RAJESH JAIN,TIKAMGARH vs. PR.COMMISSIONER OF INCOME TAX GWALIOR, GWALIOR

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 09.03.2022 passed by the Ld. Pr. Commissioner of Income Tax, Gwalior (in short ‘the Ld. PCIT’) holding the assessment order passed by the Assessing Officer as erroneous in so far as prejudicial to the interest of the Revenue. The grounds raised by the assessee are reproduced as under:

 The learned Commissioner of Income Tax was not justified in passing order u/s.263 of income Tax Act, when the

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assessment order passed by the Assessing Officer was not assessment order passed by the Assessing Officer was not assessment order passed by the Assessing Officer was not erroneous and prejudicial erroneous and prejudicial to the interest of revenue.  The learned Commissioner of Income Tax was not justified The learned Commissioner of Income Tax was not justified The learned Commissioner of Income Tax was not justified in passing order u/s.263 of income Tax Act without in passing order u/s.263 of income Tax Act without in passing order u/s.263 of income Tax Act without satisfying that assessment framed is not in accordance satisfying that assessment framed is not in accordance satisfying that assessment framed is not in accordance with law, in consequence whereof the lawful revenue due to with law, in consequence whereof the lawful revenue due to with law, in consequence whereof the lawful revenue due to the state has not been realized. tate has not been realized.  The learned Commissioner of Income Tax failed to apply his The learned Commissioner of Income Tax failed to apply his The learned Commissioner of Income Tax failed to apply his own mind and mechanically followed objection of audit. own mind and mechanically followed objection of audit. own mind and mechanically followed objection of audit.  The learned Commissioner of Income Tax did not appreciate The learned Commissioner of Income Tax did not appreciate The learned Commissioner of Income Tax did not appreciate that section 263 does not confer any power on the CIT a that section 263 does not confer any power on the CIT a that section 263 does not confer any power on the CIT a quasi judicial authority to substitute his own judgment over quasi judicial authority to substitute his own judgment over quasi judicial authority to substitute his own judgment over that that that of of of the the the Assessing Assessing Assessing officer officer officer another another another quasi-judicial quasi quasi authority, because assessment passed by the Assessing authority, because assessment passed by the Assessing authority, because assessment passed by the Assessing Officer is not of his liking. Officer is not of his liking.  The learned Commissioner of Income Tax failed to The learned Commissioner of Income Tax failed to The learned Commissioner of Income Tax failed to appreciat appreciate that assessment was completed after verifying e that assessment was completed after verifying bill and vouchares bank records and after detailed bill and vouchares bank records and after detailed bill and vouchares bank records and after detailed verification and therefore assessment was not erroneous verification and therefore assessment was not erroneous verification and therefore assessment was not erroneous and prejudicial to the interest of revenue. and prejudicial to the interest of revenue.  The learned Commissioner of Income Tax did not appreciate The learned Commissioner of Income Tax did not appreciate The learned Commissioner of Income Tax did not appreciate that section 263 does not authorize him to start fishing and that section 263 does not authorize him to start fishing and that section 263 does not authorize him to start fishing and roving enquiries in matters of orders which are already roving enquiries in matters of orders which are already roving enquiries in matters of orders which are already concluded. concluded.  That the Order passed by Assessing Officer in accordance That the Order passed by Assessing Officer in accordance That the Order passed by Assessing Officer in accordance with law and after considering relevant materials duly with law and after considering relevant materials duly with law and after considering relevant materials duly supported by ev supported by evidence cannot be branded as erroneous, idence cannot be branded as erroneous, merely because Commissioner is of other view or in his merely because Commissioner is of other view or in his merely because Commissioner is of other view or in his opinion order passed is weak and not a detailed order. opinion order passed is weak and not a detailed order. opinion order passed is weak and not a detailed order. Allied Engineers v. CIT [2009] 180 Taxman 70 (Mag.) (Delhi) Allied Engineers v. CIT [2009] 180 Taxman 70 (Mag.) (Delhi) Allied Engineers v. CIT [2009] 180 Taxman 70 (Mag.) (Delhi) (Trib.)  That the Assessing Officer has specifi That the Assessing Officer has specifically mentioned in the cally mentioned in the order that books of accounts along with purchase / sales, order that books of accounts along with purchase / sales, order that books of accounts along with purchase / sales, invoices, ledgers, bank accounts were examined, verified invoices, ledgers, bank accounts were examined, verified invoices, ledgers, bank accounts were examined, verified and test checked, setting aside by Commissioner, in and test checked, setting aside by Commissioner, in and test checked, setting aside by Commissioner, in absence of any finding that Assessing Officer's order is absence of any finding that Assessing Officer's order is absence of any finding that Assessing Officer's order is factually factually incorrect, and not justified. Vijay Kumar Megotia v. incorrect, and not justified. Vijay Kumar Megotia v. CIT [2010] 3 ITR (T) 760 (Pat.) (Trib.) as in our case all the CIT [2010] 3 ITR (T) 760 (Pat.) (Trib.) as in our case all the CIT [2010] 3 ITR (T) 760 (Pat.) (Trib.) as in our case all the facts where checked by AO. facts where checked by AO.  The learned Commissioner of Income Tax committed error in The learned Commissioner of Income Tax committed error in The learned Commissioner of Income Tax committed error in relying on certain judgments without hearing even tho relying on certain judgments without hearing even tho relying on certain judgments without hearing even though those judgments are distinguishable of facts. those judgments are distinguishable of facts.  That this Appellant further crave leave to adduce more That this Appellant further crave leave to adduce more That this Appellant further crave leave to adduce more material and/or amend, modify any of the grounds of material and/or amend, modify any of the grounds of material and/or amend, modify any of the grounds of Appeal if required necessary to do so Appeal if required necessary to do so 2. Briefly stated facts of the case are that the return of in Briefly stated facts of the case are that the return of in Briefly stated facts of the case are that the return of income filed by the assessee for the year under consideration on filed by the assessee for the year under consideration on filed by the assessee for the year under consideration on 27.10.2017, declaring income of Rs.7,78,500/ declaring income of Rs.7,78,500/-, was selected for was selected for

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complete scrutiny assessment for examining abnormal increase in complete scrutiny assessment for examining abnormal increase in complete scrutiny assessment for examining abnormal increase in cash deposit and large cash deposit during demonetization period. cash deposit and large cash deposit during demonetization period. cash deposit and large cash deposit during demonetization period. The Assessing Officer completed assessment The Assessing Officer completed assessment in his order dated in his order dated 25.12.2019 passed u/s 143(3) of the Income 25.12.2019 passed u/s 143(3) of the Income-tax Act, 1961 (in short tax Act, 1961 (in short ‘the Act’) after making disallowance @ 20% out of certain expenses after making disallowance @ 20% out of certain expenses after making disallowance @ 20% out of certain expenses claimed in profit and loss account claimed in profit and loss account, amounting to Rs.1,58,6 amounting to Rs.1,58,698/- and assessed the total income at Rs.9,37,200/ assessed the total income at Rs.9,37,200/-

2.1 Subsequently, the Ld. PCIT called for the assessment record Subsequently, the Ld. PCIT called for the assessment record Subsequently, the Ld. PCIT called for the assessment record and after examination and after examination, he found that assessee had introduced he found that assessee had introduced capital of Rs.15,80,000/ capital of Rs.15,80,000/- in his capital account but the Assessing but the Assessing Officer had not examined the source of such capital d not examined the source of such capital, , accordingly the Ld. PCIT issued show cause notice u/s 263 of the Act proposing as Ld. PCIT issued show cause notice u/s 263 of the Act proposing as Ld. PCIT issued show cause notice u/s 263 of the Act proposing as why the assessment order why the assessment order might not be held as erroneous in so far not be held as erroneous in so far as prejudicial to the interest of the R udicial to the interest of the Revenue as no inquiry were evenue as no inquiry were carried out by the Assessing Officer for examining the source of said carried out by the Assessing Officer for examining the source of said carried out by the Assessing Officer for examining the source of said capital. As the assessee did not comply the show cause notice capital. As the assessee did not comply the show cause notice capital. As the assessee did not comply the show cause notice issued despite proper issued despite proper service of the said notice, t service of the said notice, therefore, after considering the judicial precedents on the issue in dispute, the Ld. considering the judicial precedents on the issue in dispu considering the judicial precedents on the issue in dispu PCIT held the assessment order as erroneous in so far as prejudicial PCIT held the assessment order as erroneous in so far as prejudicial PCIT held the assessment order as erroneous in so far as prejudicial to the interest of the Revenue and directed the Assessing Officer to to the interest of the Revenue and directed the Assessing Officer to to the interest of the Revenue and directed the Assessing Officer to pass a de novo assessment order after proper examination and pass a de novo assessment order after proper examination and pass a de novo assessment order after proper examination and inquiry.

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3.1 Before us, the Ld. Counsel of the assessee submitted that the Before us, the Ld. Counsel of the assessee submitted that the Before us, the Ld. Counsel of the assessee submitted that the Assessing Officer has made requisite inq Assessing Officer has made requisite inquiry on the issue in uiry on the issue in dispute. He referred to Paper Book page 2 wherein the Assessing dispute. He referred to Paper Book page 2 wherein the Assessing dispute. He referred to Paper Book page 2 wherein the Assessing Officer has raised the query regarding copy of the capital account of Officer has raised the query regarding copy of the capital account of Officer has raised the query regarding copy of the capital account of Rs.97,34,956/-. This query was responded by the assessee . This query was responded by the assessee, a copy . This query was responded by the assessee which is available on page 7 of the Paper Book. The assessee has which is available on page 7 of the Paper Book. The assessee has which is available on page 7 of the Paper Book. The assessee has filed a detailed copy of the capital account which is available on filed a detailed copy of the capital account which is available on filed a detailed copy of the capital account which is available on page 61 of the Paper Book. The relevant part of the capital account page 61 of the Paper Book. The relevant part of the capital account page 61 of the Paper Book. The relevant part of the capital account is reproduced as under: is reproduced as under:

Capital Account Amount Amount 1. Proprietor’s Capital A/c Proprietor’s Capital A/c Rajesh Jain 6,58,607.41 Addition Capital 15,80,000.00 Add:- Net Profit 3,40,412.83 25,79,020.24 Less :- Drawing 25,79,020.24 25,79,020.24

Capital Account 1. Proprietor’s Capital A/c Proprietor’s Capital A/c Opening Balance 66,67,653.09 Add: Net Profit 6,11,560.00 Add: Agriculture Income Add: Agriculture Income 1,58,200.00 74,37,413.09 Less : House Loan Interest Less : House Loan Interest 23,477.00 Less LIP Premium Less LIP Premium 1,50,000.00 Less: Drawing 1,08,000.00 2,81,477.00 71,55,936.09 71,55,936.09 Total 97,34,956.33 97,34,956.33 3.2 We find that the assessee has provided the detail of the capital We find that the assessee has provided the detail of the capital We find that the assessee has provided the detail of the capital account but has not filed any account but has not filed any explanation in support of explanation in support of source of

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the addition of said capital of Rs.15,80,000/ the addition of said capital of Rs.15,80,000/- before the Assessing before the Assessing Officer. The Ld. Assessing Officer ought to have examined the Officer. The Ld. Assessing Officer ought to have examine Officer. The Ld. Assessing Officer ought to have examine source of said capital when the detail f said capital when the detail was furnished by the was furnished by the assessee. The Ld. Assessing Officer is not only adjudicating assessee. The Ld. Assessing Officer is not only adjudicating assessee. The Ld. Assessing Officer is not only adjudicating authority but also investigating authority and therefore, before authority but also investigating authority and therefore, before authority but also investigating authority and therefore, before adjudicating on the issue adjudicating on the issue , he was required to examine the sourc required to examine the source of addition of said capital at Rs.15,80,000/ addition of said capital at Rs.15,80,000/-. Thus it is clear that the . Thus it is clear that the Assessing Officer has not made any inquiry for examining the Assessing Officer has not made any inquiry for examining the Assessing Officer has not made any inquiry for examining the source of said capital and therefore, we do not find any infirmity in source of said capital and therefore, we do not find any infirmity in source of said capital and therefore, we do not find any infirmity in the order of the Ld. CIT(A) in holding the assessment order as the order of the Ld. CIT(A) in holding the assessm the order of the Ld. CIT(A) in holding the assessm erroneous in so far as prejudicial to the interest of the revenue. The erroneous in so far as prejudicial to the interest of the revenue. The erroneous in so far as prejudicial to the interest of the revenue. The grounds of appeal of the assessee are accordingly dismissed. grounds of appeal of the assessee are accordingly dismissed. grounds of appeal of the assessee are accordingly dismissed.

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Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai