B.SUJATHA,COIMBATORE vs. ITO NON CORPORATE WARD 2(5), COIMBATORE

This appeal by the assessee is arising out of order revision order of Principal Commissioner of Income Tax (Appeals)-1, Coimbatore in C. No.120(23)/263/PCIT-1/CBE/2018-19, vide order dated 22.03.2019 u/s.263 of the Income Tax Act, 1961 (hereinafter the ‘Act’). The original assessment was framed by the Income Tax Officer, Non-Corporate Ward-2(5), Coimbatore for the assessment year 2010-11 vide order dated 29.12.2016 u/s.143(3) r.w.s. 147 of the Act.

The only issue in this appeal of assessee is as regards to the PCIT revising the assessment framed by the AO for verification of agricultural income accepted without considering the nature and extent of crops raised. For this assessee has raised various grounds which need not be reproduced.

Brief facts are that the assessee has filed her return of income for the relevant assessment year 2010-11 declaring agricultural income at Rs.2,69,75,426/-. This return was processed and subsequently reopened u/s.147 of the Act. The AO noted in his assessment order that the assessee submitted land purchased documents, affidavits from lessors regarding oral lease of their lands for cultivation, sale bills of medicinal plants and other agricultural produce. The assessee also submitted chittiadangal details of agricultural cultivation of 12 acres of own land and 150 acres of leased lands along with details of agricultural income and agricultural produce sold such as jasmine, gloriosa, coliues roots, drumstick, chilli, onion, groundnut, news paper cutting depicting medicinal plant cultivation, letters from Horticulture, Asst. Director of Aravankurichi and Karur certifying the yield. The AO noted that the receipts from agricultural income are substantiated by assessee with documents but expense claimed does not appear to be sufficient. Hence the AO estimated the expenses at Rs.5,00,000/- and accepted the agricultural income at Rs.2,64,75,426/-. Subsequently, the PCIT after going through the case records issued show-cause notice in C.No.120(23)/PCIT-1/CBE/2018-19, dated 24.01.2019 giving explanation as to why the assessment framed by the AO be not revised u/s.263(3) of the Act. The assessee before AO argued that the assessee has filed complete details as required by the AO as per the noting in record sheet and submitted all the required details as required by the AO. The ld.AR for the assessee drew our attention to the copies of order sheet entries obtained through RTI application and now enclosed to page 2 to 7 of assessee’s paper-book. As per the order sheet notings, the AO required the details of agricultural income and the ld.AR drew our attention to the relevant noting of the AO in the order sheet entries and the relevant order sheet entry reads as under:-

We have heard rival contentions and gone through facts of the case. Before us, the ld.AR relied on the decision of Hon’ble Supreme Court in the case of Malabar Industrial Co. vs. CIT, [2000] 243 ITR 83 and stated that the order of AO is neither erroneous nor prejudicial to the interest of Revenue because CIT has to record how the order of AO is erroneous. According to him, the precondition of revision u/s.263 of the Act is that he has to hold the assessment order as erroneous as well as prejudicial to the interest of Revenue and he can make such enquiries as he deems necessary. He further argued that PCIT has not made any enquiry and simpliciter for re- verification of entire documents revised the assessment and directed the AO to reframe the assessment. The ld.AR drew our attention to para 7 of the judgment of Hon’ble Supreme Court in the case of Malabar Industrial Co. supra, and argued that the AO has taken one of the possible view and PCIT is unable to uphold how the order of AO is not sustainable in law. We noted from the case law cited by ld.AR for the assessee of Hon’ble Supreme Court in the case of CIT vs. Max India Ltd., [2007] 295 ITR 282, wherein the Hon’ble Supreme Court has affirmed the decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs. Max India Ltd., [2004] 268 ITR 128, wherein the Hon’ble Punjab & Haryana High Court has categorically held that once the AO has taken a possible view, CIT has no jurisdiction to interfere with the jurisdiction of AO. The ld.AR drew our attention to para 5 of the judgment which reads as under:- 5. We find no merit in this contention. For expressing a View, it is not necessary that it should be based on a judicial pronouncement. A view has to be expressed on the basis of the provisions of law as applicable to the facts of a case. It is not in dispute that the view expressed by the Assessing Officer is in conformity with the view subsequently expressed by the various Benches of the Tribunal. We are, therefore, satisfied that the Tribunal was justified in holding that the view expressed by the Assessing Officer was a possible view and since the Assessing Officer has taken a possible view, the Commissioner had no jurisdiction to interfere by exercising his powers under Section 263 of the Act. In this behalf, we may refer to the decision of the Supreme Court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, wherein at page 88 it has been held as under (page 88) :

The ld.DR has relied on the decision of Hon’ble Bombay High Court in the case of PCIT vs. Zuari Maroc Phosphates Ltd., 432 ITR 316, wherein the Hon’ble Bombay High Court has justified the action of PCIT that without a thorough inquiry and merely based on vague premise that assessee might have incurred certain expenses which might be relevant to keep the assessee in operation, the AO was not justified in allowing the business loss to the extent of Rs.1.78 crores. But the facts before Hon’ble Bombay High Court and before us are distinguishable for the reason that the AO has conducted complete enquiry in regard to agricultural income and verified each and every detail during scrutiny assessment proceedings and then reached to a definite conclusion that the receipts of agricultural income are substantiated but expenses claimed does not appear to be sufficient for claiming the income reported compared to subsequent years. The AO has applied his mind to the facts of the case and also examined each and every aspect relating to receipts of agricultural income including agricultural land holding, produce sold and amount received. The PCIT in his revision order nowhere owes that the view taken by the AO is not sustainable in law. Once this is the position, we are of the view that revision order passed by PCIT is not sustainable in law. Hence, we quash the revision order and allow the appeal of the assessee.

In the result, the appeal filed by the assessee is allowed.