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आदेश/Order Per Krinwant Sahay, A.M.:
1. The appeal in this case has been filed by the Assessee against the order dated 31.03.2024 of the ld. Principal Commissioner of Income Tax, Panchkula (herein referred to as ‘PCIT’) u/s 263 of the Income Tax Act, 1961 (in short 'the Act').
639-Chd-2024 – Daya Kishan Gill, Jind 2
2. Grounds of appeal
taken by the Assessee are as under: -
1. That the Ld. CIT has erred in concluding proceedings under Section 263 of the Income Tax Act, 1961 without proper perusal of Assessment record.
2. That based on the facts and circumstances of the case and in law, the Ld. CIT has exceeded legislative jurisdiction u/s 263 of the Income Tax Act,1.961 thus the order passed by the Ld. CIT is bad in the eyes of the law.
3. That the Ld. CIT has erred in substituting an alternative view as against the firm view adopted by the Ld. AO at the time of original assessment u/s 143(3) of the Income Tax Act, 1961.
4. That the Ld. CIT has erred in passing an order under Section 263 of the Act in the absence of any erroneous position prejudicial to the interest by revenue, in the original assessment order passed by Ld. ITO under Section 143(3) of the Act.
5. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
Brief facts of the case, as enumerated by the ld. Counsel in his submissions, are as under:
639-Chd-2024 – Daya Kishan Gill, Jind 3
1. This is the case of an individual relating to A.Y. 2017- 18. The Assessee has filed his Income Tax Return of income for the subject year on 27.03.2018 u/s 139(4) declaring an income of Rs. 3,41,100/- besides agriculture income of Rs. 26,85,800/-. For the subject year, the Assessee's case was selected for scrutiny under CASS.
Subsequently, During the course of assessment proceeding under Section 143(3) of The Income Tax Act, statutory notice u/s 143(2) of The Act was issued on 24.09.2018. Also, notice u/s 142(1) of The Act along with a detailed questionnaire were available on the portal under the tab e-proceedings on 20.09.2019 fixing the case for hearing on 30.09.2019.
3. In response thereto, the Assessee filed his written submissions and evidence along with replies to various queries as called for by the Assessing Officer in the questionnaire dated 20.09.2019 which have been duly verified and examined by the AO.
4. The AO after considering the replies and information submitted by the Assessee accepted the returned income of Rs. 3,41,100/- along with Agricultural income of Rs. 26,85,800/-, vide order dated 27.12.2019.
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5. Thereafter, a show cause notice u/s 263 of The Act was issued to the Assessee vide letter dated 25.01.2022 wherein the Assessee was requested to show cause as to why the Assessment order passed by the AO should not be cancelled by invoking the provisions of section 263 of the Act.
6. The main contention as per the notice of the ld. Principal Commissioner of Income Tax was regarding the claim of substantially higher agricultural income and the substantial amount of cash deposited in his Karnataka Bank during demonetization. The Ld. Pr. CIT in his notice conceded the fact that, "the Assessing Officer had failed to conduct the basic enquiries in order to ascertain the veracity of Assessee's explanation regarding the sources of cash deposited in his account with Karnataka Bank and regarding the claim of substantially higher agricultural income."
7. Subsequently, the Assessee was allowed a final opportunity of being heard vide letter dated 03.02.2022 fixing the case for hearing on 10.02.2022 with a request to the Assessee to make written as well as verbal submissions but the Assessee was unable to respond to the said notices as he was not in the best of his health during that time. Thereafter, the order
639-Chd-2024 – Daya Kishan Gill, Jind 5 u/s 263 dated 14.02.2022 was passed on the basis of information available on the relevant Assessment records.
8. That the ld. Pr. CIT vide order dated 14.02.2022 made an observation that the AO has completed the Assessment "in a haste without conducting any enquiries", the AO has simply accepted the claims of the assessee without conducting any enquiries. Thus, the sources of cash deposits amounting to Rs. 23,86,000/- and agricultural income amounting to Rs. 26,85,800/- declared by the Assessee remained totally unexplained, and further made an observation that the AO was found to have not verified the facts mentioned in the order u/s 263 of The Act, which were prejudicial to the interest of the revenue.
The Ld. Pr. CIT concluded that the this was a case fit for revision u/s 263 of The Act as the assessment framed by the AO was erroneous and prejudicial to the interest of the revenue and accordingly the said order 1 to be set aside and directing the AO to frame the assessment afresh, with the directions to make requisite inquiries and proper verifications with regard to the issues mentioned in the order u/s 263 and affording reasonable opportunity of being heard to the assessee.
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During the proceedings before us, the ld. Counsel for the Assessee has filed all the papers that were filed before the Assessing Officer during the assessment proceedings and before the ld. PCIT during the proceedings u/s 263 of the Act.
At the very outset, the ld. DR brought it to the notice of the Bench that the ld. PCIT had passed the order u/s 263 on only two issues:-
Deposit in the Karnataka Bank 2. Details of land from which the Assessee earned agricultural income Accordingly, the Bench directed the Counsel of the Assessee to produce the documents supporting his position on these two issues. The ld. Counsel for the Assessee produced a copy of the bank account of Karnataka Bank, which he claimed was also produced before the authorities below but somehow it was not discussed in detail there.
Regarding agricultural income, the Assessee had claimed that it had got share in the Friends Agricultural Farms which was owned over 600 acres of land. The ld. Counsel submitted that the Assessee had four acres of agricultural land of its own at Dsitrict Jind, Haryana. Besides, it was a partner in an agricultural firm called Friends
639-Chd-2024 – Daya Kishan Gill, Jind 7 Agricultural Farms in which the Assessee had share of 145.68 acres of land in Friends Agricultural Farms, Roopnagar, Punjab.
During the proceedings before us, the ld. DR argued and relied on the findings given by the ld. PCIT. The ld. DR summitted that the Assessee has not filed papers regarding land owing before the PCIT. In response to these arguments of the DR, the Assessee filed documents regarding ownership of around 563 acres of land that was in the possession of Friends Agricultural Farms wherein, the Assessee was a partner having a share of 24%. A copy of such documents were given to D.R. also.
We have considered the findings given by the ld. PCIT and the argument given by the ld. DR. In fact, the ld. DR has relied on the order of the PCIT . We find that the ld. PCIT has passed the order for verification on mainly two issues: - i) Regarding deposits made by the Assessee in Karnataka Bank account; and ii) Regarding agricultural income shown in the return of income.
9. During proceedings before us, the Counsel of the Assessee has claimed that on both these issues details / papers were filed before the Assessing Officer during the assessment proceedings and before ld.
639-Chd-2024 – Daya Kishan Gill, Jind 8 PCIT during 263 proceedings. However, the same details regarding the deposits in the bank account in Karnataka Bank as well as papers regarding ownership of land possessed by the Assessee in Friends Agricultural Farms, in which the Assessee was a partner having share of 24%. We find that on both the issues on which the ld. PCIT has passed the order u/s 263 have been duly explained by the Assessee before the authorities below. Therefore, ld. PCIT may not have a reason to again pass an order u/s 263 on these two issues. Accordingly, Assessee’s appeal against the issue of order u/s 263 is allowed.
Appeal on other Grounds are general in nature.
In the result, Assessee’s appeal is allowed. 11.
Order pronounced on 21.10.2024.