INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Matter covered by decision of CIT (A) -

Assessee filed a return claiming exemption under section 10(1) with regard to the profit arising on sale for a land on the ground that the land, which was sold was agricultural land. CIT invoking section 263 held that the assessment order suffered from errors and it was prejudicial to the interest of the revenue and accordingly, the same was set aside and AO was directed to cause necessary enquiry giving reasonable opportunity to assessee and to redo the assessment. The assessment was completed by AO treating the land as 'non-agricultural land' under the category of 'capital asset' under section 2(14). Held: Nothing was brought on record by assessee to establish that the agricultural operations were carried on prior to his purchase and after purchase. Moreover, conduct of assessee in selling the property within a short period of one year and the property being used to develop the SEZ ought to have been taken note of by Tribunal while deciding the character of the land, as mere classification of the land in the revenue record, as agricultural land, did not conclusively prove that the nature of the land was an agricultural land. Lands were transferred to non-agriculturists for non-agricultural purpose and this would also be one of the relevant factors to test the case of the assessee.