INCOME TAX ACT, 1961

Sectin 263

Revision under section 263 - Erroneous and prejudicial order - No lack of enquiry on AO's part -

Pr. CIT treated order passed by AO as erroneous and prejudicial to the interests of revenue. For the reason that AO had not examined whether parcel of land sold as well as parcel of land subsequently purchased were being used for agricultural purposes for claiming deduction under section 54B and secondly, expenditure incurred on improvement of the land sold was not verified by AO. Further, AO had not examined the nature of investment made in new house for the purposes of claiming deduction under section 54F. Held: Case of assessee was selected for limited scrutiny through CASS for the purposes of verifying deduction claimed under the head 'Capital gains as apparent from the assessment order passed under section 143(3) thereto , notice under section 143(2) was issued and thereafter, notice under section 142(1) along with questionnaire was issued specifically calling for information and documents relating to claim of large deduction while computing capital gains. In response, assessee attended the proceedings and furnished requisite information/documents in support of his claim of deduction. Assessee produced relevant details and evidences and specifically the sale and purchase documents for disposing off and subsequent acquiring the agricultural land, Girdawari reports evidencing the carrying on of agricultural operations as well as valuation report towards cost of improvement and the amount invested in Capital Gain Account Scheme.There was thus no dispute that AO had conducted enquiry on the matter for which case was selected for scrutiny and details and records produced before him were examined and after satisfying himself, AO finally concluded that the assessee has rightly computed and declared its income from capital gains and returned income was accepted. Therefore, question of lack of enquiry did not arise when AO had taken up the scrutiny and issued notice under section 142(1) along with a questionnaire calling for all the details relevant to the acquisition of the agricultural land being sold as well as subsequent agricultural land purchased as well as of cost of improvement. Therefore, order passed by AO could not be treated as erroneous and prejudicial to the interests of revenue.

Relied:Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 831 (SC) : 2000 TaxPub(DT) 1227 (SC), ITO v. D.G. Housing Projects Ltd. (2012) 343 ITR 329 (Del) : 2012 TaxPub(DT) 1727 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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