Prahlad Singh Vs PCIT (ITAT Delhi)
PCIT Cannot Invoke Section 263 to Force Tax u/s 69A Where AO Took a Plausible View on Agricultural Income – ITAT Delhi
The Delhi Bench of the ITAT quashed the revision order passed under section 263 for AY 2020-21, holding that the PCIT had wrongly assumed jurisdiction by treating the assessment as erroneous and prejudicial to the interests of revenue. The assessee had declared agricultural income, which the AO—after examining land records, Form-J sale proceeds, purchase bills, and government-issued landholding documents—treated as income from other sources and taxed at normal rates.
The PCIT sought to revise the order on the premise that the AO ought to have invoked section 69A read with section 115BBE to tax the amount at 60%, alleging lack of proper enquiry and incorrect application of law. The Tribunal rejected this approach, observing that the assessee had furnished substantial documentary evidence of agricultural operations (including jamabandi, lease documents, Form-J, and “Meri Fasal Mera Byora”), all of which were before the AO. Whether such income should be taxed as agricultural income or income from other sources is a debatable issue, and the AO’s view constituted a plausible view in law.
The ITAT reiterated that for valid exercise of section 263, both conditions—the order being erroneous and prejudicial—must co-exist. Where the AO has taken one of the permissible views after enquiry, revision is impermissible. The Tribunal also noted that the assessee’s appeal on the quantum issue was already pending before the CIT(A), further weakening the PCIT’s assumption of jurisdiction. Accordingly, the revision order was quashed and the assessee’s appeal allowed
FULL TEXT OF THE ORDER OF ITAT DELHI
