MR ASHOK KHIMRAJ JAIN,NANDUBAR vs. PRINCIPAL COMMISSIONER OF INCOME TAX-1, NASHIK, NASHIK

The solitary issue under the present appeal revolves around alleged action of Ld. PCIT in directing the AO to reframe the assessment de-novo after thorough verification of source of cash deposits, wherein the case of the ITAT-Pune Page 1 of 6

Ashok Khimraj Jain, assessee had undergone limited scrutiny under CASS mechanism for the very reason to verify as to whether the cash deposit of during demonetization period has been made from disclosed sources.

Pithily stated facts borne out of case records are; 3.1 The assessee filed his return of income [for short ‘ITR’] for the year under consideration on 31/03/2017 declaring total income of ₹4,14,670/-. The case was selected for limited scrutiny under CASS to examine ‘Whether the cash deposit of ₹15,95,000/- during demonetization period has been made from disclosed sources’. After considering the submission, the Ld. AO completed the assessment proceedings u/s 143(3) of the Act, vide his order dt. 17/11/2017 by making addition of ₹1,64,098/- u/s 69A of the Act as unexplained money.

We note that, the appellant had deposited cash of ₹15,95,000/- into his bank account on 08/11/2016. Pursuant to OCM operation, the appellant case was subjected to scrutiny u/s 143(3) of the Act. During the course of regular assessment proceedings u/s 143(3) of the Act for AY 2015-16 the appellant submitted that, said cash deposits were supported by closing balance of ₹10,19,188/- held by him as on 31/03/2015 and cash commission earned during the financial year 2015-16. The submission of the appellant did inspire no confidence, hence in the absence of appellant’s failure to adduce persuasive material and convincing explanation in support of aforestated closing balance ITAT-Pune Page 3 of 6

We further note that, subsequent to framing the assessment for 2015-16 wherein the appellant was given credit for opening cash balance of ₹6,57,438/- (i.e. 31/03/2014), was brought to tax in the respective assessment year 2014- 2015 by invoking jurisdiction u/s 147 of the Act by the Ld. AO. The said addition was found duly confirmed by the Ld. CIT(A) in first appeal before him and by the Co-ordinate bench Tribunal in dt. 25/04/2023. Thus, admittedly the Revenue invariably has brought the entire closing balance of ₹10,19,188/- claimed to have held on 31/03/2015 to tax u/s 69A of the Act.

We further noticed that, this aforestated fact of taxing the entire amount of closing balance held by the appellant as at the closure of the previous year relevant to assessment year under consideration has lost sight of Ld. PCIT, therefore the observation recorded while invoking the revisionary jurisdiction suffered, thus the very basis for revision u/s 263 of the Act.

Therefore in our considered view, the Ld. PCIT’s finding that the documents through which attempt has been made to support the explanation were neither called by the AO nor produced by the assessee which clearly ITAT-Pune Page 4 of 6

In the light of aforestated undisputedly facts and circumstances, we see hardly any reason to deviate from the settled legal proposition laid by the Hon'ble Jurisdictional High Court of Bombay in ‘CIT Vs Gabriel India Ltd.’ Reported in 203 ITR 108 and ‘CIT Vs Design Automobile Engineers’ reported in 323 ITR 632 (Bom), and Hon’ble Delhi High Court in ‘CIT Vs Sunbeam Auto Ltd.’ reported in 332 ITR 167 (Del.) in holding that in the absence of any failure on the part of Assessing Officer in making due inquiry(ies), the first limb i.e. an assessment being erroneous fails therefore the very basis of jurisdiction of the Ld. PCIT u/s 263 of the Act.

Before parting we also note that, the Hon’ble lordship in ‘Gee Vee Enterprises Vs Addl. CIT’ reported in 99 ITR 375 (DHC) held that the Assessing Officer’s role in framing a regular assessment is that of an investigator as well as an adjudicator. An unless the Assessing Officer as an adjudicator decides a question or aspect and makes an assessment which is unsustainable in law, it cannot be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing ITAT-Pune Page 5 of 6

Resultantly, the appeal of the appellant is ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Friday 26th day of May, 2023.