NALLIAH MARAN,CHENNAI vs. ITO NON CORPORATE WARD 3(4), CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax-5, Chennai, dated 15.02.2019 relevant to the assessment year 2014-15 passed under section 263 of the Income Tax Act, 1961 [“Act” in short].

Facts are in brief that the assessee is an individual, filed his return of income for the assessment year under consideration by declaring a total income of ₹.4,21,280/-. The Assessing Officer has issued notice under section 143(2) of the Act dated 07.09.2015. Subsequently, calling for specific details and documents, a notice under section 142(1) of the Act was also issued. The assessee’s AR appeared before the Assessing Officer and filed all the relevant details i.e., statement of income, sale deed, etc. By considering the details filed by the assessee, the assessment under section 143(3) of the Act was completed on 05.12.2016.

Subsequently, by exercising the powers conferred under section 263 of the Act, the ld. PCIT issued a show-cause notice to the assessee on the ground that the land which is subject matter in dispute is not an agricultural land and the provisions of section 56(2)(vii) of the Act applies. The assessee has filed detailed reply. After considering the submissions of the assessee, the ld. PCIT was of the opinion that the Assessing Officer has not examined the issue properly and therefore, the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. Accordingly, the ld. PCIT cancelled the assessment order and directed the Assessing Officer to redo the assessment after considering the explanation of the assessee.

Against the revision order under section 263 of the Act, the assessee is in appeal before the Tribunal.

On the other hand, the ld. DR supported the revision order passed under section 263 of the Act.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including three paper books filed by the assessee. Before us, the ld. Counsel for the assessee has pointed out from the paper book that vide show-cause notice dated 25.07.2016, the Assessing Officer has specifically asked the assessee as to why the provision of section 56(2)(vii)(b) of the Act should not be applied in his case and called for detailed explanation. We find that in response to the notice issued by the Assessing Officer, the assessee filed two replies dated 22.04.2016 and 24.06.2016 and also filed revenue records before the Assessing Officer by stating that the land is an agricultural land. By considering the detailed replies given by the assessee and also after examining all other details such as adangal extract, certificates issued by the Village Administrative Officer, copy of the online and manual patta issued by the Revenue Divisional Officer, which are given in the paper book page 1 to 16, the Assessing Officer passed the assessment order by treating the land in dispute as an agricultural land. By considering all the details filed by the assessee, we are of the opinion that the Assessing Officer came to a conclusion that the land is an agricultural land. Further, we find that the ld. PCIT was not correct in directing the Assessing Officer to examine again without considering the relevant documents filed by the assessee even before the ld. PCIT during revisional proceedings. By considering all the facts and circumstances of the case, we are of the considered opinion that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. Accordingly, we cancel the order passed by the ld. PCIT under section 263 of the Act and allow the appeal filed by the assessee.

In the result, the appeal of the assessee is allowed. Order pronounced on the 31st August, 2021 at Chennai.