SHRI KIRTI KUMAR BHANGADIYA,NAGPUR vs. THE PRINCIPAL C.I.T.-(CENTRAL), NAGPUR

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ITA 255/NAG/2016Status: DisposedITAT Nagpur27 June 2017AY 2011-1222 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Pr. CIT was not justified in holding that the impugned assessment orders were erroneous. The Tribunal noted that the AO had accepted the assessee's explanations as there was no foolproof evidence to link the assessee with the seized documents, and the entity from which the documents were seized did not implicate the assessee. The Tribunal found that the AO had taken a plausible view in the facts and circumstances of the case, and the Pr. CIT had not brought any material on record through further inquiries or verifications to substantiate his inferences. The Tribunal emphasized that the Pr. CIT's inferences were debatable and that the Pr. CIT had not shown that his view was sustainable in law. The Tribunal further stated that the AO had duly examined the issue of purchase and sale of agricultural lands and taken a possible and cogent view that such transactions cannot be taxed. The Tribunal set aside the order passed by the Pr. CIT under Section 263, allowing the appeal of the assessee.

What were the facts?

The assessee, Shri Kirtikumar Bhangdiya, filed a return for Assessment Year 2011-12 declaring income of Rs. 84,07,980/- and agricultural income of Rs. 3,60,205/-. A search and seizure operation was conducted on the assessee's premises on July 19, 2011. Subsequently, a notice under Section 153A was issued, and the assessee filed a revised return. The Assessing Officer (AO) passed an order under Section 143(3) determining the total income at Rs. 1,09,43,853/-. The Principal Commissioner of Income Tax (Pr. CIT) initiated proceedings under Section 263, believing the AO's order was erroneous and prejudicial to the revenue. The Pr. CIT noted the assessee purchased several parcels of agricultural land in July-September 2010 and sold them to M/s. Aparna Infraenergy within 10 to 40 days. The Pr. CIT opined that the income from these transactions should be assessed in Assessment Year 2011-12, despite the AO's assessment order for AY 2010-11 having been deleted by the CIT(A) on the grounds that the transactions pertained to AY 2011-12.

What were the issues?

1. Whether the order passed by the Pr. CIT under Section 263 of the Income Tax Act, 1961, is illegal, invalid, and bad in law? (Question of law) Assessee's Contentions: - The AO had accepted the assessee's explanations regarding the purchase and sale of agricultural lands. - There was no foolproof evidence linking the assessee with the seized documents or implicating them. - The AO had taken a plausible view based on the facts and circumstances, and the department lacked corroborative material to disprove the assessee's explanations. - The Pr. CIT's inferences from the seized documents were debatable and not substantiated by further inquiries or verification. - The Pr. CIT's order was an attempt to substitute his views with that of the AO and conduct fishing and roving inquiries, which is not permissible under Section 263. - The AO had examined the purchases and sales of agricultural land and taken a possible and cogent view that such transactions cannot be taxed. Revenue's Contentions: - The Pr. CIT was of the opinion that since the land was purchased and sold within a span of 10 to 40 days in August-September 2010, the income related to the said transaction of land needed to be assessed in Assessment Year 2011-12. - The Pr. CIT observed that the order passed by the AO was erroneous and prejudicial to the interest of the revenue, as the transaction of purchase and sale of agricultural lands had taken place during the assessment year 2011-12 and therefore, should be taxed during the said assessment year.

Which sections of the Income-tax Act were involved?

Section 263,Section 139(1),Section 143(1),Section 132,Section 153A,Section 143(3)

AI-generated summary — verify with the full judgment below

58 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SKRI P. K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER LIANo255Nag/2016 Asstt_Yt:2011-12 Shri Kirtikumar Bhangdiya, 20-2, House No. 526, Near Gatewel Hospital; Dhantoli Nagpur, PAN AGYPB16S9G Vs. Pr. Commissioner of Income Tax Central; Nagpur, (Appellant) (Respondent; Appellant by Respondent by Date %f hearing Date of pronouncement Shri AR: Ninawe Shri K . P. Dewani 21/06/2017 27/06/2017 QRDER PPel FRPKBANSAL_VP: This appeal has been filed by the assessee agaist the order passed under section 263 of the Income Tax Act 1961 by the Principal Commissioner of Income Tax, Central, Nagpur dated 30/3/2016. The issue involved in this appeal is whether the order passed by the Pr. CIT is illegal, invalid and bad In Iaw. 2 The facts in brief in this appeal are that the return under section 139(1) was filed on 31/1/2013 declaring income of Rs, 84,07 980/- and agricultural income of Rs. 3,60,205/ The return was processed under section 143(1) on 30/3/2013. Search ad seizure operations under section 132 of I.T. 548 Act 1961 was conducted on the residential and business premises of Shri Mitesh Bhangdiya and Shri Kirtikumar Bhangdiya on 19/07/2011, Subsequently notice under section 1534 was issued On 28/12/2012 in response to which the assessee filed the return of income under section 1534 on 21/3/2013 on an income of Rs. 84,07,980/ The order under section 143(3) was passed on 31/3/2014 determining total income at Rs. 1,09,43,853/- and agricultural income of Rs. 3,60,205/-. The Pr, CIT noticed from the assessment record and seized record that the assessee has purchased the following lands: Name of Name the seller purchase of the Description pflArea Consideration Dt of sale agricultural in Hctr(Amt (Incl of deed land & Kh No stamp + Reg Exp) Shri Gyaneshwar Kirtikumar Jankiram Zade Rhangdiy a Mouza 2.76 3,41,250/- Navegaonpeth Kh No.92 5/11/2009 NPE Mouza 2.72 2,62.9207- Navegaonpeth KhNo.93 5/11/2009 Hari Domaji Jivtode Mouza Anandrad J Zade Navegaonpeth Kh.No.94 1.39 1,31,4507 - 5/11/2009 Mouza Tirkhura 1.94 Kh. No. 169/2 13,94,1307- 218/2010 Vinod Fulnath Shambharkar Mouza Gardapar|1.21 7,40,4507- Sudhakar Kavadu Kh.No.99/1 Chokhare 1/9/2010 Mouza Gardapar(o 81 3,94,3707 - Dhanpal Kundiik Kh.No.90/3 Titare 30/8/2010 c8 Mouza Gardapar/o.80 4,93,7107 - Kh,No,90/4 30/8/2010 Naku} Narayan Kemaye Mouza Gardapar[2.96 23,02,8807 Kailash Shankar KhNo.100 Dhanore 1/0/2010 Mouza Gardaparj3.48 27,09,2007- Kh No.101 1/9/2010 Manjulabai Shankar Dhangore Mouza Gardapar[1.31 Kh.No,92/2 7,99,7207 30/8/2010 Maroti Budha Lokhande Mouza Kawathala Kh.No,184 0.39 3,53,2207 . 27/2/2010 Hemraj Domaji Dandekar & Others Mouza Pundlik Mahadeo Kawathala Dandekar KhNo,114 0.40 3,67,7407 - 27/7/2010 Natthu Kisan Rejurkar Mouza Kavathala 0.42 Kh.No.115 3,78,7701- 27/7/2010 Eq Mouza Kavathala 0.67 Kh.No.48 6,06,6201- 26/7/2010 Sheshrao Chandrabhan Pasare Mouza Kavathala |0,72 Kh.No.56 6,54,450- 26/7/2010 Prasannakumar Prabhakumar Dawle Mouza Kavathala 1.40 KhNo.60}2 11,80,9907 27/7/2010 Mayur Madhukarrao Code Mouza Kavathala 0.38 Kh No.100 3.445,71 O1- 25/7F2010 Kachru Kama Shrirame MlNPR 3 Eel Mouza Kavathala 40 Chandrashekhar KhNo.181 Domaji Dandekar 3,67,7201- 27/7/2010 Mouza Kavathala 0.52 Ankosh Dharmaji Kh.Nq,94 Nannaware & pthers 4,70,780- 29//7/2010 Mouza Kavathala 0.15 Kh.No,109 1,36,2201- 2917/2010 Kawdu Shiva Shembade Mouza Kavathala 0.54 Demabai Mahadev KhNo.6D Savsakde & Others 4,89.280}- 29/7/2010 Mouza Kavalhala 30 KhNo.54 11.80,060}- 10f8F2010 Jagan Hari Kale Mouza Kavathala |0.92 Kh.No.55 8,34,550}- 10/8/2010 IJagan Hari Kale Mouza Kavathala 0.13 KhNa.110 1.18,255/. 210882010 Manda Purushottam Shembekar & Others Mouza Kavathala 06 Prabhakar Khadu Kh.No.112 Helwatkar 3,94,030- 23/8/2010 Mouza Kavathala 0.36 KhNo.97 3.27,520 - 23/8/2010 Shriram Kavadu Kapse & Other Mouza Kavathala 0.40 Prabhakar Khadu Kh No 113 Helwatkar 2.62,7801- 23/812010 Mouza Gardapar 1.6 Ragho Chaudhary Kh.No,94 9,89,8501- 01/11/2010 Vinod Chokhare Mouza Gardapar 2,00 KhNo.8g 10,50,2807- 30/10/201 0 PPe Mouza Kavthala 1o.74 Indumati Kayerkar Kh.No 104 3.94,0507- 11/10/201 IMouza Gardapar O.90 Kh.No.93/1 3,84.0307- 23/09/201 0 Janba Maniram Nanaware Mouza Gardapar 0.80 KhNo.93/2 3,94,0307- 23/09/201 Shrikirshna Maniram Nannaware Total 35.25 2,02,61,0057 Description 0f Iand Kh No Area in Hctr Date deed sale Consideration Amt Mouza Navegaonpeth No.92 Kh 2.76 23/9/2010 1,01,88,0007 Mouza Navegaonpeth KhNo 93 2.72 Mouza Navegaonpeth KhNo,94 1 39 Mouza Tirkhura Kh_No.169/2 161 23/9/2010 28,80,0007 - Mouza Gardapar Kh,No.99/1 1.21 23/9/2010 1,58,72,0007 puza Gardapar KhNo.90/3 0.81 za GGardapar Kh,No.90/4 0.80 uza Gardapar Kh No.100- 2.96 Mouza Gardapar Kh No.101 3 48 Mouza Gardapar #KhNo,9272 1.31 yJlouza Kawathala Ijlh_No.184 0.39 20/812010 21,74,0007- #wlouza Kawathala KhNo.114 0.40 Mouza Kavathala Kh, No_ 115 0.42 Mouza Kavathala Kh No,48 0.87 Mouza Kavathala Kh Np.56 0.72 #' TAX 683 Mouza Kavathaia Kh.No.80/2 1.440 Mouza Kavathala Kh,No.10Q 0.38 Mouza Kavathala KhNo.181 0.40 Mouza Kavalhala KhNo.94 0.52 Mouza Kavathala KhNo.109 0.15 Mauza Kavathala Kh.No,60 0.54 Mouza Kavathala Kh,No.54 1.30 Mouza Kavathala KhNo.55 0 92 Mouza Kavathala KhNo.11Q 0.13 23/8/2010 28,92,QQQf: Mouza Kavathala Kh.No.112 1.06 Mouza Kavathala KhNo.97 0.36 Mouza Kavathala KhNo,113 0.40 Tax_ APFE Mouza Gardapar KhNo.94 uza Gardapar Kh No.89 1.6 9/11/2010 53,67,QOD}- 2.00 auza Kavthala Kh_No.104 0,74 30/10/2010 10.98,0002 Mouza Gardapar Kh,No_93/1 0.90 30/10/2010 25,20.0QQ}- Mouza Gardapar KhNo,9372 0.B0 Total 35.25 5,27.91,0007- It was also noticed that these lands were sold to Ms. Aparna Infraenergy within 2 short span of time 10 to 40 days from the date of purchase as detailed below: Description of land Kh No Area in Hctr Date deed 5ale IConsideration Amt 2 Gch Mouza Navegaonpeth No.92 Kh 2.76 23/372010 1,01,88,0007 Mcuza Navegaonpeth Kh No.93 2.72 Mouza Navegaonpeth KhNo.94 1.39 Mouza Tirkhura KhNo.169/2 1.61 23/9/2010 28.80,0007- Mouza Gardapar Kh No.99/1 1.21 23/9/2010 1,56,72,00o7- Mouza Gardapar Kh.No,90/3 0.81 Mouza Gardapar Kh_No.90/4 0.80 Mouza Gardapar Kh_No 100 2.98 Mouza Gardapar Kh_No.101 3 48 Mouza Gardapar ^Kh No,92/2 1.31 Yllouza Kawathala Ijlh No.184 0.39 20/8/2010 1,21,74.Q007 - #wlouza Kawathala Kh No.114 0.40 Mouza Kavathala Kh No. 115 0.42 Mouza Kavathala KhNo,48 0.67 Mouza Kavathala Kh No.68 0.72 ELzz Mouza Kavathala Kh No.60r2 1.40 1 puza Kavathala Kh.No.+00 0.38 Owozn Mouza Kavathala Kh-No.181 0,40 Mouza Kavathala KnNo.94 0.52 Mouza Kavathala KhNo.10g 0.15 Mouza Kavathala Kh_No,60 0.54 Mouza Kavathala Kh_No.54 1.30 Mouza Kavathala Kh.No.55 0 92 Mouza Kavathala Kh_No,110 0.13 23/882010 28,92,OOOf- 605- Mouza Kavathala Kh.No.712 1.06 Mouza Kavathala Kh No.s7 0.36 Mouza Kavathala Kh,No.113 0.40 'Mouza Gardapar Kh No.94 9/11/2010 53,67,0Dff- IMouza Gardapar Kh No.89 2.(D Mouza Kavthala Kh_No.104 0.74 30/10/2010 10,98,Q(0;- Mouza Gardapar Kh No.93/1 0.90 30710/zO1q 25,20,QQoi- Mouza Gardapar Kh.No.93/2 0.80 Total 3525 5,27.91,0007_ It was noticed by the Pr. CIT that Ws. Aparna Infraenergy i5 a firm which was having two partners: Shri Mitesh Bhangdiya father of assessee was partner with 659 of profit with two other partners_ This partnership was econstituted the year 2010 inserting new partners of PHL group. Incoming partners Ight capital contribution towards SO% of the stake ad the firm agreed to set up and develop a coal based thermal power plant of 250 MVV at Mouza Kawthala, Tah Chimur Dist Chandrapur: Memorandum of agreement dated 24/05/2010 was seized at page Nos, 36 to 52 of item No. 12 of Annexure B-1. Amendment to this agreement dated 09/10/2010 was also seized at pages 24 to 35 of item No. 12 of Annexure B-1. As per clause 5 of this agreement firm M/s. Aparna Infraenergy had to purchase 37.02 hectres (approx. 91.43 acres) of freehold land from Shri Mitesh Bhangdiya ad his family members: As per clause 7 of the amended MQA the above stated firm has to purchase 150-200 624 acres of suitable land For setting up coal based thermal power plant: In pursuance of this; assessee purchased above discussed land and spld the same within the gap of 10 to 40 days to M/s Aparna Infraenergy. As per the seized document total land admeasuring 35.25 hectres purchased by assessee in july Seotember , 2010 and sald to Ms Aparna Infraenergy in August- September; 2010. The A.O. has discussed this issue In detail in his order for the assessment year 2010-11 but the addition made by him was deleted by the CIT(A) an the ground that the transaction did not pertain to the assessment year 2010-1 but pertained to assessment year 2011-12. The Pr. CIT was of the opinion that Since the land was purchased and sold within a3 span of 10 to 40 days in August September 2010, the income related to the said transaction of land needs to be assessed in assessment year 2011-12, Therefore the Pr, CIT was of the opinion that the order passed for the tsment year 2011-12 is erroneous ad prejudicial to the interests of the nue in not taxing the income from sale of land in assessment year 2011- 12 and accordingly a show cause notice under section 263 of IT, Act 1961 was issued to assessee on 04/03/2016 asking assessee 35 to why purchase and sale of land not be treated as adventure in the nature of trade and should not be taxed in assessment year 2011-12 instead of assessmqent Year 2010-11. The assessee submitted the reply which was considered by Pr. CIT but did not agree and took the view that the order passed by the AO. i5 bo7 10 erroneous and prejudicial to the interests of the revenue_ The Pr. CIT therefore set aside the same by observing as under; #I have gone through the submissions and found that assessee has purchased and sold land within a span of 10-40 days of 35,25 hectres discussed in the chart referred in preceding paras somewhere in the order. The land is purchased with 3 view to be used for setting up of coal based thermal power plant of 250MVV on the said land a5 is evident from the agreement dated 24/05/2010 and amended agreement dated 09/07/2010. As the land Is not used for agricultural purpose it appears to be for the purpose ofr commercial activity ad hence to be taxed as adventure in the nature of trade: However, before doing S0, the AO needs to make on the spot enquiry about utilization of land before purchase and after purchases; He should g0 through all the relevant documents_ In view of discussion made above; the documents seized at the time of search and the discussion made in the assessment order of AY_ 2010-11, the order for A.Y. 2011-12 is considered erroneous and prejudicial to the interests of revenue hence it is set aside for limited purposes; The A.O. is directed to ga through the documents, make the spot verification and then pass order de novo. The order stands set aside_ 3. We have heard rival submissions and carefully considered the same along with the orders of tax authorities below. We noticed that the Pr. CIT has found the arder passed by the A.O. to be erroneous and prejudiclal to the interests of revenue as in his opinion the A.O. has not made any enquiry or examined the issue whether the purchase and sale of the land within span cf 10 to 40 days is chargeable to tax We noted that notice for the assessment year 2011-12 was given by the A.O. under section 142(1) alng with notice: There was an Annexure at page 8 which reads as under: ANNEATURE To Notice Ws 142(f} dided 07.0/.20114 in the case of Shri Kirtikumar M Ithangdiya for A Y 2006-07 (o 2012-13 IvnQ 11 1} Pleasu lurnish the delails Of agriculure' Ianc purehased specifically in Chimur Tehsit_Distt C hanstraqur_Ihc_iwfimation should be in dollct; i0g forial Nainc Of Lhee INamne of the [ecripir) &f Arcal in C'onsideralion purehaser DU of" sale Seilt "eri, Lancl i. Hctr itllicalint deed PHY, Kh No Shri Kinikumar M [hangcliya 2) Pleust explain the souree Of MvextMncms #gainst (hc purchase of agricultura/ lands alcng with bank slatemenls. 3) Please ascertain for #hal purpose the ,agricultural land was purchased and whelher the pturposc is lulfilled? 4} Clease lrnish the hank accounts nf fiurmers to whom you have inade paytent xgaiust thc purchase l their agricullural land 5) Have you sold all the agricuitural land purchased (rom farmers lo Aparna InlraEnergy P Lud? Ifno; Ihcn: plcase furnish the specilic details of land ungold ta Anarna InfraEnergy P Ltd 6) Please expkain thc ancestral agricullural lands in your name? Please produce the decunlenlary proofi.e. 7/ {2 exlracts , 7) Whether anccslral agricultural land have hccul sold Qut; it yes, please furnish the naniee Ol buyer and dale of execution of sale eleed. 8) As per the seized material. specie fically purehase deed in 1hiee name &l yot it is secn Uhat vcry little time of span You have sold Ou the agricullural land to Apurna [nfraFniergy Pvt Ltd 4 (irm: Please firnish thc copies of agrecrtent to Sle and sale deed of all the land sold Qul Lo Apira Infraenergy Pvt Ltd. # The assessee in reply to the said notice vide his letter submitted as under: STo APPE The Dy. Commissioner of Income Tax, Central Circle-2(1). Nagpuc Assessee KirtiKumar Mitesh Bhangdiya Assess Year: 2006-07 to 2012-13 PAN AGYPB1659G Reference Natice Uls 142(1) dated 07,01.2014 The assessee now submits the reply of above cited notice. 1 The assessee encloses herewith the details of agricultural Land Purchased specifically in Chimur Tehsil, Dist: Chandrapur. 609 12 The asses3ee humbly submits that the agricultural Lands are purchased mainly through Banking Channel The assessee has encloses herewith the bank book, wherein the Pzyment along with the source of the investment is Teflecting: The bank statement of the aforesaid bank bopk is already subiitted in our previous submission. Some of the agricultural lands have been purchased through cash Qut of withdrawal from the bank and gift and advances received from the family members . The assessee encloses herewith the ledger abstract of Agricultural lands purchased in support of the submission made 3 The assessep has purchased and used the Lands for the agricultural Purposes and thus purpose of acquiring agricultural land i8 fulfilled, 4. The assessbe js unable furnish the bank statements Qf the Farmers from whom the agricultural Lands has been Purchased 88 they are refusing to provide the same, 5_ The assessee encloses herewith the details of agricultural Lands sold to Aparna Infraenergy The assessee also states that out of all the agricultural lands purchased by assessee, only 3 few have been sold to Ms Aparna Infraenergy. And there were no furthet lands unsold to Aparna infraenergy during the previous year relevant to assessment year 2012-13. ApP_ 6 . 8 7. There were no ancestral agricultural Lands in the name of asgesspe; 7 . The assessee humbly states that the assessee had purchased 3S the agricultural lands for Ihe agricultural Purpose Only. Part of the agricultural Iand purchased by assessee has been sold to Aparna Infraenergy:' In continuation of the reply to the notice dated 07/001/2014 the assessee submitted the details of the agricultural land sold appearing at pages 13 of the paper baok as under: 'KIRTIKUMAR M. BHANGDIYA Reply to point no. 5 of notice u/s. 142{1) dated 073.01.2014 Agricultural land sol to Aparna Infracnergy Sr, No, Descriptin ofLanl Acre Kh,No. Dt. () Sale Decd Eules Consideratitn Agriculture Land- Navegaorpk-uh 2.76 Hcl_ Kh.No.9z 2309/2)|0 1,0|,88,UE0).0Q Agricullure" !anf ~Nat ?g"upeth 2.72 Hec. KlNu9; 13 Agricultxire Lilnd-Naregaonjjerh 1.39 Fcc. Kh_Vu. 04_ Agri Land-| irkhia 44 Mc Kh_No 160.2 13.09.2010 z%80.{004.OQ Agri Lund-(jatrdapal' L~lHcc Kh_Vo. fM;l 23,09/2010 1.S6,72,COO.AO Agri. Land-Gardhpar VS KhNq 9O:} Agri L.anj-Garduf (.SH1 Hcc. EYo.40,4 Agi Land]-Cardamar 244 Hcc Khi Vu.dCu} Agi, Land-Gardapar 48hf lce KhNli)| Agi. Land-Gardapai L]c. KhN41.972 Agri, Land-Kawathala 0_3Q Mcc. EhNv.l81 12008.ZOq 1,21,74,QO0,00 Agri Lund-Kavathnla 040Mec KhNo.4 Agri; Lund-Kavathala 042Hec. Kh,No.[[5 Agri Land-Kavathila 0.6? #ler: Kh.NcW4X AP= 14 A2i Land-K'Aa! athuli 1.72 #cc. KH_Ni.56 {gri_ Lind-Kawathali 1A+Hrl- KhNonfJu ? Agri_ Lald -Kavathala 0.38 Hcc. Kh,Nu,MH)V Agri Land-Kavathulu 0440 Hcc. Kl No.I8I 18 Agri Land-Kavithili (.52 Hcc. Kln Yo.44 NPPEZ 1 Agri.l.al-Katathala V) Ifze Ktuiu[C Agri. Land-Kavathala 54 Hlc Kh Na.Go Agri laana-Ravalhala. 1,30} Hzc- KhNo. 54 Agri .ald-Kavathala 0,92 Hzc KhNa.5; 23 AgriLaid-Kavathali 0.[3Ilec KbN'o,la( 27/03*2010 23.4_ CHUO),CJ) 24 Agri [ urd-#avaihalj 136 Hec_ Rh Vo ]12 E2_ 15 Agri.| an-Kavalhala 0),30 #tle_ Kl Nu 07 gri Lund-Kavathal 0.40 Flcc. Kh Vcc.113 Agri. land A[ Ciard:wi'

1.

Mcc:. EJV.e (c: [Zlo 53,67,0UU,((h Agri_ [and Af (jardanir 2WfHec_ KhNo.84 Agri Land Al Kavthaka 0.74 Ilec_ KlNo. |014 301OOC 1Q.48,0CD).Do) J0 Agri Land At Gardupar 0.9Olec_ Kl.93.| SC: | (20/0 25,20,OO.tQ 35 Agri [,ind Al Gardajmr 0.XO Hec_ KihNq,9? PPEL Tax this basis it was contended that the order passed by the A.O.was neither erroneous nor prejudicial to the interest of the revenue as the A.O. has duly examined the issue regarding purchase and sale of agricultural lands within the span of 10 40 days by the assessee. In our opinion under section 263 of the I.T, Act 1 961 both the conditions for invoking jurisdiction that the order passed by the A.O. is erroneous ad prejudicial to the interests of the revenue must be fulfilled. When the AO. has taken one of the possible view until and unless the view taken by the Ao is illegal and not sustainable in Iaw, the order of the A.O. can not be regarded to be erroneous. Our aforesaid view is duly supported by the decision of the Hon'ble Supreme Court in the 6 13 16 case of Malabar Industrial Co Ltd Vs, CIT reported in 243 ITR 683 In which it was held a5 under: "The pre-requisile to the exercise of jurisdiction by the Commissioner under Section 263 is that the order of the Assessing Officer is erroncous insofar as it is prejudicia} to the interests of the revenue The Commissioner has to bc satisfied of twin conditions, namely, (1) the order of the Assessing Officer sought to be revised is erroncous; and (Il) it Is prejudicial to the interests of thc revenue [f ole of them is ahsenl if the order of lhe Assessing Officer is erroneous but is not prejudicial t0 the revcnue recourse cannot bc had to section 263(1). There cah be n0 doubt that the provision cannot be invoked to correct each and every type of mistake or error comnnitted by thc Assessing Officer; it is only when an order is erroneous that the scction will be attracted, An incorrect assumnption of facts or an incorrect application of law will satisfy the requirement of the order being erronecus In the same category fall orders passed without applying thc principles of natural justice 01 without application of mind The phrase 'prejudicial to the interests of the fevenue' has to be read in conjuaction with an erroneous order passed by the Assessing Officer, Kvery loss of revenle a5 3 consequence of the order of the Assessing Officer cannot be treated as prejudicial to the interests of the Tevehue. For example, if the Assessing Officer has adopted one of the courses permissible in law and it has resulted in loss of revenue; OF where two views are possiblc and the Assessing Officcr has takent one view with which the Commissioner does not agree, it cannot he treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Assessing Officer is unsuslainable in law Where & sun not earned by & person is assessed as income in his hands on his so offering the order passed by the Assessing Officer accepting the same without #pplication of mind a5 such will be erroneous and prejudicial to the interests ofthe revenue " 5 The learned Departmental Representative before uS vehemently relied on the Explanation to section 263 inserted with effect from 1/6/2015. We have gone through the Explanation to section 263 of IT. Act 1961 which 6 4H 17 defines the words erroneous" and 'prejudicial to the interests of revenue As we noticed that the question when a order can be termed as erroneous has been decided by the Honble Bombay High Court in the case of CIT Vs, Gabrial India Ltd,, 203 ITR 108 in which the Hon'ble High Court has held as under: "From the aforesaid definitions it is clear that a order cannot be termed as erroneaus unless it is not in accardance with law. If an incame tax officer acting in accordance with the law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him; the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer; who passed the order, unless the decision is held t0 be erroneaus. Cases may be visualised where the Income tax officer while making an assessment examines fhe accounts, makes enquiries, applies his mind to the facts and circumstances of the Case and determines the income either by accepting the accounts or by making some estimate himself, The Commissioner, on perusal of records , may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income tax officer, That would not vest the Commissioner with power to examine the AX PEi Tax ccounts and determine the income himself at & higher figure. is because the Income tax afficer has exercised the quasi dicial power vested in him in accordance with law and rived at a conclusion and such a conclusion JVNO cannot be terned to be erroneous simply because the Commissioner does not feel satisfied with the conclusion, There must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute On an incorrect or incomplete interpretation a lesser tax than what was just has been impsed" The Hon'ble High Court has considered the definitions given} to the words 'erroneoust "erroneous assessment" and 'erroneous judgment" in Black's Law Dictionary and and accordingly held that an order cannot be termed as erroneous unless it is not in accordance with law. An order can be termed as "erroneous" only if it is not in accordance with the law, 611 18 The Hon'ble Delhi High Court has also followed the above said view in thecase %f CIT Vs Sunbeam Auto Ltd (2011)(332 ITR 167). The Hon'ble Delhi High Court has also extracted following observations made by the Tribunal:- Still further; the Hon'ble Supreme Court in Malabar Industrial Co. (2O00) 243 ITR 83 has held that when two views are possible and the Assessing Officer has taken one of the possible view, then the order cannot be held to be prejudicial to the interest of the Revenue. Since the Commissioner of Income tax could not come to & definite finding that the expenditure in question was a capital expenditure in the proceedings under section 263, in our opinion; the order of the assessing officer could not be held to be erroneous, In the case of Nagesh Knitwears P Ltd (20127345 ITR 135), the Hon'bleDelhi High Court has elucidated and explained the scope of the provisions of sec,263 of the Act ad the same has been extracted by the Delhi High court in thecase of CIT Vs. Goetze (India) Ltd (361 ITR 505) as under: "Thus, in cases of wrong opinion OT finding on merits, the Commissioner af Income tax has to come to the conclusion and himself decide that the %rder is erroneous, by conducting necessary enquiry. if required and necessary, before the order under section 263 is passed, In such cases, the order EC pf the Assessing Officer will be erroneous because the order not sustainable in law and the said finding must be ecorded, The Commissioner of Income tax cannot remand Zvmo the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, agaln the Commissioner of Income tax must give and record a finding that the orderlinquiry made is erroneous, This can happen If an enquiry and verification is conducted by the Commissioner of Income tax and he is able to establish and show the error or mistake made by the Assessing officer, makirg the arder unstainable in law; In some cases possibly though rarely, the Commissioner of Income tax can also show and establish that the facts on record Or inferences drawn from fact8 on record per se justified and mandated further enquiry Or investigation but the Assessing officer had erroneously not undertaken the same. However, the said finding must be clear; unambiguous and not debatable: The matter cannot be 19 616 remitted for a fresh decision t0 the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition Or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the mattertssie to the Assessing Officer would implyand mean the Commissioner of Income tax has not examined and decided whether 0r not the order is erroneous but has directed the Assessing Officer to decide the aspectquestion; Similar view has been expressed by Hon'ble Madras High Court in the case ofCit Vs. Amalgamations Ltd (238 ITR 963) While discussing Explanation(a} To Explanation 2 inserted W.e;f; 1/6/2015 The ITAT, Mumbai held in the case of Shri Narayan Tatu Rane in ITA No. 2690/Mum/2018 vide order dated 8/5/2016 as under: "The Iaw interpreted by the High Courts makes it clear that the Ld Pr, CIT , before holding an order to be erroneous, should have conducted necessary enquiries or verificatian In order to show that the finding given by the assessing officer is erroneous, the Ld Pr_ CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case_ the Ld Pr, CIT ha8 failed t0 do s0 and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him, Such a course of action of the Ld Pr_ CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act; The Ld Pr , CIT has (aken support of the newly inserted Explanation 2(a) to sec 263 of the Act: Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w,ef. 1.4.2015 , would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above, If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order. without conducting any enquiry QT verification in order t0 establish that the assessment order is not sustainable in law and order for revision He can also force the AO to conduct the enquiries in the manner preferred Dm 20 by Ld Pr, CIT, thus prejudicing the independent application of mind of the AO. Definitely , that couid not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act; since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case ofParashuram Pottery Works Co_ Ltd Vs. ITO (1977)(106 ITR 1) that there must be 3 point of finality in all legal proceedings and the stale issues should not be reactivitated beyond a particular stage and the lapse of time must induce repose in and set af rest judicial and quasi-judicial controversies as it must in other spheres of human activity. Further clause (a) of Explanation states that an order shall be deemed to be erroneous if it has been passed without making enquiries or verification; which should have been made, In cur considered view, this pravison shall apply , if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr, CU cannot be taken &5 final one; without scrutinising the nature of enquiry Or verification carried out by the AQ vis-a-vis its reasonableness in the facts and circumstances of the case; Hence , in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed ithe order after carrying our enquiries or verification, which a reasonable and prudent afficer would have carried out Or nof It does not authorise Dr give unfettered powers to the Ld Pr, CIT to revise each and every order, if in his opinion; the same has been passed without making enquiries Or verification which should have been made. In our view, it i5 the responsibility of the Ld Pr, CU to show that the enquiries or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective Or prospective application shall not be relevant In the instant case, as noticed earlier; the AO has accepted the explanations of the assessee, since there i5 no fool proof evidence to link the assessee with the document and MIs RNS Infrastructure Ltd, from whose hands it was 618 21 seized, also did not implicate the assessee. Thus, the assessee has been expected to prove a negative fact, which is humanely not possible No other corroborative material was available with the department to show that the explanations given by the assessee were wrong or incorrect Under these set of facts, the AO appears to have been satisfied with the explanations given by the assessee and did not make any addition We have noticed that the Hon'ble Supreme Court has held in the case Of Central Bureau of Investigation Vs V C Shukla and Olhers (supra) that the entries in the books of account by themselves are not sufficient to charge any person with liability. Hence, in our view it cannot be held that the assessing officer did not carry out enquiry Or verification which should have been done since the iacts and circumstances of the case and the ihcriminating document was not considered to be strong bye the AO to implicate the assessee. Thus, that the we are 0f the view assessing officer has taken a plausible View in the facts and circumstances of the case. Even though the Ld Pr, CIT has drawn certain adverse inferences from the document, yet it can seen that they are debatable in nature. Further; as noticed earlier, the Ld Pr CIT has noi brought any material on record by making enquiries or verifications to substantiate his inferences. He has also not shown that the view taken by him is not sustainable in law: Thus, we AAPPr aeof the view that the Ld Pr CIT has passed the impugned evision orders only to carry out fishing and roving enquiries ith the objective Of substituting his views with that Of the O; Hence we are of the view that the Ld Pr: CIT was not ustified was not correct in law in holding that the impugned assessment orders were erroneous, 63 In the instant case, as noticed earlier , the AO has accepted the explanations of the assessee; since there is no fool proof evidence to link the In the instant case we note that the assessee has duly submitted all the details of purchase ad sale of lands being in the nature of agricultural lands. Therefore; it cannot be said that the A.O. has not examined the issue In our view the A.O, has duly examined the issue and has taken a possible ad cogent view that the purchase and sale of agricultural lands cannot be taxed: It is not the case where G1 22 the order has been passed without making any enqulry or verification which could kiavc been made by a prudent Man. The Pr . CIT while passing the order under section 263 viewed that the order passed by the A.0. is crroneous and prejudicial to the interest of revenue but he has not brought out as to what is error in the order and how the A.O. I1a15 Tiot made enquiry. He has simply observed that since the transaction of purchase ad sale of agricultural lands had taken place during the assessment year 2011-12, therefore, it should be taxed during the said 35sessment Year. On this basis, in our opinion; it cannot give the jurisdiction to Pr. CIT under section 263 tQ revise the assessment and that too when the A,0. has examined the purchases and sale of the agricultural land and taken one of the possible view: We, therefore; set aside the order passed by the Pr. CIT(A) under section 263 of the I.T. Act; 1961, In the result; the appeal of the assessee is allowed Sc {d= MARJIT SINGH) Judicial Member Dated= 1x2.7/06/2017 #Singh Copy of_ the order forwarded to P. K. BANSAL ) Vice President 1 The Appellant 2 The Respondent 3 Concerned CIT 4 The CIT(A) 2p$ 'J !FI'BZ? '"Assj _etistrar" [riaunrl Lh, hA_PUn; 5 DR. f (1u0d Ale

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