Satyapal Singh Chauhan HUF Vs ITO (ITAT Chandigarh)
When AO Makes Inquiry, PCIT Cannot Step In – ITAT Chandigarh Quashes PCIT’s Revision u/s 263 – AO Had Already Verified Agricultural Income
Background
- Assessee HUF owns 36 acres of agricultural land with tubewell connection, regularly declaring substantial agricultural income:
- AY 2018-19 – ₹26.94 lakh (accepted u/s 143(1))
- AY 2019-20 – ₹29.79 lakh (accepted u/s 143(1))
- AY 2020-21 – ₹34.47 lakh (accepted u/s 143(3))
- For AY 2020-21, case was selected under CASS for limited scrutiny on agricultural income.
- AO issued detailed questionnaire & SCN (09.02.2022); assessee submitted J-forms, jamabandi, accounts of commission agents, tubewell bills, bank statements showing sale proceeds through banking channels.
- AO, after verifying, accepted agricultural income & passed order u/s 143(3) on 16.09.2022
- PCIT later issued SCN u/s 263, alleging AO had not made adequate inquiries, & set aside assessment
Assessee’s Arguments
- AO had conducted detailed inquiry & applied mind; possible view was taken.
- PCIT wrongly invoked Explanation 2(a) to Section 263 without pointing out specific lapses.
- Relied on SC rulings in V-Con Integrated Solutions Pvt. Ltd. (173 taxmann 774) & SPML Infra Ltd. (164 taxmann.com 505), where it was held that when AO has raised queries & assessee has replied, PCIT cannot revise merely for not agreeing with AO’s conclusion
Tribunal’s Observations
- AO consciously verified agricultural income with supporting documents; order was not “erroneous” or “prejudicial.”
- PCIT only raised doubts for the sake of doubt (e.g., HUF status missing in bank/J-form, ancestral nature of land, irrigation proof). But all evidence (J-forms, commission agents’ accounts, tubewell bills, jamabandi) was already on record.
- Merely because assessments in earlier years were processed u/s 143(1) does not permit PCIT to doubt current year scrutiny accepted u/s 143(3).
- Invoking Explanation 2(a) to s.263 unjustified as adequate inquiries were made.
Tribunal’s Decision
- PCIT’s revisionary order quashed.
- AO’s original assessment dated 16.09.2022 restored.
- Appeal allowed in full
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
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