MANSUKHBHAI KANJIBHAI SAKARIYA,RAJKOT vs. PRINCIPAL COMMISSIONER OF INCOME TAX, RAJKOT-1, RAJKOT

2.Succinctly, the factual panorama of the case is that assessee before us is an Individual. The assessee had filed his return of income for assessment year (AY) 2016–17, declaring total income of Rs.10,26,350/-. The assessment was finalised under section 147 read with section 144B of the Income tax Act, 1961, on 28th March 2022, accepting returned income of Rs.10,26,350/- 3. Later on, Learned Principal Commissioner of Income-tax (in short “Ld PCIT”) has exercised his jurisdiction under section 263 of the Income-tax Act, 1961. The MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 3 learned PCIT, on perusal of case records, it was noticed that during the previous year 2015-16 relevant to assessment year (A.Y.) 2016-17, the assessee had received interest on enhanced compensation on acquisition of agricultural land of Rs.1,89,62,258/-, along with other co-owners. During the course of assessment proceedings, the assessee had submitted that the entire amount of interest of Rs.1,89,62,258/-, received on enhanced compensation was taxed in the hands of Babubhai Kanjibhai Sakaria (one of the co-owner and brother of the assessee), vide assessment order dated 21.12.2018. The entire amount of TDS made on said interest by Land Acquisition Officer reflected in 26AS of Shri Babubhai Kanjibhai Sakariya, one of the co-owner of the ancestral property acquired by Land Acquisition Officer. On verification, it was also seen by learned PCIT that the share of the assessee, in said ancestral property was 25% and accordingly, share of the assessee in interest received on enhance compensation on acquisition of agricultural land would worked out to Rs.47,40,565/- ( 25% of Rs.1,89,62,258). On further verification, it was found by ld.PCIT that an addition of Rs.94,81,129/- (Rs.23,70,283/- on substantive basis and balance said to be pertaining to other co-owners on protective basis) being 50% of total interest received on enhanced compensation on acquisition of agricultural land has been made in the case of one of the co- owner (i.e. Shri Babubhai Kanjibhai Sakaria) of the ancestral agricultural land acquired by Land Acquisition Officer. Therefore, addition of Rs.23,70,282/- being 50% of interest of Rs.47,40,565/- being 25% of total interest on enhance compensation on acquisition of agricultural land was required to be added in the total income of the assessee on substantive basis. However, the assessing officer has not made any addition in this regards. The Assessing Officer, in the assessment order, failed to make addition of Rs. 23,70,282/- (25% share of total addition of Rs. 94,81,129/- made in the case of Babubhai Kanjibhai Sakariya, brother of the assessee). Therefore, the assessment order passed by the assessing officer u/s 147 r.w.s. 144B of the MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 4 Income tax Act, 1961 on 28.03.2022, is erroneous and prejudicial to the interest of the revenue. 4.Considering above such facts, notice u/s 263 of the Income-tax Act, 1961, was issued by ld.PCIT, on 29.02.2023 and duly served upon the assessee.The ld. PCIT stated in the notice that assessee case was reopened on the basis of information available with the Department that during the year under consideration, assessee has received interest on enhanced compensation on acquisition of agricultural land of Rs.1,89,62,258/-. During the course of assessment proceedings, assessee has submitted that the entire amount of interest of Rs.1,89,62,258/- received on enhanced compensation has been taxed in the hands of Babubhai Kanjibhai Sakana vide assessment order dated 21.12.2018. The entire amount of TDS made on said interest by Land Acquisition Officer reflected in 26AS of Shri Babubhai Kanjibhai Sakariya, one of the co -owners of the ancestral property,that is, agricultural land acquired by Land Acquisition Officer. On verification, it was noticed by the ld. PCIT that assessee share in said ancestral property is 25% and accordingly, assessee share in interest received on enhanced compensation on acquisition of agricultural land would worked out to Rs.47,40,565/-. On further verification, it was found that an addition of Rs.94,81,129/- (Rs.23,70,283/- on substantive basis and Rs.23,70,283/- on protective basis) being 50% of total interest received on enhanced compensation on acquisition of agricultural land has been made in the case of one of the co - owners (i.e. Shri Babubhai Kanjibhai Sakaria) of the ancestral agricultural land acquired by Land Acquisition Officer. Therefore, addition of Rs.23,70,282/- being 50% of interest of Rs.47,40,565/-, being 25% of total interest on enhanced compensation on acquisition of agricultural land was required to be added assessee income. However, the assessing officer has not made any addition in this regards. The Assessing Officer has failed to make addition of Rs. 23,70,282/- (25% share of total addition of Rs. 94,81,129/-, made in the case of Babubhai MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 5 Kanjibhai Sakariya, assessee brother) as narrated in the assessment order dated 21.12.2018 in the case of assessee brother Shri Babubhai Kanjibhai Sakariya. The assessing officer has not properly verified/ examined the facts of the case and the issue under consideration. Therefore, assessment order has been passed without making due inquiry/verification. Hence, in terms of Explanation 2 to section 263 of the Income-tax Act. 1961, such order is erroneous in so far as it is prejudicial to the interest of revenue. 5.In response to the above show- cause notice of the ld.Pr.CIT, the assessee submitted its reply before the ld.Pr.CIT, which is reproduced in his revision order vide page No.5 and 6. Before the ld. Pr. CIT, the assessee submitted that reassessment order itself is not valid, therefore, subsequent order passed by the ld.Pr.CIT by exercising the revisionary jurisdiction is also bad in law. 6.The assessee also submitted before ld. PCIT that during the assessment proceedings, the assessing officer has conducted sufficient inquiry in respect of the issue raised by the ld. Pr. CIT. The assessee also submitted before the ld.Pr.CIT that the Government has acquired the land on account of compulsory acquisition and the subject land was belonged to two co-parceners, who were owners of the land, which was acquired by the Government. However, the Government has paid entire payment to one co-parcener,that is, Shri Babubhai K. Sakariya. The interest on compensation was also paid to the Shri BabubhaiK. Sakariya , which in turn had been divided amongst the co-owners as per their shares. The assessee also submitted before the ld.Pr.CIT that the interest received on enhanced compensation is not taxable under section 56(2)(viii) of the Act, as it is a part of the main compensation. 7.However, the ld.Pr.CIT rejected the above contentions of the assessee and observed that during the previous year 2015-16 relevant to A.Y. 2016-17, the assessee along with other co-owners had received interest on enhanced MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 6 compensation on acquisition of agricultural land of Rs.1,89,62,258/-. During the course of assessment proceedings in case of the assessee, the assessee had submitted that the entire amount of interest of Rs.1,89,62,258/- received on enhanced compensation was taxed in the hands of Babubhai Kanjibhai Sakaria, vide assessment order dated 21.12.2018. The entire amount of TDS made on said interest by Land Acquisition Officer reflected in 26AS of Shri Babubhai Kanjibhai Sakariya, one of the co-owners of the ancestral property acquired by Land Acquisition Officer. On verification, it was also seen that the share of the assessee in said ancestral property was 25% and accordingly, share of the assessee in interest received on enhanced compensation on acquisition of agricultural land would worked out to Rs.47,40,565/-. On further verification, it was found that an addition of Rs.94,81,129/- (Rs.23,70,283/- on substantive basis and balance said be pertaining to other co-owners on protective basis) being 50% of total interest received on enhanced compensation on acquisition of agricultural land has been made in the case of one of the co- owners (i.e. Shri Babubhai Kanjibhai Sakaria) of the ancestral agricultural land acquired by Land Acquisition Officer. Therefore, addition of Rs.23,70,282/- being 50% of interest of Rs.47,40,565/-, being 25% of total interest on enhance compensation on acquisition of agricultural land was required to be added in the total income of the assessee on substantive basis. Further, as stated above, during the assessment proceedings, the assessee had submitted that the addition has already been made in case of Shri Babubhai Kanjibhai Sakaria (co-owner and brother of the assessee). However, on perusal of the assessment order of Shri Babubhai it has been found that the total substantive addition of Rs.23,70,283/- on substantive basis and Rs. 71,10,846/-, said to be pertaining to other co-owners on protective basis was made in the hands of Babubhai Sakaria. In view of the above facts, the assessing officer ought to have added the amount of Rs.23,70,282/- in the hands of the assessee on substantive basis. However, the assessing officer has not made MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 7 any addition in this regards, therefore, order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue and hence learned PCIT directed the assessing officer to pass a fresh assessment order after making necessary enquiries. 8.Aggrieve by the order of the ld.Pr.CIT, the assessee is in appeal before us. 9.Shri Rajendra Singhal, Learned Counsel for the assessee submitted that during the assessment proceedings, the assessing officer had conducted adequate inquiry by issuing notice under section 142(1) of the Act, which is placed at Paper Book Page no.18-19, which is reproduced below: “2. In order to examine the issue of claim of substantial undisclosed Interest received on enhanced compensation paid for compulsory acquisition of agricultural land of Rs. 1,89,62,2587- you are requested to furnish the following details/documents: • Brief note on the nature of business carried on by the assessee during the previous year. • Detailed computation of income. • You are requested to explain if the Interest received on enhanced compensation has been offered to tax under the head 'income from other sources' as per the section 56(2)(viii) r.w.s. 145B(1') of the IT. Act, 1961. • Kindly submit the instrument of acquisition/transfer of the property. Document supporting enhancement of compensation. • Kindly furnish the bank statement for the financial year 2015-16. 3.In order to examine other issues emanating from your case during the complete scrutiny proceedings, you are requested to furnish the following details/ documents: • Kindly reconcile the TDS details as per Form 26AS with the income declared by you. • Kindly find attached herewith the ITS details. Please reconcile the same with the income declared by you. • Please furnish copies of the last assessment order in your case and if any addition/disallowances were made therein or any earlier order what is the present appellate result or has the same reached finality.”

10.The ld. Counsel for the assessee, also took us through the replies submitted by the assessee, during the assessment proceedings, in response to the above notice MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 8 under section 142(1) of the Act, which is placed at PB Page No.21 to 27, and the same is reproduced below: “In order to examine the issue of claim of substantial undisclosed interest received on enhanced compensation paid for compulsory acquisition of agricultural land of Rs.1,89,62,258/-, you are requested to furnish the following details/documents: Brief note on the nature of business carried on by the assessee during the previous year. The brief note on the nature of business carried on by me during the previous year are as under: I am earning income from share of profit, interest and remuneration from the partnership firm Parmeshwar Impex, income from other sources i.e. bank interest, PPF interest, FD interest, deposit interest, long term capital gain, dividend income and income from business and profession. Detailed computation income. I am enclosing herewith the detailed computation of income at Annexure-B. You are requested to explain if the interest received on enhanced compensation has been offered to tax under the head 'income from other sources' as per the section 56(2)(viii) r.w.s. 145B(1) of the I.T. Act, 1961. In this regard, I have to submit that I had credited the amount of 47,37,762/- in my capital account being agri. Land-survo Dam- interest and not offered to tax the interest received on enhanced compensation under the head 'income from other sources' as per the section 56(2) (viii) r.w.s. 145B(1) of the I.T. Act, 1961. Reasons for not offering the interest received on enhanced compensation under the head 'income from other sources' as per the section 56(2) (viii) r.w.s. 145B(1) of the I.T. Act, 1961 are under: In respect of receipt of Rs. 1,89,51,049/- towards interest u/s 28 of Land Acquisition Act, 1894 on Enhanced Compensation on compulsory acquisition of rural agricultural land by government, I would like to clarify that the land so acquired by government was originally owned by my father Late Shri Kanjibhal Kababhai. And we four co-owners (4) namely Smt. Ujiben Kanjibhai Sakariya, Shri Jerambhai Kanjibhai Sakariya, Shri Mansukhbhai Kanjibhai Sakariya, myself and Babubhai Kanjibhai Sakariya were possessing the same in capacity of his legal heirs and each having share of 25% and therefore my share in interest so received will be of Rs.47,37,762/-. Due to wrongly quoting of only PAN of Shri Babubhai Kanjibhai Sakaria, one of the co-owners having 25% share, by the office of Land Acquisition Officer, the entire interest amount of Rs.1,89,51,049/- and entire TDS thereon of Rs.18,95,105/- is being shown in the name Shri Babubhai Kanjibhai Sakariya and shown in his name in the ITS data with you. Since the entire TDS of Rs. 18,95,105/- is being shown in the PAN and 26AS in the name of Babubhai Kanjibhai Sakariya, who is a one of the co-owners having 25% share and he has claimed the same in his Return of income. Further, it is to submit that the case of Shri Babubhai Kanjibhai Sakariya was selected for scrutiny for A.Y. 2016-17 and entire addition of Rs.1,88,51,049/- has been considered and addition MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 9 has been by the concerned assessing officer by passing the scrutiny assessment u/s 143(3) on 21.12.2018 determining the total income at Rs.94,81,130/-. In support of the same, 1 am enclosing herewith the copy of assessment order supra at Annexure-C. Therefore, your authority is requested to kindly consider the submission as above and drop the present proceedings, as the once entire amount has been taxed in the case of one of the co-owners case, then if considered then it will be double taxation. Further, without prejudice to the above, I have to submit the following for no taxability of the amount under the provisions of section 56(2) (viii) r.w.s. 145B(1) of the Act: The land so acquired by government is agricultural land situated in rural area and hence it is not a capital asset as defined under section 2(14) of the Income Tax Act, 1961. Further it is settled position that Interest on enhanced compensation received u/s.28 of the Land Acquisition Act, 1894 forms part of enhanced compensation/consideration for land as it is an accretion in the value of land. This has been held by Supreme Court in case of CIT v. Ghanshyam (2009) 182 Taxman 368 (SC). Therefore, interest received of Rs.47,37,762/- being 25% share (18962258 / 25%) is consideration for compulsory acquisition of land itself. And being rural agricultural land it is not a capital asset, and accordingly the same is not chargeable to tax under the head income from capital gains or under any other head of income. In connection with reference invited to section 56(2)(viii) r.w.s. 145B(1) of the Act, by you, for chargeability of the interest income under the said section, I would like to state that interest as stipulated under the provisions of section 56(2)(viii) of the Income Tax Act, 1961, is interest other than interest u/s.28 of the Land Acquisition Act, 1894. In my case interest of Rs.47,37,762/- received is on enhanced compensation, the same forms part of compensation/consideration. Taking the ratio laid down of the High Court of Gujarat in the case of Movaliya Bhikhubhai Balabhai v. ITO wherein it was held that Interest on compensation/enhanced compensation under section 28 of the Land Acquisition Act, 1894 forms part of compensation/consideration and not interest as contemplated u/s. 56(2)(viii) of the Income Tax Act, 1961, interest of Rs.47,37,762/- will also not be chargeable to tax under the head income from other sources. The aforesaid interest of Rs.47,37,762/- is credited to my capital account on 23-07- 2015. For your kind reference, I enclose herewith copy of my capital account for the year under consideration as Annexure-D. I have offered total income of Rs.4,47,370/- under the head income from other sources which includes income as mentioned. The computation of income is enclosed herewith for your reference as Annexure-B above. In view of the above submission and legal as well as factual facts, I request your authority not to considered the amount of Rs.47,37,762/- being 25% share of Rs. 1,89,62,258/- under the head 'income from other sources as per provisions of section 56(2)(viii) r.w.s. 145B(1) of the Act. Kindly submit the instrument of acquisition/transfer of the property. Documentssupporting compensation enhancement of compensation.

MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 10 In this regard, I am enclosing herewith the copies of order of the Hon'ble High Court of Gujarat bearing first appeal No.709 of 2015, the Principal Senior Civil Judge at Gondal LAR.78/2004 at Annexure-E. Further, I rely on the decision of the ITAT, "A" Bench, Ahmedabad for A.Y. 2007-08 and copy of the same is enclosing herewith at Annexure-F. I also relies on the decision of the Hon'ble ITAT, Delhi Bench 'F', New Delhi - (Α.Υ. 2011-12), dated 16.04.2021 Paramjeet Singh Parvesh Kumar Sharma, Karnat vs. ACIT, Central Karnal, New Delhi. Kindly submit the bank statement for the financial year 2015-16. I am enclosing herewith the copy of bank statement for the F.Y. 2015-16 at Annexure- G Kindly reconcile the TDS details as per form 26AS with the income declared by you. In this regard, I am enclosing herewith the form No.26AS with the income declared by me at Annexure-H. Please furnish copies of the last assessment order in your case and if any addition/disallowances were made therein or any earlier order what is the present appellate result or has the same reached finality. With regard to above, I would like to submit that no such assessment order made. I have provided herewith the necessary clarifications, explanations and documents. If you require any further information/explanations please ask me before taking any adverse decision, it will be pleasure for me to submit the same. Further, respectfully following the fact raised in my objection against the validity of notice and reasons as earlier submitted, I request your authority to kindly cancel the notice issued u/s 148 of the Act dated 31.03.2021 and drop the subsequent proceedings also and oblige.”

11. Therefore, the ld.Counsel for the assessee submitted that by issuing notice under section 142(1) of the Act, and inresponse to the notice under section 142(1) of the Act, the assessee has submitted detailed reply during the assessment proceedings. Not only that the assessing officer has examined the documents and details, however, assessing officer also examined the Land Acquisition Act and as per the judgment of the Hon’ble jurisdictional High Court of Gujarat in the case of Movaliya Bhikhubhai Balabhai (supra), assessing officer also examined that the land enhanced compensation and interest thereon, is a part of the MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 11 compensation. The ld. Counsel also submitted that the Explanation-2 to section 263 is not applicable to the assessee under consideration.

MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 14 both as an accretion in the value of the lands acquired and interest forundue delay. Interest under Section 28 unlike interest under Section 34 is an accretion to the value,hence it is a part of enhanced compensation or consideration which is not the case with interestunder Section 34 of the 1894 Act. So also, additional amount under Section 23(1-A) and solatiumunder Section 23(2) of the 1961 Act forms part of enhanced compensation under Section 45(5)(b)of the 1961 Act."Thus, the court has held that interest under section 28 of the Act of 1894 is an accretion to compensation andforms part of the compensation and, therefore, exigible to tax under section 45(5) of the Act. Such decisionwas, therefore, rendered in favour of the revenue.

12. On behalf of the first respondent, reliance has been placed upon decisions of different High Courts takinga different view. This court is not in agreement with the view adopted by the other High Courts which are notconsistent with the law laid down in the case of Ghanshyam (HUF) (supra). In Manjet Singh (HUF) KartaManjeet Singh's case (supra), the Punjab and Haryana High Court has chosen to place reliance upon variousdecisions of the Supreme Court rendered during the period 1964 to 1997 and has chosen to brush aside thesubsequent decision of the Supreme Court in Ghanshyam (HUF)'s case (supra) which is directly on the issueby observing that the assessee cannot derive any benefit from the observations made by the Supreme Court asquoted therein. In Hari Kishan's case (supra), the Punjab and Haryana High Court has placed reliance upon itsearlier decision in the case of Manjet Singh (HUF) Karta Manjeet Singh (supra). In Bir Singh (HUF)'s case(supra), the Punjab and Haryana High Court has held that under the scheme of the 1894 Act, interest undersection 34 is part of compensation while interest under section 28 is not the interest which partakes thecharacter of compensation and is treated differently. In the opinion of this court, the above view of the Punjaband Haryana High Court is contrary to what has been held in the decision of the Supreme Court inGhanshyam (HUF)'s case (supra) wherein it has been held that interest under section 28 unlike interest undersection 34 is an accretion to the value, hence it is a part of enhanced compensation or consideration which isnot the case with interest under section 34 of the 1894 Act. This court is in agreement with the view adoptedby the Punjab and Haryana High Court in Jagmal Singh's case (supra), which has been extensively referred toin paragraph 4.1 above. The decision of the Delhi High Court in Sharda Kochhar's case (supra), having beenrendered in the context of a different controversy would have no applicability to the facts of the present case.

14. The petitioner had earlier challenged the communication dated 9th February, 2015 whereby its applicationfor a certificate under section 197 of the I.T. Act had been rejected, and subsequently, tax on the interestpayable under section 28 of the Act of 1894 has already been deducted at source. Consequently, the challengeto the above communication has become infructuous and hence, the prayer clause came to be modified.However, since the amount paid under section 28 of the Act of 1894 forms part of the compensation and notinterest, the second respondent was not justified in deducting tax at source under section 194A of the I.T. Actin respect of such amount. The petitioner is, therefore, entitled to refund of the amount wrongly deductedunder section 194A of the I.T. Act.

15. For the foregoing reasons, the petition succeeds and is accordingly allowed. The second respondenthaving wrongly deducted an amount of Rs. 2,07,416/- by way of tax deducted at source out of the amount ofRs. 20,74,157/- payable to the petitioner under section 28 of the Act of 1894 and having deposited the samewith the income-tax authorities, taking a cue from the decision of the Punjab and Haryana High Court inJagmal Singh's case (supra), the first respondent is directed to forthwith deposit such amount with theReference Court, which shall thereafter disburse such amount to the petitioner herein. Rule is made absoluteaccordingly with costs.

MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 20 17.We note that the sole reason, as coming out from the order u/s. 263 of the Act is that the assessment should have been made, relying upon order of the Hon'ble Punjab and Haryana High Court in the case of Manjeet Singh (HUF) Karta Manjeet Singh vs. Union of India (CWP No. 15506 of 2013) (65 Taxman.com 160)(2016) on 29/01/2016. We note that the Hon'ble Principal Senior Civil Court has directed to pay the interest u/s. 28 of the land acquisition (LA) Act along with enhanced compensation and solatium. The ratio settled by the Hon'ble Gujarat High Court in the case of Movaliya Bhikhubhai Balabhai v. ITO (Supra) is squarely applicable to the facts of the present case. The said judgment was not accepted by the Department, but the SLP filed by the Department but the SLP of the Department has been decided against the revenue by the Hon'ble Supreme Court in a speaking and detailed judgment dated 15.09.2017 along with other cases and reported as case inUnion of India vs. Hari Singh [2018] 91 taxmann.com 20 (SC). Under the circumstances, the ratio upheld by the Hon'ble Supreme Court has become law of the land and binding upon all the authorities. We note that ld.PCIT relied on the judgement ofHon'ble Punjab and Haryana High Court in the case of Manjeet Singh (HUF) Karta Manjeet Singh vs. Union of India (CWP No. 15506 of 2013) (65 Taxman.com 160)(2016) on 29/01/2016, which is not the judgement of jurisdictional High Court, therefore does not have binding force. As per the Doctrine of Stare Decisis and Doctrine of Precedent, all lower Courts, Tribunals and authorities, exercising judicial or quasi-Judicial functions, are duty bound by the decisions of the High Court within whose territorial jurisdiction they function. The Doctrine of Stare decisis is a whole some doctrine which gives certainty to law and guides the people to mould their affairs in future. The Hon'ble Supreme Court in Sakhi vs. Union of India AIR 2004 SC 3566 as observed and recorded in Para 23 that: "Stare decisis is a well-known doctrine in legal jurisprudence. The Doctrine of Stare decisis, meaning to stand by decided cases, rests upon the principle that law by which men are governed should be fixed, define and known, and that, MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 21 when the law is declared by Court of competent jurisdiction authorised to construe it." Further, the Doctrine of Stare Decisis is applicable in case under Income Tax Act, 1961, also as held in CIT vs. Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom.) and Consolidated Pneumatic Tool Co. (India) Ltd. vs. CIT (1994) 209 ITR 277 (Bom.).We note that Ld. Pr. CIT has passed impugned order u/s. 263 of the Act, relying upon order of the Hon'ble Punjab and Haryana High Court in the case of Manjeet Singh (HUF) vs. Union of India (Supra). However, with due respect, the above cited decision of the Hon'ble Punjab and Haryana High Court is not binding on the Authorities, falling under jurisdiction of the Hon'ble Gujarat High Court.Therefore, assessing officer was right in following the judgement of the jurisdictional High Court of Gujarat in the case ofMovaliya Bhikhubhai Balabhai (supra). Therefore, we note that the Hon'ble Supreme Court has laid down law through judgment in case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83, wherein it was held as under: "When an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law." Our view is further fortified from the judgement of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Indo German Fabs in IT Appeal No. 248 of 2012, dated 24-12-2014, where in, it was held as follows: "Section 263 of the Act confers power to examine an assessment order so as to ascertain whether it is erroneous and prejudicial to the interest of the revenue but does not confer jurisdiction upon the CIT to substitute his opinion for the opinion of the Assessing Officer. The words prejudicial and erroneous have to be read in conjunction and therefore, it is not each and every error in an assessment that invites exercise of powers under Section 263 of the Act, but only orders that are erroneous and prejudicial to the interest of the revenue. 18.Therefore, we note that when the Assessing Officer has taken a legally plausible view, duly supported by judicial precedents, then, the Ld. Pr. CIT is MansukhbhaiKanjibhai Sakariya Vs. Pr.CIT 22 precluded from taking recourse to revisionary proceedings u/s. 263 of the Act. He cannot thrust his view to substitute view taken by the assessing officer, unless such view taken by the assessing officer is wholly unsustainable in law. Since in the assessee`s case, the view taken by the assessing officer is a plausible view; legally sustainable, therefore, in our view the Ld. Pr. CIT has erred in invoking revisionary jurisdiction u/s 263 of the Act, hence, we quash the order passed by the learned PCIT under section 263 of the Act. 19.In the result, appeal filed by the assessee is allowed. Order is pronounced in the open court on 27/08/2025.