No Revision u/s 263 can be done on the ground that documents/material not looked into and analyzed by AO not in a particular manner
In a recent judgment, ITAT Raipur has held that the exercise of revisional jurisdiction u/s 263 based on a conviction that the documents/material ought to have been looked into and analyzed by the A.O not in the manner that was adopted by the latter for arriving at a possible and plausible view, but in a manner of choice advocated by the revisional authority is not permissible as per the mandate of law
ABCAUS Case Law Citation:
4432 (2025) (02) abcaus.in ITAT
Important Case Laws relied upon by Parties:
CIT Vs. Kwality Steel Suppliers Complex
Pr. CIT Vs. Mahavir Ashok Enterprises (P) Ltd.
Malabar Industrial Co. Ltd. Vs. CIT
In the instant case, the assessee had challenged the revisional order passed u/s 263 of the Income Tax Act, 1961 (the Act) by the CIT setting aside the re-assessment disallowing the assessee’s claim for deduction u/s 54B of the Act.
The case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act and original assessment was framed by the AO vide his order passed u/s 143(3) of the Act accepting the returned income of the assessee.
Thereafter, the AO to verify the assessee’s claim for deduction u/s. 54B of the Act, initiated reassessment proceedings. Notice u/s 148 of the Act was issued by the AO.
During the course of re-assessment proceedings, the AO observed that the assessee had during the subject year along with 8 others co-owners (family members), had vide a registered sale deed sold an agricultural land situated at a village resulting in long term capital gain (LTCG). The assessee had against his 1/9th share claimed deduction u/s 54B, u/s 54EC and u/s 54F of the Act.
The return of income filed by the assessee was, thereafter, accepted by the Faceless Assessing Officer (FAO) vide his order passed u/s.147 r.w.s. 144B of the Act.
Subsequently, the Pr. CIT examined the claim for deduction u/s. 54B of the Act and found that it was not in order. The Pr. CIT observed that the pre-condition for claim of deduction u/s 54B. i.e. the subject land transferred by the assessee was during the period of two years immediately preceding the date of transfer was being used by the assessee or his parents for agricultural purposes was not found to be satisfied in his case. The Pr. CIT observed that the land revenue record issued by the Village Patwari stated that no agricultural activities were conducted on the subject land. Further, the Pr. CIT observed that the satellite data taken by ISRO revealed that the usage pattern of the subject land was shown as “fallow land” and also, there was no change in the usage of the same during the corresponding period.
The Pr. CIT held that the AO while framing the reassessment had failed to conduct proper enquiry and examine the assessee’s claim for deduction u/s 54B of the Act, which, thus, had rendered the order of reassessment passed by him u/s. 147 r.w.s. 144B of the Act as erroneous in so far it was prejudicial to the interest of the revenue. The Pr. CIT observed that despite there being primary evidence available with the department and detailed enquiry already undertaken on this issue by the Jurisdictional Assessing Officer (JAO) who had with the prior approval of CCIT passed an order u/s. 148A(d) of the Act, no enquiry/verification was independently done by the FAO.
In response to the Show cause notice (SCN), the assessee rebutted the proposed action of the Pr. CIT, and submitted that as the AO had passed the reassessment order u/s. 147 r.w.s. 144B of the Act after duly considering the submissions filed by the assessee and conscious application of mind to the tangible material on record before him, therefore, the reassessment order so passed by him could not be held as erroneous in so far it was prejudicial to the interest of the revenue on any of the aspects, on which, the same was sought to be revised u/s. 263 of the Act.
The assessee to support his claim had filed with the AO a comprehensive research report expressed doubt on the Google historical imagery erroneously showing no agriculture activities on land. The Pr. CIT shared the reports on the google historical imageries with the Director General, State Council of Science & Technology (CCOST) i.e. a premier Government Institution and sought for its expert opinion on the same. In reply, the Director General, CCOST, Raipur reported that the subject lands were “fallow lands”.
The Pr. CIT shared the report of the Director General, CCOST Raipur with the assessee for his counter comments. In rebuttal, the assessee submitted that in the backdrop of the contemporaneous evidence that was filed on record in the shape of expert opinion as against the opinion of CCOST, a reasonable doubt ensued in favour of the assessee that agricultural operations were being carried out in the preceding two years prior to the date of transfer of the subject land. Apart from that, it was submitted by the assessee that as the opinion arrived at by CCOST was completely based on a visual interpretation of certain satellite images on some stray dates, therefore, the same could not be treated as sacrosanct and absolute.
Apart from that, the Pr. CIT observed that the “Panchshala khasra” attached alongwith the registered sale deed clearly described the subject land as “padath land” (i.e. barren land) for more than 5 years. Further, the Village patwari had certified the “Panchshala Khasra” of the subject land and had further certified that no agricultural activity was conducted on the land for the required years.
The Pr. CIT to fortify his conviction that no agricultural activities were carried out by the assessee on the subject land in the two years immediately preceding the date on which it was transferred, had drawn support from the fact that the assessee had not disclosed any agriculture income in his income tax returns for any of the assessment years filed prior to the date of its sale. Further, the Pr. CIT observed that as per the Inspector’s report also, the subject land was not being used for agricultural purpose for more than 5-10 years.
Accordingly, the Pr. CIT vide his order passed u/s. 263 of the Act disallowed the assessee’s claim for deduction u/s 54B of the Act and directed the AO to revise the reassessment order passed by him u/s. 147 r.w.s. 144B of the Act.
Before the Tribunal the assessee assailed the order passed by the Pr. CIT u/s. 263 of the Act, based on his two fold contentions, viz. (i) that the Pr. CIT had grossly erred in law and facts of the case by traversing beyond the scope of the revisional jurisdiction vested with him u/s.263 of the Act; and (ii) that the Pr. CIT had based on his perverse observations concluded that the assessee and other coowners had not carried out agricultural operations on the subject land in the two years immediately preceding the date on which the said land was transferred.
The Tribunal observed that the Hon’ble Supreme Court had observed that the Commissioner of Income Tax while exercising the revisional jurisdiction is not sitting in appeal. The order of the A.O cannot be termed as prejudicial simply because he had adopted one of the courses permissible in law and it had resulted in loss of revenue; or where two views are possible and the A.O had taken one view with which the Commissioner does not agree. Accordingly, where two views are possible and the A.O had taken one view and the Commissioner does not agree with the view taken by the A.O, the assessment order cannot be treated as an order erroneous or prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act.
The Tribunal observed that in another case the Apex Court observed that every loss of revenue as a consequence of an order of the A.O cannot be treated as prejudicial to the interests of the revenue, for example, 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 interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law.
The Tribunal observed that the Pr. CIT in the present case had dislodged the view taken by the AO based on the same set of facts and documents as were available and deliberated upon by the AO while framing the reassessment. The Pr. CIT held the view that the documents, i.e. the satellite imageries, land revenue records ought to have been looked into and analyzed by the A.O while framing the reassessment vis-à-vis the manner in which the same were analyzed by him.
The Tribunal opined that though an order passed by an AO without making inquiries or verification which should have been made can be brought within the meaning of an order which is “deemed to be erroneous” under Section 263 of the Act, but the supervisory jurisdiction of the revisional authority cannot be exercised for seeking dislodging of a possible and plausible view taken by the A.O after carrying out necessary inquiries and verifications, for the reason, that the revisional authority is of the view that the documents/material ought to have been looked into and analyzed by the AO in a different manner.
The Tribunal opined that the exercise of revisional jurisdiction based on a conviction that the documents/material ought to have been looked into and analyzed by the AO not in the manner that was adopted by the latter for arriving at a possible and plausible view, but in a manner of choice advocated by the revisional authority, will be nothing short of seeking of substitution of the view of the revisional authority by imposing the manner of analyzing of the documents/material as desired by him as against that adopted by the AO i.e. a quasi-judicial authority, for arriving at a possible and plausible view, which is not permissible as per the mandate of law as held by the Apex Court.
The Tribunal opined in the instant case, the Pr. CIT by seeking substitution of his view as against the possible and plausible view arrived at by the AO based on the same set of documents/material, had, thus, traversed beyond the scope of his jurisdiction u/s 263 of the Act.
Accordingly, the Tribunal set-aside the order passed by the Pr. CIT u/s. 263 of the Act and restored the order of reassessment passed by the A.O u/s. 147 r.w. Section 144B of the Act.
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