Sh.Rajeev Bragta, Shimla V. Pr.CIT-1, Chandigarh

ITA 69/CHANDI/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6596 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 09-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Earning of tax free income; Set aside
• Section: 263; 143(3); 142(1); 143(1); 143(2); 13; 22

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठच瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठ ‘‘बी बीबी बी.’’, च瀃डीगढ़ च瀃डीगढ़च瀃डीगढ़ च瀃डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर आयकरआयकर आयकर अपील अपीलअपील अपील सं संसं सं./ ITA No. 69/CHD/2021 Assessment Year : 2016-17 Shri Rajeev Bragta, Flat No. 3, Bhasin Villa, Goel Apartments, Sanjauli, Shimla. बनाम VS The Pr. CIT-1, C.R. Building, Sector 17-E, Chandigarh. 瀡थायी लेखा सं./PAN /TAN No: BCSPB9072L अपीलाथ牸/Appellant 灹瀄यथ牸/Respondent िनधा榁琇रती क琉 ओर से/Assessee by : Shri Vishal Mohan,Advocate राज瀡व क琉 ओर से/ Revenue by : Shri Sarabjeet Singh, Sr.DR तारीख/Date of Hearing : 01.04.2022 उदघोषणा क琉 तारीख/Date of Pronouncement : 16.06.2022 VIRTUAL HEARING आदेश आदेशआदेश आदेश/ORDER PER DIVA SINGH By the present appeal, the assessee assails the correctness of the order passed by PCIT, Chandigarh dated 11.03.2021 of the following grounds : 1. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 and further erred in holding the assessment order dated 30-10-2018 is erroneous in so far as it is prejudicial to the interest of revenue. 2. That in any case and in any view of the matter, action of Ld. Pr. C1T in assuming jurisdiction u/s 263 and passing the impugned order under this section is bad in law and against the facts and circumstances of the case. 3. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 by extending jurisdiction beyond the reasons of limited security i.e. "Whether the claim of ITA-69/CHD/2021 A.Y. 2016-17 Page 2 of 14 agricultural income is correct", and specially directing AO to verify the debits and credits in bank statement of the assessee. 4. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 2. The hearing in the present case took place on 01.02.2022 and on 01.04.2022. The ld. AR referring to the background of the case wherein it was claimed that the assessment order has been passed after due enquiry. The exercise of power u/s 263 by the ld. PCIT, it was submitted, is an arbitrary exercise. It was his submission that on going through the record, it is evident that the twin conditions necessary for exercise and powers u/s 263 in the facts of the present case did not exist. The reasons recorded by the ld. PCIT in para 6 of her order for justifying the power, it was submitted, was not applicable to the facts of assessee's case. The ld. PCIT, it was submitted, has exercised the power mixing the facts of assessee's case with some other case and thus, it is a case of non-application of mind by the ld. PCIT. 3. The ld. AR inviting attention to the above grounds, specifically ground No. 3 drew attention to the statement of facts appended with the present appeal. Referring to the same, it was submitted that the assessee had e-filed return of income on 28.07.2016 declaring income of Rs. 1,89,680/- ITA-69/CHD/2021 A.Y. 2016-17 Page 3 of 14 and agriculture income of Rs.26,48,619/- .The case of the assessee was selected for Limited Scrutiny under CASS for examining whether the claim of agricultural income is correct. Assessment under section 143(3) of the Act was completed on 30.10.2018 and income returned by the assessee at Rs.1,89,680/- an agricultural Income of Rs.26,48,619/- was accepted. 4. Referring to the material available on record, attention was invited to page 61 of the Paper Book filed on 22.11.2021. In support of the aforesaid ground, attention was invited to Paper Book page 4 which is copy of the notice issued u/s 143(2) dated 03.07.2017. The reply of the assessee thereto, it was submitted, is available at pages 9 onwards wherein vide his reply dated 25.09.2018, the assessee before the AO had submitted as under : 5. I am owner of apple orchard and bills of apple produce sold is being attached. 6. Copies of bank accounts are being procured and shall be filed in due course of time. 7. I have not maintained any details of expenditure incurred. The detail of estimation of expenditure is 20-25%.” 5. Attention was invited to page 30 & 31 which is a copy of the assessment order sought to be revised in the present proceedings. Specific page 37 was referred to highlight that the order accepting agricultural income was passed after considering the detailed submissions made available. The ITA-69/CHD/2021 A.Y. 2016-17 Page 4 of 14 documents filed in support thereof were considered. These consisted of the ledger account maintained with M/s Mahajan Fruit Company alongwith supporting documents available from page 10 to 21. Similarly supporting documents of sale of fruit to M/s Pradeep Thakur Fruit Company, Parwanoo indexed at pages 22 to 25 of the Paper Book were also relied upon. 5.1 It was submitted that apart from these documents the assessee had also filed copy of the Jamabandi of the total land holdings of the assessee to the AO available at pages 26 to 29. Referring to column No. 7 therein, it was pointed out that qua each of the land holdings, the nature of the land as “Baag bageecha” “Faldaar” has been written by the Land Revenue authorities 5.2 Referring again to Paper Book page 10, it was submitted that the assessee has shown receipt of Rs. 32,69,175/- from the sale of horticulture produce to M/s Mahajan Fruit Company. The assessee has all along submitted that he has not been maintaining any details of expenses. As a result of this, expenses have been estimated. The Assessing Officer has duly enquired into all these aspects before passing the order sought to be upset by the ld. PCIT without any basis. ITA-69/CHD/2021 A.Y. 2016-17 Page 5 of 14 6. In the said background, inviting attention to Paper Book page 47-50 it was submitted that Show Cause Notice dated 20.02.2021 was issued by the ld. PCIT which clearly shows that he was aware of the fact that it had been selected under CASS for a specific purpose; where ownership of land for the stated activity and bills etc. of the parties to whom sales were made, were all available on record and had been seen. Despite this, without faulting the evidences, the assessment order was sought to be set aside on the following shortcomings. The assessee was required to explain the same : “4 There are credits as well debits in his bank accounts and debits are almost equal to credits. On the other side the assessee declared net agriculture income at Rs. 2648,619/-. In view of these, following facts emerged in this case - i. No proof of sale of his agriculture produce was filed by the assessee ii. Debits in his bank accounts are more than credits in his bank accounts iii. The assessee declared agriculture expenses at Nil whereas he has withdrawn Rs. 69,65,588/- from his bank accounts. Purpose of balance withdrawals is not clear. iv. No agriculture expense was declared in Schedule-EI of his return of income. 6.1 The reply to the same, it was submitted is also attached to the Paper Book at pages 51-60. Referring to the same, it was highlighted for the benefit of the ld. PCIT that the scope of the scrutiny was specifically for examining agricultural income. It had been stated that all the necessary details in regard to the said income had been shown to the AO and were also made available before the ld. PCIT. Drawing ITA-69/CHD/2021 A.Y. 2016-17 Page 6 of 14 specific attention to page 52 which is internal page 2 of the reply to the ld. PCIT, the status of the land holding of the assessee for the stated activity was highlighted : The assessee is owner of land measuring about 16 Bighas and jamabandi was duly filed with reply dated 25/09/2018. The details of jamabandis filed is as under: Name of Mohal Area of Land In Hectare Agricultural land In Hectare Share Share of Undersigned In Hectare Gorali 02-78-03 02-38-31 l/3rd 00-79-44 Chiwna Badlagav 00-90-34 00-81-85 l/3Rd 00-27-28 Total 01-06-72 The total area under cultivation by the assessee is 01-06-72 hectare i.e 14.19 Bighas. Hence the contention that documents pertaining to agricultural land is not filed is misconceived and not based upon the facts of the case. 6.2 In the said background, inviting attention to the impugned order, the conclusion drawn by the ld. PCIT, it was submitted, is arbitrary and contrary to record and is a case of arbitrary exercise of power. Attention was invited to para 6 of the impugned order so as to submit that the order has been passed mechanically and is a case of “copy, cut paste”. It was submitted that reference is made to Investments whereas at no point of time, any investments had been made by the assessee. These referred to and under consideration by the ld. PCIT herself does not pertain to the assessee. It was submitted that the argument that it is a case of “copy, cut, paste” is being made consciously with full knowledge of its consequences. This objection to ITA-69/CHD/2021 A.Y. 2016-17 Page 7 of 14 the order on this ground is not a casual objection. Specific para relied upon for the aforesaid assertions was read out. Same is reproduced for ready reference : “6. In view of the above facts and discussions, I am satisfied that the assessment order passed by the Assessing Officer on 30.10.2018 is not only erroneous it is also prejudicial to the interests of the revenue and has been issued without making proper enquiries either from the assessee or from third parties to confirm the realities of the investment actually claimed to have been made by the assessee on the basis of which the deduction has been claimed. Therefore, the said order passed on 30.10.2018 is set aside to the files of the assessing officer to pass fresh order after making necessary enquiries/investigations in the light of the discussions made above and after giving due opportunity to the assessee of being heard.” (emphasis supplied) 7. Accordingly, it was his prayer that the order being whimsical, arbitrary and a case of non-application of mind by the ld. PCIT may be quashed. 8. The ld. DR on the other hand inviting specific attention to the assessment order submitted that the AO while accepting the agriculture income has given the finding that it appears to be genuinely earned from agricultural operation. For ready reference the assessment order is reproduced hereunder : Return declaring income of Rs. 1,89,680/-and agricultural income of Rs. 26,48,619/- was filed by the assessee on 28/07/2016 and the same was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter, the Act). Later on the case of the assessee was selected for scrutiny through CASS with the reasons "Correctness of Agricultural Income". Statutory notice u/s. 143(2) of the Act was issued on 09/08/2018 which was duly served upon the assessee. Subsequently, fresh statutory notices u/s. 142(1) of the Income Tax Act, 1961 along with detailed questionnaire were issued to the assessee on 18/06/2018. In response to these notices, the assessee furnished requisite details/documents as called for vide questionnaire dt. 18/06/2018. The same have been perused. ITA-69/CHD/2021 A.Y. 2016-17 Page 8 of 14 2. Brief facts of the case are that the assessee is an agriculturist/horticulturist and own cultivable horticulture/Agricultural land and has declared agricultural income of Rs. 26,48,619/-. The assessee has furnished all the requisite details/information documents in support of agricultural income declared in ITR. In view of above fact income under the head "Agriculture Income" at Rs. 26,48,619/- appear to be genuinely earned from agricultural operation and is accepted. Accordingly, Income of assessee is computed as under : Income from other sources Rs. 1,89,680/- Agricultural Income Rs. 26,48,619/- Assessed. Issued requisite documents. (emphasis supplied) 9. Accordingly, it was his submission that once the AO on consideration of the entire facts, circumstances and evidences of the case instead of making a proper enquiry has passed a brief order in haste which on a cursory look appears to be genuine. Thus once the AO himself is not sure, as noted by him, the ld. PCIT was fully justified in examining the order and after issuing show cause notice to the assessee and considering the assessee's submission. The order was correctly set aside. Referring to facts on record, it was argued that the entire land holding of the assessee was not fit for agriculture, some of it was unfit for agricultural activity. Accordingly, it was his argument that it is not possible to show a net income of Rs. 26 lacs from 2 acres. It was his submission that the land is not large enough and the receipts in proportion are very large. ITA-69/CHD/2021 A.Y. 2016-17 Page 9 of 14 9.1 The ld. CIT-DR was required to refer from the orders whether there is any discussion on what estimated income from the stated activity on the stated land was considered acceptable. We find no discussion in the orders on the possible agriculture receipts which can be considered reasonable from horticulture activity in the specific belt where the land was situated. Since there is no such reference to any such facts, the arguments in vacuum at this stage, possibly has no meaning. The ld. CIT-DR agreed that there is no discussion on what was the possible acceptable receipt from sale of apple proceeds in the specific area in the specific year and thus, instead invited attention to the evidences relied upon by the assessee. It was submitted that the same transporter is seen to carry in truck the horticulture proceeds of the assessee and the AO did not care to issue any notice u/s 131 to question the transporter or to issue any notice u/s 133(6) to verify the facts. Thus, the issues, it was submitted, required enquiry and the order passed is justifiable on facts and may be upheld. 9.2 Inviting attention to para 6 it was submitted that it was typographic error as nowhere else the ld. PCIT make reference to any such fact and merely because there is typographic ITA-69/CHD/2021 A.Y. 2016-17 Page 10 of 14 error, the inference that it is an order passed mechanically may not be accepted. 10. The ld. AR in reply reiterating his factual position relied upon the decision of the Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 (SC) for the proposition that in case the revisionary authority differs with the view taken by the AO and the view taken by the AO is a possible view, then in these facts the order cannot be revised. The order u/s 263, it was submitted, has to satisfy that it is erroneous as well as prejudiced to the interests of the Revenue. The error in the order has to be specifically pointed out by the PCIT which has not been done. 11. We have heard the rival submissions and perused the material available on record. It is seen that in the facts of the present case in response to the Show Cause Notice issued by the ld.PCIT, which has been captured in the earlier part of this order, the assessee has filed his reply relying upon the evidences and submissions made before the AO. The Show Cause Notice has been reproduced in para 4.2 of the order. The ld. PCIT has on facts considered the issue in the following manner : “4.3 Perusal of the above facts show that the Assessing Officer has failed to take cognizance of the facts and has simply accepted returned income in this ITA-69/CHD/2021 A.Y. 2016-17 Page 11 of 14 case. The assessment made by the assessing officer is held to be erroneous so far as it is prejudicial to the interest of revenue. Hence genuineness of large net agriculture income, is doubtful. No addition was made by the Assessing officer in this case and even his net agriculture income was accepted in order under section 143(3) of the IT. Act, 1961. The Assessing Officer even did not disallow claim of his large exempt income i.e. large net agriculture income. The assessment made by the assessing officer is held to be erroneous so far as it is prejudicial to the interest of revenue. In the proceedings under section 263 the AR of the assessee has claimed that there was no need for the AO to examine the expenses on earning of agriculture income and withdrawal made for the purpose as it was a limited scrutiny case but the AR of the assessee has failed to consider that the basis of selection of the case was to verify the authenticity of agriculture income and that cannot be verified I the absence of verification of existence of appropriate landholding and verification of expenses incurred for the purpose of earning the income. The assessment made by the assessing officer is held to be erroneous so far as it is prejudicial to the interest of revenue. 11.1 The said conclusion has been supported by relying upon various case laws and in terms of the aforesaid conclusion, the directions to revise the order in para 6 has been arrived at. We find on consideration of the entire facts and circumstances of the case that notwithstanding the observation made in para 6 stated to be a typographical error by the ld. CIT-DR and alleged to be a case of mechanical exercise of power by the ld. AR, the fact remains that in the facts of the present case the evidences of agricultural activity was supported by the evidences in terms of the Land Revenue Authority evidenced by the Jamabandi. On query it has been stated that in the Khasra Girdawari, since the trees continue to remain on land, there is no change in the narration and thus, the evidence was sufficient evidence for the purposes of horticulture activity. ITA-69/CHD/2021 A.Y. 2016-17 Page 12 of 14 We find that in the facts of the present case, there is nothing on record to show that the apple bearing trees did not exist on the land. We further find that the evidences by way of M/s Mahajan Fruit Company and M/s Pradeep Thakur Fruit Company, Parwanoo showing sale from the production of fruit etc. for the purposes of the present proceedings was sufficient evidences and the fact that no details of expenses have been given, is evident from the answers of the assessee to the initial query of the AO namely that no record of expenses was being maintained and estimated expenses have been suo-moto reduced and only net income has been shown. The assessee is stated to be engaged in this activity continuously over a period of time, however, this is stated to be the first year wherein the assessee was subjected to scrutiny proceedings. We have also gone through the assessment order and seen that the strength which the CIT- DR seeks to draw from the wording, “ appear to be genuinely earned from agricultural operation and is accepted” is a matter of writing and can not be taken to be indicative of any doubts entertained by the AO in the correctness of the order being passed. The horticulture income examined by the AO has been accepted. On a consideration of the entire facts and circumstances, position of law and the submissions of the parties before the ITA-69/CHD/2021 A.Y. 2016-17 Page 13 of 14 Bench, we find that the appeal of the assessee on facts deserves to be allowed. The present case is not a case of no enquiry and nothing has been placed before us on it being a case of lack of proper enquiry. The manner of recordings in the assessment order “appears to be genuine” we have seen is neither here nor there and even if for a moment, the observations made by the ld. PCIT in para 6 of the order are accepted to be typographical error, the fact remains that the ld. PCIT on considering the facts and submissions has failed to point out any error in the order passed. The order cannot be passed on the presumption that had some more enquiry been made, possibly some more facts would have been unearthed. The ld. PCIT has all the powers under the Act to carry out whatever enquiry he/she deems fit while exercising the Revisionary powers u/s 263 of the Act which power has to be exercised with due care and intention. Hence, it was necessary for the ld. PCIT to bring out some error in the order and then satisfy the adjudicating authority that the error was of such magnitude that it can be considered to be prejudicial to the interests of the Revenue. In the facts of the present case no error has been pointed out. The exercise of Revisionary powers cannot be permitted to be exercised arbitrarily or whimsically.Accordingly, on a consideration of ITA-69/CHD/2021 A.Y. 2016-17 Page 14 of 14 facts, circumstances and position of law, the order passed u/s 263 of the Act is quashed. Thus, we find on facts that the appeal of the assessee is to be allowed. 12. In the result, the appeal of the assessee is allowed. Order pronounced on 16 th June,2022. Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा लेखालेखा लेखा सद瀡य सद瀡यसद瀡य सद瀡य/ Accountant Member 瀈याियक 瀈याियक瀈याियक 瀈याियक सद瀡य सद瀡यसद瀡य सद瀡य/ Judicial Member “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. आयकर आयु猴 (अपील)/ The CIT(A) 5. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar