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Facts
The assessee filed its return of income, and the case was selected for scrutiny based on cash deposits and property investments. During the assessment, various notices were issued, and the assessee provided explanations and documents. The Assessing Officer completed the assessment accepting the returned income.
Held
The Tribunal held that the PCIT erred in invoking Section 263 by cancelling the assessment order without proper consideration of the assessee's submissions and documentary evidence. The PCIT's order was found to be beyond the scope of the show-cause notice and violative of natural justice.
Key Issues
Whether the PCIT's order under Section 263 of the Income Tax Act, cancelling the assessment, was justified given the assessee's submissions and the AO's due inquiry.
Sections Cited
253, 263, 143(3), 144, 143(2), 142(1)
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI VIKRAM SINGH YADAV & SHRI PARESH M. JOSHI
Order
Per Paresh M. Joshi, JM :
This is an appeal filed by the Assessee u/s 253 of the Income Tax Act, 1961 (herein referred to as ‘the Act’] before this Tribunal. The Assessee is aggrieved by the order bearing No. ITBA/REV/F/ REVs/ 250 /2020-21/1031467646 (1) dated 14.03.2021 of ld. PCIT, Chandigarh-1 passed u/s 263 of the Act. The relevant A.Y.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 2 is 2016-17 and the corresponding previous period is from 1.4.2015 to 31.03.2016.
2. Factual Matrix 2.1 That the Assessee filed its return of income on 4.8.2016 declaring total income of Rs. 8,41,690/-.
2.2 That the case of the Assessee was selected for limited scrutiny and that following issues were identified for the examination – 1. Whether the cash deposit has been made from disclosed sources.
2. Whether the Investment and income relating to properties are duly disclosed.
2.3 That in the original assessment proceedings a show cause notice bearing number: ITBA/AST/F143(3) (SCN)/2018- 19/1013300032 (1) dated 25.10.2018 was issued to the Assessee wherein it was stated that the Assessee’s case for assessment year 2016-17 was selected for complete scrutiny through Computer Aided Scrutiny Selection (CASS) for following reasons: 1. large cash deposit in saving bank account 2. Large investment in property.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 3 That a notice u/s 143(2) of the Act was issued to the Assessee on 27.09.2017 which was duly served upon the Assessee. That thereafter Notice u/s 143(1) along with specific questionnaire were issued to the Assessee as per details given below: S.No. Particulars Date of Date of fixation compliance 1 Notice u/s 143(1) 18.10.2018 24.10.2018 alongwith question 2 -do- 05.10.2018 11.10.2018 3 -do- 06.09.2018 12.09.2018 4 -do- 26.07.2018 10.08.2018 5 -do 20.07.2018 25.07.2018 It was also averred in the aforesaid show cause notice that the Assessee has neither filed any information / document even once leading to the conclusion that Assessee is deliberately not complying with the proceedings. The Assessee was told that in case of failure to cooperate in future ex-parte assessment will be completed u/s 144 of the Act on basis of information and material on record on or before 23.10.2018[ paper book page 101]. 2.4 That on 25.10.2018 a notice u/s 142(1) was issued to the Assessee to furnish told A.O. certain accounts and documents
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 4 specified therein on or before 29.10.2018 [ paper book page 102]. A show cause notice dated 25.10.2018 [page 101 of paper book ] was also issued to Assessee.
2.5 That the Assessee vide reply which is at page 104 of paper book brought to the notice of the Assessing Officer following facts which can be summed up as under:- 1. That father is residing at Fatehpur UP. It is not possible to call him at such a short notice. Distance is 1400KM. Train tickets are not possible due to long queue of waiting list. Age is against father. Further all person connected with Agreement to sell are residing at or around same place. Hence request was made to ld. Assessing Officer to grant leave for exempting their personal appearances and instead he be allowed to furnish affidavit in this regard which would be duly attested by first class Magistrate. All the relevant documents shall be furnished along with the affidavit of father and purchasers at next hearing. Further copy of Agreement to sell and cancellation deed of the same is already furnished with previous reply.
2. That the cash was deposited in same financial year in which the same was received from my father. It was deposited as and when the amount was required to be 103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 5 remitted / paid. Further being Agriculturist from family there is a practice of maintaining cash in personal custody only.
That the details of the payments of the purchase, of residential flat at Gaziabad is enclosed herewith for your kind reference (Please refer annexure-l attached). Out of the total purchase price of Rs. 80,35,000/- of the said residential flat, I have paid sum of Rs.. 28,10,000/- from my bank account through bank remittances and the sum of Rs 5,35,000/- were paid in cash, the cash flow statement has already been provided to your goodself in the previous reply. Further, my sister has paid sum of Rs 46,90,000/- through bank remittances, the copies of the bank statements and Income Tax Return of my real sister are enclosed herewith for our kind reference (Please refer Annexure-II attached herewith).”
2.6 That on 4.12.2018 yet another show cause notice [ page 24 of paper book] was issued to the Assessee wherein it was stated – “that you have not attended the assessment proceeding even once, which leads to the conclusion that you are deliberately not filed any reply. As per information available with this office you have made cash deposits of Rs. 32,88,320/- in his saving Bank account maintained with ICICI Bank Ltd., Chandigarh. Apart from this you have also purchased
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 6 residential house at Gaziabad consideration a amount of Rs. 80,35,000/- ( Rs. 75,00,000/- + Stamp Charges of Rs. 5,25,000/- + Rs. 10,000/-Registration fee) during the financial year 2015-16.
You are again requested to explain the source of investment made by you as mentioned above. In the absence of any explanation from you this office is left with no option but to complete assessment in your case ex-parte. In light of above facts it is proposed to complete the assessment u/s 144 of the Income-tax Act, after making an addition of Rs. 1,13.23,000/- (Rs. 80,35,000/- purchase of property + Rs. 32,88,320/- cash deposits).
In this regard, you are requested to explain the source of investment made to purchase the said property amounting to Rs. 80,35,000/- and also explained the source of cash deposits of Rs. 32,88,320/- in your saving Bank accounts maintained with ICICI, Bank Ltd., Chandigarh during the F.Y. 2015-16.
Please show cause as to why an addition of 1,13,23,000/- may not be made to your total income for the asstt. Year 2016-17. If still you have any explanation to offer, you may file the same on or before 6.12.2018. In case of failure on your part, it will be presumed that you have no objection to the proposed addition and assessment will be completed accordingly.
The Assessee by reply on page 26 of paper book brought to the notice of the ld. Assessing Officer following facts:-
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1. That Assessee is an employee in Darshaw & Company Pvt. Ltd. copy of Form No16 of Income Tax Return for the year under consideration was enclosed. – Annexure I.
2. That during the year under consideration father of the Assessee had entered into agreement to sell of his agriculture land at village Barola, Tehsil Manjhanpur, Distt. Koshambi and that he had received cash of Rs. 40 lakh on 30.4.2015. The Assessee had deposited the same on different dates in his saving account. The copy of agreement to sell was enclosed – Annexure II
3. The copy of Bank Statement of the Assessee for relevant period was also enclosed – Annexure III
4. The copy of cash flow statement of the Assessee for the relevant period was also enclosed, showing deposit of cash in bank account of the Assessee along with the detail of source of the cash deposited by the Assessee in the bank account. The requisite / supporting documents were to be enclosed – Annexure IV
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 8
That the Assessee had purchased a residential flat No. SD-77, Shashtri Nagar, Gaziabad UP amounting to Rs. 75 lakhs as on 26.5.2015. It was also stated that sum of Rs. 5,35,000/- was paid as Stamp duty and Registration charges. The details payment made by the Assessee along with purchase deed of property was enclosed Annexure V.
2.7 That on 6.12.2018, yet another show cause notice was issued to the Assessee stating that no details have been furnished yet. [page 153 of Paper book] . the Assessee by response dated 7.12.2012 brought to the notice of ld. A.O. following: - “DEAR SIR IN REFERENCE TO YOUR ABOVE- MENTIONED SHOW CAUSE NOTICE IT IS RESPECTFULLY SUBMITTED THAT I ALREADY SUBBMITED MY REPLY ON 06.12.2018. IN RESPONSE TO YOUR PREVIOUS NOTICE IN WHICH THE DUE DATE OF REPLY WAS 06.12.2018, HENCE I HAVE DULY FILED MY REPLY IN TIME IN COMPLAINCE TO YO UR NOTICE. HENCE YOU ARE REQUESTED TO DROP THE PROCEEDINGS UNDER SHOW CAUSE. THE COPY OF ACK IS ENCLOSED HERE WITH FOR YOUR KIND REFERENCE. THANKING YOU SD KULDEEP SINGH.”
2.8 That on 12.12.2018 yet another notice u/s 142(1) of the Act was issued to the Assessee were in further requisitions were 103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 9 made [ page 158 of paper book] the Assessee by response on page 159 of paper book brought to the notice of ld. A.O. same facts which are already recorded by us in para 2.5 (supra) [page 159 to 166] 2.9 That by additional response on page 167 of paper book the Assessee brought to notice of ld. Assessing Officer following (i) Declaration of the father of the Assessee in the presence of the purchaser of the Agreement to sell who has also signed on the same declaration before Ist Class Magistrate – Annexure-I.
(ii) Copies of gift deed form father, mother-in-law and sister to the Assessee during the year under consideration- Annexure II [ 168 to 188 of paper book] 2.10 That by yet another response on page 189 of paper book the Assessee brought on the notice of ld. Assessing Officer the copy of FARD of Agriculture land of the father of Assessee was enclosed – Annexure A [ page ITO – 177 paper book) against which the father of the Assessee had entered into agreement to sell.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 10 Note: This document called FARD was also submitted on 14.12.2018 in response to notice dated 12.12.2012. [page 5 to 14 of paper book].
2.11 The ld. Assessing Officer by an assessment order bearing No. ITBA/AST/S/143(3) 2018-19/ 1019524940(1) dated 24.12.2018 passed u/s 143(3) computed the income of the Assessee as per return of income at Rs. 8,41,690/-. It was held by him that information filed by the Assessee was examined. It was also held by him that verification of documents submitted during the assessment proceedings was done and was accepted.
2.12 It being by assessment order (supra) the income of the Assessee was accepted without any additions.
2.13 That after the aforesaid assessment order dated 24.12.2018 was passed, a notice dated 6.3.2021 u/s 263 of the Act was issued to the Assessee by PCIT Chandigarh-1 which reads as under: - “Your attention is invited 10 the assessment order u/s 143(3) of Income tax Act, 1961 dated 24.12.2018 framed in your case for the A.Y. 2016- 17.
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2. From perusal of the assessment record, it has been observed that your case for A.Y. 2016-17 was selected for Scrutiny under CASS and the assessment was completed at returned income of Rs. 8,41,690/-.
3.1 On perusal of the assessment record, it has been observed that as per AIR information, you have deposited cash of Rs. 32,83,300/- in the saving bank account maintained with the ICICI Bank Ltd. and also made investment in purchase of property of Rs. 80,35,400/- at Gaziabad, U.P. during the financial year 2015-16 relevant to assessment year 2016-17. During the course of assessment proceedings, the source of cash deposit was explained by you by showing gift of Rs. 40,00,000/- from your father who is resident of Distt. Fatehpur, U.P. In support to your claim you filed an affidavit of your father Sh. Partap Singh. In the affidavit, Sh. Partap Singh stated that he made an agreement on 29.04.2017 with ten people (vendees) to sell his agriculture land for Rs.90,00,000/- and received cash amounting to Rs.40,00,000/- as advance from purchasers which he gave to you. However, details of land holding of Sh. Partap Singh were not submitted by you during the assessment proceedings to prove the genuineness of agreement. Agreement to sell is also not submitted. Also, as per the affidavit, the deal was cancelled - i 29.04.2017 as the purchasers failed to execute the sale deed. 3.2 In the absence of supporting documents the credit worthiness of the cash amounting to Rs.40,00,000/- given by your father could not be 103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 12 established and hence, cash deposits amounting to Rs. 40,00,000/- remained unexplained.
4. In view of the above facts, the order passed u/s 143(3) of the Income Tax Act, 1961 in your case is erroneous and prejudicial to the interest of the Revenue. You are therefore requested to show cause as to why the aforesaid order of assessment may not be revised under the provisions of Section 263 of the Income Tax Act, 1961.
In view of the above facts, the order passed u/s 143(3) of the Income Tax Act, 1961 in your case is erroneous and prejudicial to the interest of the Revenue. You are therefore requested to show cause as to why the aforesaid order of assessment may not be revised under the provisions of Section 263 of the Income Tax Act, 1961.
5. In this connection, your case is fixed for hearing before the undersigned on 12.03.2021 at 01:10 PM. In case of failure on your part to comply with this notice, an order u/s 263 of the Income Tax Act, 1961 shall be passed on the basis of the facts as are presently available on record.”
2.14 The Assessee by response on page 3 of paper book brought to the notice of PCIT following- (i) that the case was selected for cash deposit in the bank account and that the ld. A.O. has made addition detailed inquiry for source of deposit in bank.
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(ii) As per para 3 of Your honour notice your goodself has informed us that the assessee has failed to submit details of land holding. In this regards we submit that the copy of fard from Revenue record showing the land holding of assessee's father has been uploaded on 14/12/2018 as annexure A along with reply no 4 in response to notice dt. 12-12-2018. The copy of reply, copy of Fard & acknowledgment are again uploaded for kind consideration, please refer Annexure-I attached. We submit the assessee has filed fard in support of land holding of his father and same is public document and self-explanatory.
(iii) We also submit that your honour has also observed that the assessee has failed to submit the copy of agreement to sell whereas the assessee has uploaded agreement to sell on 06/12/2018 as Annexure no 2 of reply no 1 in response to notice dated 04/12/2018. The copy of reply, agreement to sell and acknowledgement are again uploaded for your kind consideration, please refer Annexure-II attached.
(iv) The assessee has uploaded both documents in support of landholding and agreement to sell for source of deposit during the course of assessment proceedings and your honour has pointed out the deficiency with regard to submission of land holding and agreement to sell whereas the factual position is that the assessee has submitted both
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 14 documents along with affidavits of buyers and seller which was sworn by all persons duly appeared before executive magistrate & statutory Authority has put his signature on said affidavit. v) We also submit that the assessee wanted to produce all buyers and his father for verification, however due to long distance between office of assessing officer and place of residence of buyers, exemption was sought from the assessing officer. vi) We also submit that this is the first year of faceless assessment and assessing officer has made detailed enquiry from the assessee and assessee has submitted complete reply along with evidences as pointed out in your notice under section 263 of Income Tax Act Act. vii) We understand that the show cause notice has been issued without verifying the complete records available on e- filing website and two documents for land holding and agreement to sell were brought to our notice for taking action under section 263 of Income Tax Act whereas both documents i.e., Fard for land holding and agreement to sell were duly uploaded at the time of assessment.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 15 2.15 In view of the above reply to the Show Cause Notice u/s 263 of the Act the Assessee requested that the Revisionary proceeding be dropped as all material question posed to them in the Show Cause Notice are answered and that there is no deficiency on part of Assessee. They sought personal hearing in border to clarify any question if any.
2.16 That basis above documents on record, the ld. PCIT by impugned order in para 6 has finally held as under: “In the facts and circumstances of the case, the failure of the Assessing Officer make enquiries/verification to arrive at the correct law mistake the assessment order erroneous in so far as prejudicial to the interest of revenue. Hence, the said assessment order dated 24.12.2018 is held to be erreneously in so far as it is prejudicial to the interest of revenue for the reasons as discussed above in view of the provisions of section 263, inter alia including Explanation 2(a) inserted w.e.f. 01.06.2015. Accordingly, the assessment order u/s 143(3) dated 24.12.2018 for the assessment year 2016-17 is cancelled with a direction to the Assessing Officer to pass an order afresh in accordance with law, after allowing opportunity of being heard to the assessee.”
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 16 2.17 The Assessee being aggrieved by the impugned order has filed the present appeal before us against the impugned order and inter alia has raised following Grounds of appeal before us –
1. That the Pr. Commissioner of Income Tax- Chandigarh-1 wrongly passed order under section 263 of Income Tax Act as he did not consider the reply and information furnished filed by appellant and she has passed order without making any enquiry during revisionary proceeding & she has simply cancelled the assessment with a direction to pass order afresh without rebuttal to reply filed in response to show cause notice.
That the assessment order having been passed by the Assessing Officer after making due enquiry & due application of mind and taking into consideration the various replies, material on record, the action restored to by the Pr. CIT Chandigarh-1 for imposing his opinion with respect to manner of enquiry and acceptance of cash deposit is unwarranted and uncalled.
3. That the order of Pr. CIT Chandigarh -1 is bad as no reasonable opportunity has been given to appellant.
4. That the Assessee craves for permission to add, amend, alter or withdraw any Grounds of appeal with approval of the Hon'ble Bench.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 17
Record of Hearing 3. 3.1 The hearing in the matter took place on 03.12.2024 before this Tribunal when both the parties i.e. ld. AR for and on behalf of the Assessee and ld. DR for and on behalf of the Revenue appeared before us and canvassed their respective contentions before us. We have heard both the them patiently and have treated them equally by giving equal opportunity. The ld. AR at the outset and at the threshold inter alia contended that the impugned order of ld. ACIT, Chandigarh-1 is bad in law, illegal and not proper within the menacing of section 263 of the Act and that the same deserves to be set aside by this Tribunal. It was submitted by the ld. AR that reply to the Show Cause Notice and information furnished along with it have been totally ignored by the ld. PCIT while passing the impugned order which shows non application of mind and arbitrary exercise of power. It was contended that basis paper book filed running into pages 1 to 99 were in all material information along with documents are placed on record of this Tribunal (supra) with regard to assessment order of ld. Assessing Officer and so also with regard to revisionary proceedings u/s 263 of the Act that 103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 18 in both the proceedings i.e. u/s 143(3) and u/s 263 each and every query for the Revenue stood answered along with documentary evidence which describes source of money. It was contended that once all queries by the ld. A.O. are answered alongwith the documentary evidence which were all examined and verified by ld. A.O. before accepting the ROI there is absolutely no legal basis to pass the impugned order. The ld. PCIT ought not to have distorted the assessment order as there is no material on record to disturb the finding of ld. A.O. made in assessment order 3.2 The ld. AR then contended before us after taking us through pages 7 of paper book that no material information and documents were suppressed by the Assessee at the time of assessment proceedings. In fact, sometime requisitioned documents were already uploaded on portal and still the quarries were made by ld. A.O. by issuing notice (s) not realizing the fact that queries are already answered and relevant document uploaded on portal.
3.3 The ld. AR next contended that before by passing the impugned order the ld. PCIT while exercising power u/s 263 should have atleast conducted some inquiry if not detailed but a 103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 19 bare minimum in order to ascertain whether the impugned assessment order which is subject matter of Revision u/s 263 is indeed erroneous and so also prejudicial to the interest of Revenue. No such inquiry / or bare minimum inquiry seems to have been conducted by the ld. PCIT before passing the impugned order which shows non-application of mind and arbitrary exercise of power an approach wholly untenable in law.
3.4 It was also contended that reply to the show cause notice issued u/s 263 of the Act was not effectively rebutted by the ld. PCIT in the impugned order and that she has simply cancelled the assessment order in a vary simplicit manner which approach is uncalled for. In brief, ld. AR contended that before cancelling the assessment order of ld. A.O., the PCIT must have sufficient material in her possession basis record of the case to come to a finding that order of ld. Assessing Officer is erroneous and prejudicial. In fact, there is no such material on record.
3.5 It was contended that ld. PCIT miserably failed to read the two crucial documents which were already on record of the case – i_) Agreement to sell
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(ii) Copy of FARD – document evidencing proof of agricultural land. Per contra the above undisputed position which was already on record during the course of assessment proceedings still the allegation was made in the Show Cause Notice u/s 263 that Assessee has notified these documents when factually and admittedly these documents were already on record. The ld. AR has taken us through respective pages and paper book placed on record.
3.6 The ld. AR contended that source of cash deposit of Rs. 40 lakh was advance received in respect of agreement to sale which his faster had entered into on 30.4.2015. That sale deed was not finally executed in lieu of the buyers agreed to cultivate the land for three years. It is a case of PCIT in his impugned order that this document was unregistered document and further ld. A.O. has failed to conduct third party verification, on genuineness of transaction leading to availability of cash in the hand of Assessee The ld. AR per contra has contended that agreement to sell is an important document and need not be registered. By virtue of agreement to sell a right in personam was created in favour of 103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 21 vendee, in whose favour the agreement to sell had been executed. Such contractual right can be surrendered or neutralized by parties through subsequent contract- or conduct leading to no transfer of the property to the proposed vendee. Reliance was placed on the judgement of the Hon'ble Supreme Court of India in the case of Shri Sanjeev Lal etc. vs. CIT and another reported in 2014(7) TMI 99-SC./ 3.7 The ld. AR in so far as following observation of ld. PCIT in the impugned order is concerned which is reproduced below. “4.1 The reply filed by the assessee has been considered. The assessee has made cash deposits in his bank account. These cash deposits are the source of investment in the flat Regarding the source of these cash deposits the assessee claimed that these were out of the cash gift received from his father. The assessee further claimed that his father had received Rs.40,00,000/- in cash as advance for sale of land. The IKRARNAMA dated 30.04.2015 was not a registered document. Further the sale was not finally effected and in lieu of Rs. 40,00,000/- the buyers agreed to cultivate the land for three years. The Assessing Officer accepted this version of the assessee without any third party verification. No inquiries were made by the Assessing Officer regarding the genuineness of transaction leading to availability of cash in the hands of the assessee. Further, for purchase of flat investments by the sister
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 22 has been shown as per details filed by the assessee. The gift deeds given by the sister do not match with the total investment in the flat made by the sister. However, no queries in this regard have been raised by the A.O.”
The Ld. AR in respect of above contended that above were not part of the Show Cause Notice and complained of breach of principles of natural justice on the part of ld. PCIT in the impugned order.
3.8 Finally ld. AR placed reliance on Co-ordinate decision of this Tribunal in the case of Shri Ram Lal vs. PCIT-1, Chandigarh in dated 24.5.2024 in support of the proposition that when A.O. had carried out due inquiry, no interference is required u/s 263 of the Act.
3.9 Per contra ld. DR has placed reliance on the impugned order of PCIT and has contended that same is in order and that there are no legal infirmities in it. The same should be upheld. 4.0 Observations, findings and conclusions 4.1 We now examine the legality, validity and propriatary of the impugned order basis premises laid down by us.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 23 4.2 We basis perusal of the record and after hearing rival contentions are of the considered opinion that there is no legal infirmities in the assessment order of the ld. A.O. The Assessee was repeatedly issued notice(s) after Notice(s) from time to time during the course of the assessment proceedings wherein certain information with regard to source of cash and investment in property was sought which were duly and properly replied by the Assessee, alongwith documentary evidence from time to time (supra). The ld. A.O. has examined the reply and documents filed. The ld. A.O. has also verified the documents. The ld. A.O. has mentioned about “examination and verification” of all details furnished by the Assessee in the assessment order. It is only thereafter he has accepted the return of income and it is without making any additions. We thus find no infirmity legal or otherwise in the assessment order. Be hat as it may the ld. PCIT in exercise of power conferred exercised her power u/s 263 of the Act and sought revision of assessment order on the ground that the same is erroneous and prejudicial and issued a show cause notice dated 6.3.2021 to the Assessee on the basis of the details of land holding
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 24 of Pratap Singh the father of the Assessee from whom the Assessee has claimed to have received Rs. 40 lakhs have not been furnished during the course of the assessment proceedings to prove genuineness of agreement to sell. Further it was alleged and stated that Assessee has also failed to furnish agreement to sell too. Basis non-furnishing of these two documents during the course of assessment proceedings source of cash deposit of Rs. 40 lakh has not been established and that the same remained unexplained. In view of this, assessment order is erroneous and prejudicial to the Revenue and that same deserves to be set aside u/s 263 of the Act. In reply Assessee brought to the Notice of the ld. PCIT that both the documents i.e. FARD in respect of land holdings and agreement to sell were duly furnished before the ld. A.O. and that both the document’s besides others were examined and verified by the ld. A.O. in manner known to law and that assessment order was passed u/s 143(3) accepting the return of income without making any addition. Thus, we hold that very basis and foundation of Show Cause Notice was successfully assailed by the Assessee and ld. PCIT erred in passing the impugned order u/s 263 of the Act.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 25 4.3 We also hold that impugned order has travelled beyond the scope of Show Cause Notice in as much as finding has come to be delivered in the impugned order to the following effect: “Further, for purchase of flat investments by the sister has been shown as per details filed by the assessee. The gift deeds given by the sister do not match with the total investment in the flat made by the sister. However, no queries in this regard have been raised by the A.O.”, The ld. AR in respect of above findings has raised a genuine grievance that above details of sister conspicuously silent in the Show Cause Notice and no explanation on it was ever sought in this regard by PCIT hence impugned order is illegal and bad in law besides being violative of principle of natural justice. We conquer with the contention canvassed by the Ld. AR and we hold that it is now fairly settled that orders cannot travails beyond the scope of Show Cause Notice. We, therefore, hold order to be illegal and not proper on this score. It is passed in violation of principle of natural justice too.
103-chd-2021 Shri Kuldeep Sihngh, Chandigarh 26 4.4 The ld. PCIT has erred in law by holding that queries raised during Revision proceedings u/s 263 of the Act remained unverified and the order was passed by the Assessing Officer without making enquiries or verification which should have been made and has resulted in claim being allowed without enquiring into it. We hold that said findings is erroneous and not proper as Assessee had furnished all documents before Assessing Officer in support of his case and that the same were examined and verified. The ld. PCIT had failed and omitted to state that which documents produced before ld. A.O. went unverified and was not examined. The very foundation of impugned order was Show Cause Notice and absence of two documents on record of ld. A.O. i.e., FARD and Agreement to sell which successfully has been established before us was on record of ld. A.O. Hence, we have no hesitation in holding that entire eddifice of impugned order collapses and it deserves to be set asides. Order 5. In the premises set out hereinabove us, the we set aside the impugned order.
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In the result, appeal of Assessee is allowed. Order pronounced on 30 .01.2025