MAHABIR PRASAD,SARGUJA vs. PR. COMMISSIONER OF INCOME TAX-1, RAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 54/RPR/2021 (AY 2008-09) (Hearing in Virtual Court) Mahabir Prasad PCIT, Raipur-1 Ajirma, Raghavpuri P.S Raipur Vs Jaynagar, Surajpur, Sarguja Chhattisgarh PAN : BPHPP 3014 E Assessee / appellant Revenue /respondent

Assessee by Shri Sunil Kumar Agrawal, CA Revenue by Shri P.K. Mishra – CIT-DR Date of hearing 13.08.2021 Date of pronouncement 02.09.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. Principal Commissioner of Income tax (PCIT) -Raipur dated 09.03.2021 for assessment year (AY) 2015-16. The assessee has raised the following grounds of appeal:- “(1). On the facts and circumstances of the case and in law, the ld PCIT has erred in giving direction u/s 263 to set aside the reassessment order u/s 147 rws 143(3) dt. 5-12-18 to verify the source of cash deposits into bank & to conduct necessary enquiry; while the alleged reopening of assessment u/s 147/148 is invalid, bad in law & without jurisdiction and thus, an invalid order u/s 147 cannot be subjected to revision u/s 263; hence, impugned order u/s 263 dt.9-3-21 is also invalid, bad in law & is liable to be quashed. (2) On the facts and circumstances of the case and in law, the ld PCIT has erred in giving direction u/s 263 of the income-tax Act

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) 1961 (‘the Act” for short) to set aside the order u/s 147 rws 143(3) dt. 5-12-18, when the assessee has duly explained the source of cash deposits into bank from its retail turnover of Rs.17,44,560 from which income of Rs.1,39,565 shown u/s 44AD & further income of Rs.1,80,000 shown u/s 44AE from 22 mini trucks plying business; impugned order u/s 147 rws 143(3) is after due verification of the details submitted by the assessee and after proper application of mind by the ld AO, is neither an erroneous order nor prejudicial to the interest of revenue, more so, satisfaction has been reflected in the assessment order; hence, impugned order u/s 263 dt. 9-3-21 is also invalid, bad in law & is liable to be quashed.”

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) Assessing Officer noted that nobody appeared on behalf of assessee nor any written response was sent. The assessee was again asked to furnish necessary documents by 13.11.2018. In response to notice dated 13.11.2018, the assessee furnished return of income declaring income of Rs.3,19,570/- . The assessee offered income under section 44AE and 44AD of the Act. The Assessing Officer after serving notice under section 143(2) proceeded for assessment. The assessee was confronted with the deposit in the bank account. In response to said show-cause notice the assessee field his written reply and stated that he is engaged in supply of brick, sand (sand stone chips) and other building material. The assessee also owned two mini trucks. The main source of assessee’s income for transportation and retail sell of building material. The assessee is not required to maintain books of account. The Assessing Officer after taking into consideration reply and other material accepted the return of income of Rs.3,19,570/- in the assessment order dated 05.02.2018 passed under section 143(3) r.w.s. 147 of the Act.

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) 3. Subsequently, the assessment order was revised by ld. PCIT invoking the power under section 263 of the Act vide order darted 09.03.2021. Before revising the assessment order, ld. PCIT noted that the assessment order dated 05.02.2018 is erroneous and in so far as prejudicial to the interest of Revenue. It was further noted that no return of income was filed by the assessee under section 139(1) of the Act. The assessee deposited cash in his saving bank account of Rs.14.48 lakh and also made cash transaction of Rs.14 lakh during financial year 2014-15. The Assessing Officer completed the assessment on 05.02.2018. Thus on verification of record, the ld PCIT was of the view that no satisfactory documentary evidence has been furnished by the assessee to prove the nature and source of cash deposit of Rs.14.48 lakh. No satisfactory explanation about the nature and source of cash deposit was furnished. The Ld. PCIT issued show cause notice under section 263. The Ld. PCIT after giving the opportunity of hearing to the assessee held that there is laps on the part of assessee. Thus order is erroneous and in so far as prejudicial to the interest of revenue. The ld PCIT also 4

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) invoked the explanation of fact under section 263 of the Act. The Assessing Officer was directed to make adequate enquiry with regard to genuineness of business, source of cash deposit and credit entries vide order dated 09.03.2021 passed under section 263 of the Act. Aggrieved, assessee has field present appeal before the Tribunal. 4. We have heard the rival submissions of ld. Authorized Representative (AR) for the assessee and the ld. Departmental Representative CIT-(DR) for the Revenue. The Ld. AR of the assessee submits that no return of income was filed by assessee for the year under consideration. The return of income was filed in response to notice issued under section 148 of the Act on 03.02.2018 declaring income of Rs.3.19 lakhs. Thereafter assessment was completed under section 147 r.w.s 143(3) of the Act on 05.12.2018 accepting return of income declared by the assessee. Thereafter ld PCIT issued show-cause notice under section 263 of the Act on 25.03.2021, on the issue of cash deposit into his bank account of Rs.14.48 lakhs. The Ld. AR of the assessee submits that assessee engaged in the business of transportation of two 5

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) mini trucks and retail trading of building construction materials. The assessee declared income of Rs.1.80 lakhs under section 44AE from business of plying and hiring and Rs.1,39,565/- under section 44AD @ 8% of total turnover of Rs.17,44,560/- from business of building materials. The turnover of assessee was of Rs.17,44,560/- for the relevant financial year. The assessee made cash deposit in his bank account of Rs.14.48 lakh which is well within the turnover of business declared by assessee. The assessee has shown sundry debit as on 31.03.2015 of Rs.2.68 lakh and sundry credit as on 31.03.2015 of Rs.5.47 lakh. The assessee was having stock-in-trade as on 31.03.2015 of Rs.2.60 lakh and having cash balance of Rs.1.35 lakh. The assessee made deposit of Rs.12 lakh on 08.01.2015 in IDBI bank from cash balance of Rs.12,41,999/- as on 05.01.2015. The cash balance and the preceding month of 31.03.2014, 31.11.2014 and 31.10.20.14 was at Rs.12.23 lakhs, Rs. 12.02 lakhs and Rs. 10.29 (lakhs) respectively. The ld AR for the assessee submits that copy of cash book for the relevant period, copy of deposit in the bank account was out of the running balance 6

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) cash-in-hand was furnished during assessment. The Assessing Officer made detailed discussion after seeking relevant information about the bank deposits. The Assessing Officer verified and examined all cash deposits. The Assessing Officer only after considering and satisfying himself accepted the return of income. The Assessing Officer applied his mind made adequate enquiry on the issue of cash deposits and took the reasonable and possible view which is tenable as per law and correct application of facts. 5. Ld. PCIT has not given any finding as to how the assessment order is erroneous. The PCIT himself has accepted that the Assessing Officer during assessment asked the assessee about the alleged cash deposits of Rs.28.48 lakhs, which makes the facts clear that Assessing Officer conducted adequate enquiry. The conclusion arrived by Ld. PCIT that Assessing Officer has not conducted adequate enquiry is incorrect. It is not the case that no enquiry is made, warranting invoking of jurisdiction under section 263 of the Act. The Ld. AR of the assessee submits that there is distinction between “lack of enquiry” and “inadequate enquiry”. If there is a lack of enquiry than 7

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) assessment order can be branded as erroneous. The LD AR of the assessee submits that Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Sunbeam Auto Ltd (2009) 31 DTR 1 (Del) held that ‘inadequacy of enquiry’ cannot be a sufficient ground for taking revision under section 263 of the Act, if there is lack of enquiry than probably Commissioner would be justified taking action under section 263 of the Act. The Ld. AR of the assessee further submits that Ld PCIT simply directed the Assessing Officer to make further enquiry and he himself had not taken any steps to make enquiry himself and did not point out as to how and in what manner the enquiry make by Assessing Officer is not sufficient or proper. To support his submission, the Ld AR of the assessee further relied upon the following decisions:-  Mukesh Jayantilal Kanakhara (2017) 184 TTJ 673 (Rajkot- Trib)  Bodhisattva Chattopadhyay vs. CIT (2929) 185 DTR 89 (Kol- Trib)  CIT Vs Nirav Modi (2016) 71 taxmann.com 272 ( Bombay High Court)  ITO vs. DG Housing Projects Ltd. (2012) 343 ITR 329 (Del)

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) 6. On the other hand, Ld. CIT-DR for the Revenue supported the order of Ld. PCIT. Ld. CIT-DR for the Revenue further submits that the assessment order is silent about the various enquiries conducted by the Assessing Officer. The Assessing Officer accepted the return of income declared by the assessee, without discussing the issues at length. 7. We have considered the rival submission of both the parties and gone through the orders of authorities below. We find that the case of assessee was re-opened on the basis of information received by the Assessing Officer that the assessee has made cash deposits in his bank account. The Assessing Officer issued show-cause notice under section 148 of the Act on 20.02.2018. In response to notice under section 148 of the Act, the assessee filed his return of income on 03.12.2018 declaring income of Rs.3.19 lakh. The Assessing Officer on page-2 of the assessment order recorded that assessee was asked to furnish return of income, computation of income, details of bank statement and the reply of questionnaire. The Assessing Officer further recorded that assessee furnished detail thereof, which has been kept on record after discussing 9

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) with the assessee. The Assessing Officer accepted that assessee is engaged of business of supplying building material and in transportation business. After considering the submissions of assessee, the income declared by assessee was accepted. 8. The Ld. PCIT revised the assessment order by taking view that no proper enquiry was made by Assessing Officer about the nature and source of cash deposit of Rs.14.48 lakh and that assessment order passed by Assessing Officer and in absence of proper verification, the Assessing Officer is erroneous and in so far as prejudicial to the interest of Revenue. The Assessing Officer was directed to make adequate enquiry with regard to genuineness of the business, source of cash deposits and credit entries. We find that the Ld. PCIT has not satisfied as to what further enquiry was required to be made. We further noted that the Ld. PCIT revised the order by taking view that the Assessing Officer made ‘inadequate enquiry’. The Hon'ble Delhi High Court in the case of CIT vs., Sunbeam Auto Ltd. (supra) held that inadequacy of enquiry cannot be sufficient ground for taking action under section 263 of the Act. 10

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) Admittedly, this case is not case of complete lack of enquiry. As noted above, the Assessing Officer during the assessment proceedings required the assessee to furnish detail income tax return, computation of income, details of bank statement and the reply of questionnaire raised to assessee about the source of deposits. Before us the Ld. AR of the assessee vehemently submitted that assessee’s declared income of Rs.1.80 lakh from business of transportation under section 44AE and Rs.1.39 lakh from trading in building material respectively (being @ 8% of total turnover of Rs.17.44 lakh). To support his contention, the assessee filed balance-sheet, trading of profit and loss account as on 31.03.2015, cash book and bank statement. The assessee also claimed that assessee was having cash balance of Rs.12.41 lakh as on 15.01.2015 and the cash balance in the immediately preceding months was Rs.12.23 lakh, Rs.12.02 lakh and Rs.10.29 lakh as on 31.12.2014, 30.11.2014 and 30.10.2014 respectively. All these facts are not disputed by the Ld. CIT-DR. Considering the aforesaid factual and legal discussion, we find that the Assessing Officer made sufficient enquiries during the 11

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16) assessment and took reasonable and plausible view. In our view, if the view taken by Assessing Officer is not acceptable Ld. PCIT, which is otherwise reasonable and plausible order under section 263 cannot be treated as erroneous. For invoking power under section 263 of the Act the twin condition i.e., order is erroneous and in so far as prejudicial to the interest of Revenue must be fulfilled simultaneously at the cost of repetition. We may further add that it is not a case of lack of enquiry, the Ld. PCIT while passing the order under section 263 held that Assessing Officer has not made adequate enquiry. Therefore the order passed by Ld. PCIT u/s 263 is not sustainable and the same is quashed. 9. In the result, assessee’s appeal is allowed. Order pronounced on 02/09/2021 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule, 1963

Sd/- Sd/- (PRADIP KUMAR KEDIA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 02/09/2021 Dkp. Outsourcing P.S

ITA No.54/RPR/2021 Mahabir Prasad (A.Y.15-16)

Copy to: 1. Appellant-Mahabir Prasad, Ajirma, Raghavpuri PS Jaynagar, Surajpur Sarguja, Chhatisgarh-497001 2. Respondent- PCIT, Raipur-1, Raipur 3. CIT-Raipur 4. CIT 5. DR 6. Guard File True copy/ By order / / TRUE COPY / / Assistant Registrar, ITAT, Raipur True copy/