KALYANRAO VASANTRAO KALE HUF,PHANDHARPUR vs. PRINCIPAL COMMISSIONER OF INCOME-TAX -4, PUNE

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ITA 184/PUN/2021Status: DisposedITAT Pune29 November 2022AY 2016-175 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the PCIT's order, finding that the AO's assessment was erroneous and prejudicial to the revenue due to a lack of proper inquiry into the agricultural income and its expenses. The AO was directed to re-examine the assessment with detailed inquiry.

What were the facts?

The assessee declared substantial agricultural income, which was accepted by the Assessing Officer (AO) without detailed verification. The Principal Commissioner of Income Tax (PCIT) invoked revisionary powers under Section 263, citing the AO's failure to conduct proper inquiries regarding the apportionment of income from sale of raisins.

What were the issues?

Whether the AO's assessment order was erroneous and prejudicial to the interest of the revenue due to inadequate verification of agricultural income and its apportionment.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 2(1A)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, ‘A’ BENCH, PUNE

Before: SHRI INTURI RAMA RAO & SHRI PARTHA SARATHI CHAUDHURY

For Respondent: Shri Ganesh Bare

ORDER

PER PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER

1.

This appeal preferred by the assessee emanates from order of the ld. Pr. Commissioner of Income Tax-4, Pune dated 31-03-2021 for A.Y. 2016-17 as per the grounds of appeal on record.

2. The solitary grievance of the assessee is the assumption of revisionary jurisdiction by the ld. Pr. CIT and passing an order u/s 263 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

3.

At the time of hearing, none appeared for the assessee. The submissions of the ld. D.R as well as materials/documents on record have been considered and the case is adjudicated on merits.

4.

The brief facts in this case are that the return of income was e-filed by the assessee on 28-03-2017 declaring total income at Rs. 1,13,930/- and agriculture income at Rs. 29,64,523/-. The case was selected for scrutiny under CASS to examine large agricultural income in comparison of the total income. The assessment order u/s 143(3) of the Act was passed on 20-12-

Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13 2018 accepting the total income at Rs. 1,13,930/- and agricultural income at Rs. 29,64,523/-. It was observed by the ld. Pr. CIT in his order that for the relevant assessment year 2016-17, the assessee had shown agricultural income at Rs. 48,46,836/- claimed to have been received from sale of raisins, horticulture receipts and sugar-cane receipts. From the said gross agricultural income, the assessee had claimed agricultural expenses of Rs. 18,82,313/- which is @ 38.83% of the gross agricultural income and net agricultural income shown in the computation of income was at Rs. 29,64,523/-. Further, it was observed that the income from sale of raisins of Rs. 24,12,312/- from sale of 12527 kg of raisins was shown as agricultural income but the same was required to be apportioned as agricultural income and business income as per section 2(1A) of the Act and Rule 7 of the Income-tax Rules, 1962. Thereafter, the ld. Pr. CIT has made an apportionment of income between the agricultural income and business income and arrived at net agricultural income assessable at Rs. 20,36,913/- as evident in his order. Considering the above facts, there was an underassessment of Rs. 9,27,610/- which was required to be taxed in the hands of the assessee under the head “income from business”. In view of the aforesaid, the ld. Pr. CIT observed that assessment completed u/s 143(3) of the Act on 20-12-2018 by the A.O was erroneous in so far as it was prejudicial to the interest of the Revenue to the above extent. Hence, the ld. Pr. CIT proposed to revise the order passed u/s 143(3) of the Act. Therefore, a DIN show cause notice was issued to the assessee vide No. ITBA/REV/REVI1/2020-21/1030974522(1) dt. 25-02-2021 giving an opportunity to explain as to why the order passed by the A.O. should not be revised by invoking provisions of sec. 263 of the Act.

Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13

5.

Accordingly, notice was issued to the assessee and an opportunity to submit written submissions in the case on or before 05-03-2021 was given to the assessee. In response to the said notice, the assessee filed written submissions dated 23-03-2021 through ITBA Revision portal on 24-03-2021.

6.

The ld. Pr. CIT placed reliance on following decisions and supported his findings that the A.O failed to make proper enquiries and verification with regards to the facts of the case making the assessment order erroneous and so as to be prejudicial to the interest of revenue.

Gee Vee Enterprises Vs. Addl. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del), CIT Vs. South India shipping Corpn. Ltd. 1998) 147 CTR (Mad) 433 : (1998) 233 ITR 546 (Mad) CIT Vs. M.M. Khambhatwala (1992) 198 ITR 144 (Guj) and CIT Vs. Bhagwan Das (2004) 191 CTR 531 : (2005) 272 ITR 367 (All).

7.

We have perused the assessment order as well as the order of the ld. Pr. CIT. We find that in the assessment order, the ld. A.O has not brought out specific facts after due verification regarding the extent of agricultural income and the agricultural expenses incurred by the assessee. The ld. A.O has simply accepted all the submissions and the documents submitted by the assessee and has not given any categorical findings of facts. It is absolutely evident that there has been no proper enquiry for ascertaining the extent of agricultural income. Even the Inspector‟s report which is stated in the assessment order does not bring out the details as to what exactly was the enquiry conducted. On the other hand, the ld. Pr. CIT has analyzed the facts and circumstances and has worked out the agricultural income assessable considering the facts of the case. In such scenario, it is the duty of the ld. A.O to bring out the correct facts after necessary verification and he should come out with a speaking order. The ld. Pr. CIT has therefore, directed the ld. A.O to re-visit the assessment while conducting the detailed enquiry and then pass an order as per law complying with principles of natural justice. We therefore, do

Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13 not find any infirmity with the findings of the ld. Pr. CIT and uphold his order passed u/s 263 of the Act.

8.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open Court on this 29th day of November, 2022

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