioner to take cognizance under section 263 of the Act, if no inquiry was conducted by the AO before finalizing the assessment order. No doubt the assessment orders are very brief, and did not have elaborate discussion on these issues, but it is pertinent to bear in mind that assessee have no control over the AO and cannot persuade him to draft the assessment order in a particular manner. It is the discretion of the AO, how to pass an assessment order. Had an elaborate discussion available, then that would be an ideal situation for the higher appellate authorities to appreciate, what has operated in the mind of the AO while passing the assessment. But in the absence of such discussion, it has to be ascertained from the questionnaire and the replies submitted by the assessee. Explanation-2can be invoked when no inquiry was conducted by the AO. In the present case, he has issued a questionnaire calling for details on 37counts. Those details were submitted. Some of the issues raked up by the ld. Commissioner in the impugned order were between the group concerns, and their accounts were open before the AO in simultaneous proceedings. He was satisfied with these accounts. Thus, it is a case of inquiry and Explanation-2 cannot be invoked in the present case. In view of the above discussion, we are of the view that the Ld. Commissioner is not justified in exercising powers under section 263,and setting aside the assessment orders. We allow all these appeals and quash the impugned orders passed under section 263 of the Income Tax Act in each case of the appellants.” ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 30 24. On comparing the facts of the earlier order of the Ld. PCIT u/s 263 vide order dated 27.04.2015 and the present impugned order u/s 263 vide dated 28.06.2019, it is revealed that there is a similarity of the facts and issues and that the same issues have been sought to be examined again, athough, the records and the appellants paper book clearly substantiate the stand of the assessee that, adequate and due enquiries have been made by the concerned Assessing Officer, while passing the order u/s 143(3)/263 and the Assessing Officer did not only relied upon the replies of the assessee during the course of assessment proceedings, but made detailed enquiries as well, through the Inspector and the Revenue Department as evident from the order sheet entries and the report of the AO, before the issue of notice u/s 263 for initiating the 2 nd revisionary proceedings. In view of the matter, we are of the considered view that, there has been due application of mind by the AO, as he had made adequate and due enquiries before passing the order and once, the Ld. AO had made due enquiries and applied his mind, during the assessment proceedings, the assessment cannot be set-aside u/s 263 of the Act. 25. Similarly view is held in the judgment of the CIT vs. Hindustan Marketing & Advertisement Co. Ltd. reported in 341 ITR 180 and Anil Kumar Sharma reported in 335 ITR 180 and Surinder Pal Singh reported in ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 31 [2022] 94 ITR (Trib) 458 (Chd.) and also the judgment of the Amritsar Bench as relied upon by the Ld. Counsel of the assessee in the case of Sh. Jaswinder Singh and M/s. KBB Nuts Pvt. Ltd. as cited supra which are quite apt and relevant to the facts and the circumstances of the case. We have also gone through the judgment of the ‘Apex Court’ in the case of Sh. Nirav Modi, Shreeji Prints as cited ‘supra’ as these are squarely applicable to the facts & circumstances of the present case. Thus, we have no hesitation in holding that adequate and detailed enquiries have been made by the Ld. Assessing Officer at the time of framing the assessment and it is not the case where the directions of the Ld. PCIT in the earlier order us 263 dated 27.04.2015 has not been followed, while framing the assessment as framed by the Ld. AO u/s 143(3)/263 dated 30.12.2016.The judgments of the coordinate benches in respect of ‘Kalpa Construction Co.’ of Nagpur Tribunal and of ‘Sh. A. Kannan’ as cited ‘supra’ are quite relevant to the issue in hand that, where the Ld. Assessing Officer has passed the order in accordance with the Directions of the Ld. PCIT u/s 263, then there could be no possibility of any error, since it was an order in consequence to the order of the superior authority. 26. In view of factual matrix and the judicial precedents, we hold that the 2 nd order (impugned order) of the Ld. PCIT u/s 263 of the Act, is perverse ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 32 to the facts on record and against the spirit of law as much as the assessment as framed by the Ld. Assessing Officer vide order dated 30.12.2016 was neither erroneous nor prejudicial to the interest of revenue. Accordingly, the impugned order passed u/s 263 of the Act, is quashed. 27. As regards to the alternative arguments of the Ld. Counsel of the assessee that, the Ld. PCIT has not formed his independent opinion before issuance of notice u/s 263, as there was a proposal by the Joint Commissioner of Income Tax, Bathinda as per the copy placed before us at pages 49 to 51 and on merits of the case. Since, we have quashed the impugned order passed u/s 263 of the Act, for the reasons hereinabove paragraph, we are not inclined to adjudicate on the issue of the Ld. PCIT having initiated the impugned proceedings on the proposal sent by the Ld. JCIT, Bathinda. 28. In the backdrop of the aforesaid discussion, the appeal of the assessee is disposed of in the term indicated as above. Order pronounced in the open court on 19.10.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr/PS* Copy of the order forwarded to: ITA No. 250/Asr/2019 Indermeet Bains v. Pr. CIT 33 (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order