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Facts
The assessee's appeal was against an order under section 263 of the Income Tax Act, 1961. The Principal Commissioner of Income Tax (PCIT) believed the assessment order was erroneous as it disallowed agricultural income at the normal tax rate instead of the higher rate under section 115BBE.
Held
The Tribunal held that the PCIT's revision order under section 263 was not justified. The Tribunal stated that section 263 can only be invoked for a lack of inquiry, not for an inadequate inquiry. The non-mentioning of a specific section did not make the assessment order erroneous or prejudicial to the revenue.
Key Issues
Whether the revision order passed under section 263 was justified when the original assessment involved an inquiry, even if considered inadequate by the PCIT, and whether non-mentioning of a specific section in the assessment order makes it erroneous and prejudicial to the revenue.
Sections Cited
263, 143(3), 69A, 115BBE, 144
AI-generated summary — verify with the full judgment below
Before: S.S. Viswanethra Ravi
Year: 2020-21 Gajendramurthy Rangappa, Vs. The Income Tax Officer, D. No. 3/207/A-1, Avalapalli, Ward 1, Hosur 635 109. Hosur. [PAN:BLJPG7735F] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : None ��थ� की ओर से/Respondent by : Ms. E. Pavuna Sundari, CIT सुनवाई की तारीख/ Date of hearing : 04.09.2025 घोषणा की तारीख /Date of Pronouncement : 09.09.2025 आदेश /O R D E R This appeal filed by the assessee is directed against the order dated 06.03.2025 passed by the ld. Principal Commissioner of Income Tax – 1, Coimbatore for the assessment year 2020-21 under section 263 of the Income Tax Act, 1961 [“Act” in short].
When the appeal was taken up for hearing, none appeared on behalf of the assessee nor filed any adjournment petition. Hence, the assessee is called absent and proceeds to adjudicate the appeal after hearing the ld. DR.
After hearing the ld. DR and on perusal of the material available on record, it is noted that the Assessing Officer, in the original assessment proceedings, disallowed an amount of ₹.25,68,520/- on account of denial of allowance under the head agricultural income vide scrutiny assessment. The ld. PCIT, while exercising the provisions of section 263 of the Act, held the said assessment order passed under section 143(3) of the Act is erroneous and prejudicial to the interest of revenue for non- mentioning of provisions of law under section 69A of the Act and taxed the same under the provisions of section 115BBE of the Act. I find that the Assessing Officer conducted enquiry and found no evidence in claiming the agricultural income and accordingly, disallowed the same and brought the same under the normal tax rate at 30%, but, not under section 115BBE of the Act, which specifically charged to tax at 60%. The ld. PCIT was of the opinion that the Assessing Officer should have disallowed under section 69A of the Act in order to charge @ 60% tax rate under section 115BBE of the Act, which is clear from para 7 of the impugned order.
The ld. DR Ms. E. Pavuna Sundari, CIT relied on the order in the case of Kamaluddin Popatlal Surani v. PCIT [2025] 170 taxmann.com 88 (Surat – Trib) and argued that in similar circumstances, the Surat Bench of the Tribunal upheld the order of the ld. PCIT under section 263 of the Act. She referred to para 11 of the said order and submits that the facts and circumstances therein are similar to the facts in hand and prayed to dismiss the ground raised by the assessee.
On perusal of the order of the Surat Bench of the Tribunal, I note that the facts are that the Assessing Officer made addition of entire amount being the value as per Stamp Value Authority (SVA) due to non- compliance of the assessee in the reassessment proceedings and passed order to his best judgement under section 144 of the Act. In the present case, is a case where entire details were filed before the Assessing Officer regarding the claim of agricultural income, but, however, the Assessing Officer not found satisfied with the said details and disallowed the claim of agricultural income and added to the total income of the assessee. I find the facts and circumstances of the case before the Surat Bench of the Tribunal is different and the facts in hand are not similar. Therefore, I hold the finding therein by the Surat Bench of the Tribunal is not applicable to the facts on hand.
The ld. PCIT, in the impugned order, failed to show the assessment order is erroneous and prejudicial to the interest of Revenue and in my opinion, non-mentioning of provisions of section 69A of the Act in order to charge to tax at 60% under section 115BBE of the Act in the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. Further, the provisions of section 263 of the Act can be invoked only when there is lack of enquiry, but not on account of an inadequate enquiry. Therefore, the revision order passed under section 263 of the Act by the ld. PCIT is not justified. Thus, the ground raised by the assessee is allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 09th September, 2025 at Chennai.