In Prahlad Singh v. Principal Commissioner of Income Tax, Rohtak (ITAT Delhi, order dated 09 January 2026), the Delhi Bench of the Income Tax Appellate Tribunal examined the validity of revisionary proceedings initiated under Section 263 of the Income Tax Act, 1961, in respect of assessment for Assessment Year 2020-21.

The assessee had filed his return declaring agricultural income, which was examined by the Assessing Officer during scrutiny proceedings. After calling for explanations and documentary evidence, including land records, jamabandi, khasra girdawari, Form-J sale proceeds, lease documents, and agricultural input bills, the Assessing Officer treated the declared agricultural income as income from other sources and taxed it at normal rates under the regular provisions of the Act, instead of invoking Section 69A read with Section 115BBE.

Subsequently, the Principal Commissioner invoked Section 263 on the ground that the Assessing Officer had failed to apply the correct provision of law and that the income ought to have been taxed as unexplained income under Section 69A at the higher rate prescribed under Section 115BBE. The revision was sought on the premise that the assessment order was erroneous and prejudicial to the interests of the Revenue.

The Tribunal observed that the assessee had furnished extensive documentary evidence establishing ownership and possession of agricultural land and generation of agricultural income, all of which had been examined by the Assessing Officer during assessment proceedings. The Tribunal held that whether such income should be assessed as agricultural income, income from other sources, or unexplained income is a highly debatable issue, and the Assessing Officer had adopted one of the plausible views permissible in law.

It was further noted that the assessee’s appeal on the quantum addition was already pending before the Commissioner (Appeals), and revision under Section 263 could not be exercised to substitute the Principal Commissioner’s opinion for that of the Assessing Officer. Reiterating the settled principle that both conditions—“erroneous” and “prejudicial to the interests of the Revenue”—must coexist, the Tribunal held that failure of either condition vitiates the revision.

Accordingly, the Tribunal quashed the revision order passed under Section 263 and allowed the assessee’s appeal.

Source Link- https://itat.gov.in/public/files/upload/1767939668-SMDeSD-1-TO.pdf

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