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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: MS SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 11.10.2017 passed by Pr. Commissioner of Income Tax, New Delhi for Assessment Year 2013-14 under section 263 of the Income Tax Act, 1961.
The Grounds of appeal
are as under:-
1. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 of Income Tax Act, 1961.
2. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in cancelling the assessment order passed by Ld. AO to the extent of alleged unexplained cash deposits in the bank account and that too by recording incorrect facts and findings and without observing the principles of natural justice.
3. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in holding the assessment order passed u/s 153A/143(3) is erroneous and prejudicial to the interest of revenue.
4. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in passing the impugned order u/s 263 which is bad in law in as much as no adequate opportunity of hearing was granted and framing the impugned order without considering the principles of natural justice.
5. That having regard to facts &circumstances of the case, Ld Pr.CIT has erred in law and on facts in passing the impugned order u/s 263 which is barred by limitation, illegal, without jurisdiction and contrary to law and facts and deserves to be quashed.
6. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal
before or at the time of hearing and all the above grounds are without prejudice to each other.”
3. The original assessment was framed by the Assessing Officer u/s 153A r.w.s. 143(3) of the Act, in course of which detailed enquiries were made by the Assessing Officer and questionnaires u/s 142(1) were issued by him from time to time. The assessee filed replies and evidences before the Assessing Officer. After the evidences and explanations presented by the assessee, the Assessing Officer passed assessment order dated 30.12.2016 thereby accepting the returned income of the assessee. The Pr. CIT, New Delhi on examination of the Income Tax record of the assessee for A.Y. 2013-14 issued show-cause notice to the assessee u/s 263 stating therein that no enquires were made by the Assessing Officer on account of cash deposits and held the assessment to be erroneous and prejudicial to the interest of the Revenue. The Pr. CIT vide order dated 11.10.2017 directed the Assessing Officer to decide the issue afresh and pass the speaking order.
Being aggrieved by the order u/s 263 passed by the Pr. CIT, the assessee filed present appeal before us.
The Ld. AR submitted that during the relevant assessment year, the assessee made cash business sales which are duly accounted, incorporated in the books of accounts and included in the income offered for the tax thereon. Moreover VAT was also duly charged on these cash sales and deposited with the government at the prescribed rate. The Ld. AR submitted that the cash received from these sales were deposited by the assessee in his bank account. This fact along with cash book, sales register, cash invoices, VAT returns and bank account etc were well presented before the Assessing Officer and after thorough examination of assessee’s contention, the Assessing Officer was satisfied and was in view that nothing adverse could be drawn for the cash deposits. The Ld. AR pointed out that the questionnaire dated 19.12.2016 issued by the Assessing Officer during the original assessment specifically focusing on the cash deposited in the bank accounts of the assessee and further sought the explanation from assessee about the source of such cash deposits in the bank statement. The assessee filed reply dated 23.12.2016 to the said questionnaire pointing out therein on the cash deposit, details of which was submitted before the Assessing Officer. The Ld. AR submitted that whatever cash was deposited from time to time in bank statements are generated due to sale of Gold in cash which was recorded in the profit and loss account of the assessee. The Ld. AR submitted that the copy of gold stock statement showing the inward as well as outward movement of Gold and perusal of which shows that the outward movement of Gold in cash i.e. cash sales. The Ld. AR submitted that the assessee also submitted before the Assessing Officer copy of ledger showing the cash sales of gold which was duly incorporate in the books, copy of monthly VAT return for the relevant assessment year showing the TIN number, address, gross central and local turnover and the VAT payable/paid on the sales made by assessee. The Ld. AR further submitted that the assessee also provided copy of cash book maintained by assessee showing all the cash transaction of assessee whether it was cash sales or deposit of such cash in the bank account. Every cash transaction has been passed through the cash books and has been accounted for. The sales register were filed before the Assessing Officer being the part of assessee’s books of accounts showing the sales made by assessee in both cash and account channel aggregating to Rs. 35,06,28,560/- which was duly recorded in profit and loss account after adjustments. The invoices for the sale made in cash was also recorded in the books of accounts and was produced before the Assessing Officer which was after careful examination by the Assessing Officer was accepted the return of income of the assessee. The assessee also filed copy of auditor’s report along with the audited balance sheet and profit and loss account for the impugned year filed before the Assessing Officer which shows that the assessee has shown the total net sale of Rs.3,54,36,476/- which are inclusive of the cash sales. The Ld. AR submitted that the Assessing Officer made every possible enquiry regarding the cash deposits and assessee has duly filed all the documents that have established the claim of the assessee that the cash deposit being the cash received from the accounted cash sales. Therefore, the action of Pr. CIT in holding the original assessment order erroneous, is without any basis, material and evidences and merely based on the basis of surmises and conjectures. Therefore, the Ld. AR submitted that the order of the Pr. CIT be quashed. The Ld. AR further submitted that the Pr. CIT has not given any reason and impugned order as to why the Pr. CIT considered the explanation of assessee was not tenable ostensibly for the reason that she did not find anything adverse in that. The finding of the Pr. CIT that there was no enquiry or investigation made by the Assessing Officer on account of unexplained cash deposits is contrary to material on record as mentioned in various replies and the evidences filed before the Assessing Officer. It clearly shows that cash deposited was enquired by the Assessing Officer specifically vide his questionnaire to which the detailed explanation with evidences was submitted and thereafter Assessing Officer considered all the submission as is evident from the plain reading of assessment order. The Ld. AR relied upon the decision of the Hon’ble Supreme Court in case of CIT vs. Max India Ltd 295 ITR 282, Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83. The Ld. AR also relied upon the decision of the Jurisdictional High Court in case of CIT vs. Sunbeam Auto Ltd. 332 ITR 167 and ITO vs. DG Housing Projects Ltd. (2012) 74 DTR 153.
The Ld. DR relied upon the order of the Pr. CIT and further submitted that there is no enquiry made by the Assessing Officer as to the cash deposits and the Pr. CIT rightly directed the Assessing Officer to pass speaking order. The Ld. DR relied upon the following decisions: 1. Denial Merchants Pvt. Ltd. Vs. ITO (Appeal No. 2396/Del/2017 2. BSES Rajdhani Power Ltd. Vs. F’CIT [2017] 88 taxmann.com 25 (Delhi) 3. Surya Jyoti Software Pvt. Ltd. Vs PC IT (I.T.A. No.2158/DEL/2017) ITAT Delhi 4. Surya Financial Services Ltd Vs PCIT (I.T.A. No.2158/DEL/2017) ITAT Delhi 5. Malabar Industrial Co. Ltd. Vs CIT [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1 (SC) 6. Rajmandir Estates (P.) Ltd. Vs PCIT [70 taxmann.com 124 (Calcutta)/[2016] 240 Taxman 306 (Calcutta)/[2016] 386 ITR 162 (Calcutta)/[2016] 287 CTR 512] 7. Rajmandir Estates (P.) Ltd. Vs PCIT [2017] 77 taxmann.com 285 (SC)/[2017] 245 Taxman 127 (SC) 8. Shree Manjunathesware Packing Products & Camphor Works Vs CIT [1998] 96 Taxman 1 (SC)/[1998] 231 ITR 53 (SC)/[1997] 143 CTR 406 (SC)
We have heard both the parties and perused all the relevant materials available on record. From the perusal of the Assessment Order, it can be seen that cash deposited was enquired by the Assessing Officer specifically vide his questionnaire to which the detailed explanation with evidences was submitted before the Assessing Officer by the assessee. After going through the evidences and submissions the Assessing Officer passed the Assessment Order. While invoking Section 263 (1) of the Income Tax Act, 1961, the Pr. CIT has not made out the case that the Assessment Order is passed without making inquiries or verification which should have been made. There was no material brought by the Pr. CIT stating therein that the Assessment Order is passed allowing any relief without inquiring into the claim of the assessee. Thus, the Pr. CIT has only expressed the different view which is not permissible under Section 263 of the Act. Revisionary power u/s 263 of the Act is conferred by the Act on the Commissioner when an order is passed by the Authority is erroneous and prejudicial to the interest of the Revenue. Orders which are passed without inquiry or investigation are treated as erroneous and prejudicial to the interest of the Revenue, but which are passed after inquiry/investigation on the question/issue are not per se are normally treated as erroneous and prejudicial to the interest of the Revenue. Because, the Revisionary Authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken, the same cannot be initiated without following the proper provisions u/s 263 of the Act. In the present case the Assessing Officer has made all the inquiries and after verifying the documents/ material on record passed a reasoned Assessment Order. Therefore, the Commissioner does not have any locus standi to make further inquiry. The decision of the Hon’ble Supreme Court in case of CIT vs. Max India Ltd 295 ITR 282, Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 are aptly applicable in the present case as the Hon’ble Apex Court wherein it is held that Section 263 has to be read in conjunction with the expression "erroneous" order passed by the assessing officer. Every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial to the interests of the revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income Tax Officer is unsustainable in law. The case laws relied by the Revenue in respect of Section 263 also reiterates the said ratio as well. Some of the decisions relied by the Revenue are not at all applicable in the present case as distinguishing facts involved in those cases. Therefore, order u/s 263 of the Act in present appeal is not justified and is set aside herewith. Therefore, the order u/s 263 is passed by the Principal Commissioner of Income Tax is set aside.