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Facts
The assessee appealed against an order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961. The PCIT had set aside an assessment order due to a perceived discrepancy in cash deposits related to the sale of immovable property. The PCIT questioned the AO's lack of critical enquiry regarding the source and timing of cash deposits.
Held
The Tribunal held that the PCIT erred in setting aside the assessment order. The Tribunal found that the assessee had provided explanations and documentary evidence regarding the cash deposit, and the discrepancy regarding dates was clarified. The Tribunal concluded there was no lack of enquiry by the Assessing Officer and no prejudice caused to the revenue.
Key Issues
Whether the PCIT was justified in invoking Section 263 to set aside the assessment order for lack of enquiry, when the assessee had provided sufficient explanation and evidence regarding cash deposits.
Sections Cited
263, 143(3), 147
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2012-13) Mohmedyusufkhan Gulabkhan Vs. Principal Commissioner of Farmwala, Income Tax, Aiyub Manzail Kinariwala Block, Ahmedabad-1 Gayakwad Haveli, Raikhad, Ahmedabad-380001 [PAN No.AAHPF1195J] (Appellant) .. (Respondent) Appellant by : Shri Hardik Vora, A.R. Respondent by: Shri R.N. Dsouza, CIT DR 18.12.2024 Date of Hearing Date of Pronouncement 24.01.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income Tax, (in short “Ld. PCIT”), Ahmedabad-1, vide order dated 19.03.2022 passed for A.Y. 2012-13.
The assessee has taken the following grounds of appeal:-
“1. The ld. Pr. CIT erred in passing the order u/s 263 of the Income Tax Act, 1961 by holding that the assessment order passed by the ITO Ward-1(3)(3), Ahmedabad u/s 143(3) rws 147 of the Act dated 26/12/2019 is erroneous and prejudicial to the interest of the revenue.
2. The ld. Pr. CIT erred in holding that the assessing officer has failed to make necessary and bring on record all facts without appreciating that specific query was raised in reassessment proceeding on issue under consideration of cash deposited in bank account of the appellant and all relevant details in response thereof was filed.
3. The ld. Pr. CIT failed to appreciate that the assessment order was neither erroneous nor prejudicial to the interest of the revenue and thus order under section Mohmedyusufkhan Gulabkhan Farmwala vs. PCIT Asst.Year –2012-13 - 2– 263 is bad in law, illegal, ultra-vires in excess of and/or in want of jurisdiction and otherwise void.
4. The ld. Pr. CIT erred in law in invoking jurisdiction under section 263 of the Act to set aside an order passed under section 143(3) rws 147 of the Act directing the assessing officer to make fresh assessment beyond the scope of reasons given by him for revision in the show cause notice without appreciating that the assessee was not confronted in respect of unproved opening cash balance before passing order under section 263 of the Act. Hence, the order passed by the Id. Pr. CIT is perverse and it may please be quashed.
5. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.”
The brief facts of the case are that the PCIT on going through the assessment records observed that assessment order has been passed by the Assessing Officer after determining the assessed income at Rs.5,50,600/-. The PCIT in the show-cause notice dated 28.02.2022, observed that there is some discrepancy with regards to cash deposits with Social Cooperative Bank Ltd. and the Assessing Officer ought to have verified the said details after making necessary enquiries, before completing the assessment. The PCIT observed that the assessee had made cash deposit of Rs. 10,00,000/- with Social Cooperative Bank Ltd. on 23.07.2011. However, on perusal of records, the PCIT observed that while the assessee had submitted that this cash deposit was from sale consideration of immovable property, however, from perusal of sale document dated 08.09.2011, it was mentioned that “the cash” of Rs. 22,09,250/- was received on 07.07.2011. Further, while perusing the sale document uploaded by the assessee on 08.08.2019, it has been mentioned at Page 8 that a sum of Rs. 22,09,250/- was received in cash today i.e. 08.09.2011. In this regard, vide notice dated
In response, to the show-cause notice dated 28.02.2022, the assessee submitted before PCIT that the assessee had received cash of Rs. 22,09,250/- as sale consideration against the sale of immovable property. The said cash element of the sale consideration was received by the assessee on 07.07.2011, which is mentioned in the sale deed and the same was deposited in the bank account by the assessee on 23.07.2011. Therefore, there is no discrepancy in facts and hence for this reason the assessment order cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. However, the Ld. PCIT set-aside the assessment order as being erroneous and prejudicial to the interest of the Revenue with the following observations:
“4. Since the assessee did not comply with the final show-cause notice dated 11.03.2022 for specific query regarding discrepancy in the date of cash of Rs. 22,09,250/- received vide two sale documents bearing the same notary no. D/106/2011, it is presumed that the assessee has nothing to say in the matter or has no objection against the proposed action u/s 263 of the I.T. Act, 1961.
Considering the totality of facts, it is evident that in this case, the AO has not conducted the critical enquiry and nothing is on record to show that any verification regarding source of cash deposits had been made by the assessee in his bank account during the re-assessment proceedings. The order of the Assessing Officer is silent on the said cash deposits, although the AO had sufficient reasons to believe that the opening cash balance of Rs. 98,62,500/- as on 01.04.2011 was unproved figure which cannot be accepted and he accepted the cash deposits made by the assessee during the year under consideration without any further inquiry, examination or independent verification. Therefore, to this extent, the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue.
6. In view of the above, I, therefore, hold that the assessment order dated 26.12.2019 passed by the Assessing Officer u/s 143(3) r.w.s 147 of the Act is erroneous and prejudicial to the interests of revenue within the meaning of section 263 of the Act and hence the said order is hereby set aside to the above extent of observations without Mohmedyusufkhan Gulabkhan Farmwala vs. PCIT Asst.Year –2012-13 - 4– disturbing the additions made in the assessment order dated 26.12.2019. Accordingly, the AO is directed to make a fresh assessment after making all necessary enquiries properly and verification in respect of all relevant aspects including those identified in this order supra. The AO is further directed to verify if the said unproved figure of opening cash balance amounting to Rs. 98,62,500/- as on 01.04.2011 has been deposited by the assessee in his bank account in the subsequent years, then take necessary remedial action as per Income Tax Act, 1961.”
5. The assessee is in appeal before us against the aforesaid order passed by Ld. PCIT.
Before us, the Counsel for the assessee submitted that the assessee has duly explained the source of cash deposited in Social Cooperative Bank Ltd. and drew our attention to Page 30 of the Paper Book (copy of the sale deed) in which it has been specifically mentioned that a sum of Rs. 22,09,250/- had been received by the assessee in cash. The Counsel for the assessee further submitted that out of this cash consideration of Rs. 22,09,250/- against sale of immovable property, the same was deposited in the bank account by the assessee on 23.07.2011. The Counsel for the assessee drew our attention to Page 16 of the Paper Book (cash book) from which it is evident that this amount had been deposited by the assessee in his bank account. Therefore, the Counsel for the assessee submitted that the source of cash deposit has been duly proved, as is evident from the sale deed itself. Further, the discrepancy regarding the dates was also clarified before the PCIT during the course of 263 proceedings. Therefore, there is no reason for setting-aside the assessment order as being erroneous and prejudicial to the interest of the Revenue. Further, the Counsel for the assessee also submitted that on perusal of the 263 order setting-aside the assessment order, it is evident that there is no specific mention as to what Mohmedyusufkhan Gulabkhan Farmwala vs. PCIT Asst.Year –2012-13 - 5– prejudice was caused to the Revenue while framing the assessment order for the impugned year under consideration. Therefore, it was submitted that the 263 order passed by PCIT is liable to be set-aside.
In response, the Ld. D.R. placed reliance on the observations made by the Ld. PCIT in the 263 order. The Ld. D.R. submitted that on perusal of 263 order, it can be seen that there was an evident lack of enquiry on certain aspects by the Assessing Officer and therefore, the PCIT has correctly held that the assessment order is liable to be set-aside as erroneous and prejudicial to the interest of the Revenue.
On going through the contents of the 263 order, we observe that in the show-cause notice under Section 263 of the Act dated 23.02.2022, the assessee was asked to reconcile the discrepancy with regard to cash deposited by the assessee with Social Cooperative Bank Ltd. on 23.07.2011. The Counsel for the assessee submitted that the assessee had received cash element for sale of immovable property on 07.07.2011, which was deposited by the assessee in his bank account on 23.07.2011. The cash element towards sale consideration of immovable property finds specific mention in the sale agreement for sale of immovable property entered in to by the assessee, along with another co-owner. Nothing has been brought on record to dispute the aforesaid facts submitted by the assessee before Ld. PCIT. Further, on perusal of the 263 order it is observed that no specific defect has been pointed out by the Ld. PCIT in the assessment order and also there is no specific mention as to how the assessment order has caused prejudice to the interest of the Revenue. The assessee had submitted the “sale deed” to the Assessing Officer on 26.07.2019, along with English translation of the same and the same was duly considered by the Assessing Officer while passing the assessment order. Therefore, evidently there is no lack of enquiry by the Assessing Officer on this aspect. Accordingly, looking into the instant facts, we are of the considered view that 263 order is liable to be set-aside.
In the result, the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 24/01/2025