Case Law Details
Pravardhan Seeds (P) Ltd. Vs ACIT (ITAT Hyderabad)
Conclusion: CIT should not stop merely on finding that the order was erroneous but also had to establish that the order of AO was prejudicial to the interests of revenue. Thus, revision could not be made in such a case and the order of AO was restored.
Held: CIT observed that AO did not examine the fact that whether the production of seeds by adopting planned, scientific and specialised procedure in departure from basic agricultural operation in the instant case could still be claimed as agriculture. Further, he observed that he did not even call for the details of contracts to examine their nature or any other details to examine that the activities undertaken by assessee were identical to those that of any farmer would carry in his own land. Thus, CIT set aside the order of AO and directed to redo the assessment after duly examining the above issue, reiterating the reason that AO passed the order without making enquiries or verification as should have been made to examine the claim in respect of agricultural relief made u/s 10(1). It was held no doubt, AO had not applied his mind, but, CIT had not established how the order of AO was prejudicial to the interests of revenue. Looking to the findings of Hon’ble Jurisdictional High Court that the seeds could not be produced without basic agricultural activities and assessee had sold the seeds and must have carried out the agricultural activities in order to produce the seeds. CIT should not stop merely on finding that the order was erroneous but also had to establish that the order of AO was prejudicial to the interests of revenue. In the given case, the only missing link was the verification of lease agreement with the farmers and activities whether it was similar to the Prabhat Agri Biotech or not. This could also be verified by CIT and established that it was prejudicial to the interests of revenue but CIT had failed in this aspect. Therefore, no doubt, the assessment order was erroneous but not prejudicial to the revenue. Thus, the order of AO was restored.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by the assessee is directed against the order of CIT – 4, Hyderabad, dated, 24/03/2017 for AY 2012-13, passed u/s 263 of the Income-tax Act, 1961 (in short ‘the Act’).
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