BEETLE VENTURES PRIVATE LIMITED,MUMBAI vs. DCIT 16 (2), MUMBAI

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ITA 3905/MUM/2026Status: DisposedITAT Mumbai13 August 2026AY 2017-189 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT's assumption of jurisdiction under section 263 was unsustainable as the Assessing Officer had conducted adequate inquiries and adopted a plausible view. The cash deposits were duly recorded as business sales in the audited books of account and offered to tax.

What were the facts?

The assessee company's reassessment order was set aside by the PCIT under section 263, directing a fresh assessment on cash deposits of Rs. 10,71,64,130/- as unexplained money. The assessee argued that the Assessing Officer had conducted detailed inquiries and accepted the explanation that these deposits represented cash sales.

What were the issues?

Whether the PCIT was justified in invoking section 263 when the Assessing Officer had conducted detailed inquiries and accepted the assessee's explanation for cash deposits. Whether cash sales recorded in audited books can be treated as unexplained money under section 69A.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 144B,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

Pronounced: 13.08.2026

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order passed by the Ld. Principal Commissioner of Income Tax (PCIT) under section 263 of the Income-tax Act, 1961 ("the Act") for Assessment Year (A.Y.) 2017- 18.

2.

The assessee has raised the following grounds of appeal:

1.

The Ld. PCIT has erred in law and on the facts of the case in passing the order under section 263 of the Income-tax Act. The action is unjustified and unwarranted.

2.

The Ld. PCIT has erred in law and on the facts of the case in invoking the provisions of section 263 of the Act by treating the reassessment order passed by the Assessing Officer as erroneous and prejudicial to the interests of the Revenue. The action is unjustified and unwarranted as the Assessing Officer had made detailed enquiries while passing the reassessment order.

3.

Without prejudice, the Ld. PCIT has erred in law and on the facts of the case in considering the amount of Rs.10,71,64,130/- as unexplained money under section 69A of the Act. The action is unjustified and unwarranted, particularly when the entire amount is recorded in the books of account as income and considered as sales.

4.

The appellant craves leave to add, amend, alter and/or withdraw any of the aforesaid grounds of appeal.

3.

Briefly stated, the facts of the case are that the assessee company is engaged in the business of distribution of pharmaceutical products through tele-calling retailing. The assessee purchases medicines from various suppliers and sells them through tele-calling retailing to ultimate consumers, who make payment in cash. The cash so received is deposited into the assessee's bank account.

3.1 The assessment was completed by the Assessing Officer under section 147 read with section 144B of the Act vide order dated 16.05.2023.

3.2 Subsequently, the Ld. PCIT invoked the provisions of section 263 of the Act holding that the reassessment order passed by the Assessing Officer was erroneous insofar as it was prejudicial to the interests of the Revenue. Accordingly, the assessment order dated 16.05.2023 was set aside with a direction to the Assessing Officer to conduct a fresh assessment on the issue relating to cash deposits amounting to Rs.10,71,64,130/- by treating the same as unexplained money under section 69A of the Act. The operative portion of paragraph 13 of the order of the Ld. PCIT reads as under:

"Considering the facts and circumstances of the case, the assessment order passed under section 147 read with section 144B of the Act dated 16.05.2023 is hereby cancelled and the AO is directed to make a fresh assessment on the issue relating to cash deposits amounting to Rs.10,71,64,130/- in the bank account which remains unexplained and should have been added as unexplained money under section 69A of the Income-tax Act, 1961. The AO will conduct necessary enquiries and verifications and provide adequate opportunity of being heard to the assessee in accordance with the principles of natural justice."

3.3 Aggrieved by the order passed under section 263 of the Act, the assessee is in appeal before us.

4.

The Ld. Counsel for the assessee submitted that the assumption of jurisdiction by the Ld. PCIT under section 263 of the Act is bad in law and liable to be quashed. It was submitted that during the reassessment proceedings under section 147 read with section 144B of the Act, the Assessing Officer had conducted detailed enquiries regarding the source of cash deposits amounting to Rs.10,71,64,130/-.

4.1 It was explained before the Assessing Officer that the cash deposits represented cash sales effected during the relevant financial year. The assessee purchased medicines from various suppliers and sold them through tele-calling retailing to ultimate consumers, who made payment in cash, which was subsequently deposited into the bank account.

4.2 The Ld. Counsel submitted that during the assessment proceedings the Assessing Officer had issued notices calling for various details, in response to which the assessee furnished complete documentary evidence including:

 explanation regarding cash sales along with audited financial statements, tax audit report and statutory filings;  stock statements, sales register, purchase register and sample bills/invoices (Paper Book No.3 dated 07.06.2026, pages 3 to 26); and  bank statements reflecting the cash deposits (Paper Book No.3 dated 07.07.2026, pages 27 to 165).

4.3 Our attention was also drawn to the last two paragraphs of page 4 and paragraph 2.4 at page 5 of the assessment order dated 16.05.2023, wherein the Assessing Officer recorded his satisfaction after examining the material placed before him and accepted the explanation furnished by the assessee.

4.4 Without prejudice, it was further submitted that although the Ld. PCIT directed fresh verification of the cash deposits, no adverse finding was recorded with regard to the purchases. In any event, the entire cash deposits of Rs.10,71,64,130/- stood duly recorded in the audited books of account as business sales and formed part of the taxable business income. Therefore, the same could not be treated as unexplained money under section 69A of the Act.

4.5 In support of the contention that section 263 cannot be invoked where the Assessing Officer has conducted enquiries and adopted a plausible view, reliance was placed on the following judicial precedents:

 CIT v. Gabriel India Ltd. (71 Taxman 585) (Bom.)  CIT v. Sunbeam Auto Ltd. (189 Taxman 436) (Del.)  Narayan Tatu Rane v. ITO (70 taxmann.com 227) (Mum.)  Procter and Gamble Health Pvt. Ltd. v. PCIT (ITA No.2326/Mum/2025) 4  Studds Accessories Ltd. v. PCIT (ITA No.3570/Del/2025)  Lalitadevi N. Tibrewala v. PCIT (ITA No.318/Ahd/2018)  PCIT-2 v. Clix Finance India Pvt. Ltd. (ITA No.1428/2018)  PCIT v. Halmira Estate Tea Pvt. Ltd. (ITAT No.30/2025)  Chandrakant Vallabhbhai Kolidia v. PCIT (ITA No.1078/Ahd/2024)  CIT(A) v. Nirav Modi (71 taxmann.com 272)  CIT(E) v. Impact Foundation (India) (ITA No.126/2024)  Shiv Punj v. CIT (International Taxation) (ITA No.4556/Del/2025)

5.

Per contra, the Ld. Departmental Representative strongly supported the order passed by the Ld. PCIT under section 263 of the Act. It was submitted that the Assessing Officer failed to conduct proper enquiries into the genuineness and source of cash deposits amounting to Rs.10,71,64,130/- and, therefore, the assessment order was erroneous insofar as it was prejudicial to the interests of the Revenue.

6.

We have heard the rival submissions, perused the material available on record and carefully considered the judicial precedents relied upon by both the parties.

6.1 Ground Nos.1 and 2 relate to the validity of assumption of jurisdiction by the Ld. PCIT under section 263 of the Act.

6.2 It is well settled that for invoking the provisions of section 263 of the Act, the twin conditions must co-exist, namely, the assessment order must be both erroneous and prejudicial to the interests of the Revenue. If the Assessing Officer has adopted one of the possible views after conducting due enquiries and applying his mind to the material available on record, the order cannot be held to be erroneous merely because the Ld. PCIT is of a different opinion.

6.3 From a perusal of the reassessment order passed under section 147 read with section 144B of the Act dated 16.05.2023, we find that the issue of cash deposits amounting to Rs.10,71,64,130/- was the specific subject matter of enquiry during the assessment proceedings.

6.4 In response to the notices issued by the Assessing Officer, the assessee furnished complete details explaining that the cash deposits represented realization of cash sales arising from its business of distribution of pharmaceutical products through tele-calling retailing. The assessee also furnished audited financial statements, stock statements, sales register, purchase register, sample invoices and bank statements evidencing the cash deposits.

6.5 We further find that the Assessing Officer examined the material placed on record and recorded his satisfaction in the assessment order, particularly in the last two paragraphs of page 4 and paragraph 2.4 at page 5, after verifying the purchases and sales. Therefore, this is not a case of lack of enquiry or absence of application of mind. The Assessing Officer had made specific enquiries, examined the evidence and accepted the explanation furnished by the assessee.

6.6 The Ld. PCIT has merely directed further enquiry without demonstrating as to how the view taken by the Assessing Officer is unsustainable in law or contrary to the material available on record. The revisional jurisdiction under section 263 cannot be exercised merely for directing a fishing or roving enquiry where the Assessing Officer has already conducted adequate enquiries and adopted a plausible view.

6.7 Our view is fortified by the decision of the Hon'ble Bombay High Court in CIT v. Gabriel India Ltd. (1993) 71 Taxman 585 (Bom.), wherein it has been held that once the Assessing Officer has made enquiries, called for explanations and accepted the same, the order cannot be treated as erroneous merely because the Commissioner is of the opinion that further enquiry ought to have been conducted. Similar principles have been laid down in CIT v. Sunbeam Auto Ltd. (189 Taxman 436) and Narayan Tatu Rane v. ITO (70 taxmann.com 227).

6.8 Even otherwise, on merits, we find that the entire amount of Rs.10,71,64,130/- stands duly recorded in the audited books of account as business turnover and has been offered to tax. Once the receipts are accounted for as sales and form part of the trading account, the same cannot again be brought to tax as unexplained money under section 69A of the Act, as that would amount to taxing the very same receipt twice.

6.9 In view of the foregoing discussion, we hold that the assessment order dated 16.05.2023 passed under section 147 read with section 144B of the Act is neither erroneous nor prejudicial to the interests of the Revenue. Consequently, the assumption of jurisdiction by the Ld. PCIT under section 263 of the Act is unsustainable. Accordingly, the impugned order passed under section 263 is quashed.

6.10 Ground Nos.1, 2 and 3 raised by the assessee are allowed. Ground No.4 being general in nature does not call for separate adjudication.

7.

In the result, the appeal filed by the assessee in ITA No.3905/Mum/2026 for A.Y. 2017-18 is allowed.

Order pronounced in the open court on 13.08.2026.

Sd/- Sd/- JAGADISH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 13.08.2026 RY-SrPS Copy to: BEETLE VENTURES PRIVATE LIMITED, UNIT NO. 155 SHAH & NAHAR IND 1 ESTATE S J MARG LOWER PAREL(W), MUMBAI-400013, MAHARASHTRA

DCIT 16 (2), AAYAKAR BHAVAN, MAHARSHI KARVE 2 ROAD, CHURCHGATE, MUMBAI-400020, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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