ITAT quashes Revision Order of Pr CIT as prima facie evidence for claiming Exemption u/s 54B proved [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of Inturi Rama Rao, Accountant Member, and S S Viswanethra Ravi quashed the revision order of Principal Commissioner of Income Tax (PrCIT) as prima facie evidence for claiming exemption under Section 54B proved.

The appellant, Sanjay Amrutrao is HUF engaged in the business developers and promoters of land. The return of income for the assessment year 2016-17 was filed on 17.10.2016 declaring total income of Rs.6,45,270/-. The assessment, against the said return of income, was completed by the Assessing Officer passed u/s 143(3) of the Act at a total income of Rs.1,92,17,316/-. Subsequently, on examination of the assessment record, the PrCIT formed an opinion that the claim for deduction u/s 54B of the Act of Rs.1,27,85,612/- came to be allowed by the Assessing Officer without verification and inquiries. The PrCIT, on perusal of the assessment record, it is observed that exemption u/s 54B in the purchase of another agricultural land was made and allowed by the Assessing Officer.

Accordingly, concluded that the assessee had not invested the entire sale consideration in purchase of new agricultural land, therefore, he concluded that the Assessing Officer, without carrying out the verification and enquiries, allowed this claim. Accordingly, the PrCIT issued a show-cause notice u/s 263 of the Act calling upon the assessee to show cause as to why the assessment order should not be treated as erroneous and prejudicial to the interest of the revenue.

However, the Pr.CIT on consideration of these submissions made by the assessee held that the Assessing Officer had failed to examine the claim for deduction u/s 54B without verification as to the date of transfer of original asset and the nature of purchase of land etc. and, therefore held that the assessment order passed is erroneous and prejudicial to the interests of the revenue. Accordingly, the Pr.CIT set aside the assessment with a direction to the Assessing Officer to re-do the same after due verification.

The Tribunal observed that “The issue in the present appeal relates to the validity of the revision exercised by the Pr.CIT u/s 263 of the Act in respect of claim for deduction u/s 54B allowed by the Assessing Officer. There is no material on record indicating that the appellant had not satisfied the conditions laid down under the provisions of the Act for claiming exemption u/s 54B of the Act. Therefore, the assessment order cannot be branded as “erroneous” and “prejudicial to the interests of the revenue”. Thus, the Pr.CIT is not justified in exercising the power of revision u/s 263 of the Act and order passed u/s 263 by the ld. Pr.CIT is hereby set-aside.”

To Read the full text of the Order CLICK HERE

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