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Facts
The assessee filed an appeal against the order of the Principal Commissioner of Income Tax (Pr.CIT) who revised an assessment order under Section 263 of the Income Tax Act. The original assessment order, passed under Section 143(3), had accepted the declared income and agricultural income without additions.
Held
The Tribunal agreed with the Pr.CIT that the original assessment order was erroneous and prejudicial to the interest of the revenue because the Assessing Officer failed to make necessary inquiries and verifications regarding cash deposits and agricultural income.
Key Issues
Whether the Pr.CIT was justified in revising the assessment order under Section 263 of the Income Tax Act due to the Assessing Officer's failure to conduct proper inquiries and verifications.
Sections Cited
263, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH ‘A’, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
(A) This appeal has been filed by the assessee for assessment year 2017- 2018 against impugned order dated 14/03/2022 passed by learned Principal Commissioner of Income Tax (“Pr.CIT”) for short under section 263 of the I. T. Act.
(B) In this case, assessment order dated 28/11/2019 was passed u/s 143(3) of the I. T. Act. The income declared by the assessee in return of income, amounting to Rs.22,45,110/- plus agricultural income of Rs.3,21,830/- was accepted by the Assessing Officer in the aforesaid assessment order, and no addition was made. The assessment order was revised by learned Pr.CIT by way of impugned order dated 14/03/2022 passed u/s 263 of the I. T. Act. In the aforesaid impugned order of Pr.CIT, the assessment framed by the Assessing Officer was set aside, to be framed de novo as per law. Grounds of appeal are as under:
“1. That the order is bad both on law and facts and is liable to be canceled.
That all the facts were thoroughly considered by the assessing authority and after considering all the facts and circumstances the assessment order was passed and so now there is no justification to set aside the original order for reframe the order. The assessee cannot be examined/ scrutinized more than once on one and the same point.
That all the purchase and sales vouchers were produced along with the books of account and the assessment order passed by the Deputy Commissioner of Commercial Tax, PILIBHIT in which he has accepted the sale and purchases disclosed by the appellant. This fact itself proves the availability of Rs. 70.00 lacs which was deposited in bank during demonetization period. No case for reconsideration on same facts is made out. No defect has been found in the maintenance of books of account and even the Pr.CIT himself has not passed any comment on the maintenance of books of account. In other words the Learned Pr.CIT has also accepted the books of account of the appellant. All the books of account were with both the learned lower authorities and the required copies of accounts were also filed before them.
That the agricultural income disclosed by the appellant is quite reasonable and correct and supported by the documentary evidences which were filed at the time of assessment proceedings and after considering all the facts and circumstances the agricultural income was accepted.”
(B.1) In the course of appellate proceedings in the Income Tax Appellate Tribunal, an additional ground was also filed, which is reproduced as under:
"Because the order passed by the Ld. Pr. Commissioner of Income Tax / Bareilly, is defective and is liable to be set aside as he has merely acted on the basis of the review of the case done by his predecessor and he himself has not done any review of the case and recorded his satisfaction before the issue of fresh notice"
(B.2) Vide letter dated 12/12/2024, the learned Pr.CIT strongly objected to the aforesaid additional ground raised by the assessee and requested that the same may not be admitted. The relevant portion of the aforesaid letter dated 12/12/2024 of learned Pr.CIT is reproduced below:
(C) In the course of appellate proceedings in Income Tax Appellate Tribunal, a letter dated 08/05/2023 was filed by learned CIT (D.R.)-1, Lucknow intimating that consequential assessment order dated 29/03/2023 u/s 143(3) read with section 263 of the I. T. Act was passed by the Assessing Officer. In the aforesaid assessment order dated 29/03/2023, an amount of Rs.70,00,000/- deposited in bank, and an amount of Rs.3,21,830/- claimed by the assessee as agricultural income were brought to tax, thereby making total addition of Rs.73,21,830/- to the returned income of Rs.22,45,110/-. In the course of appellate proceedings before the Income Tax Appellate Tribunal, a paper book containing 479 pages was filed from the assessee’s side. A supplementary paper book containing 133 pages was also filed from the assessee’s side. Further written submissions in 31 pages was also filed from the assessee’s side.
(D) At the time of hearing before us, the learned A.R. for the assessee drew our attention, at the outset to the additional ground of appeal filed by the assessee. The learned A.R. drew our attention to aforesaid letter dated 12/12/2024 of learned Pr.CIT [already reproduced in foregoing paragraph (B.2) of this order]. We have considered the additional ground filed by the assessee and we have also considered the objections raised by learned Pr.CIT. In view of the reasons stated by learned Pr.CIT in aforesaid letter dated 12/12/2024 and having due regard for facts and circumstances and applicable law, we decline to admit the additional ground of appeal.
(E) The learned A.R. for the assessee submitted that all the purchase and sale vouchers were produced along with books of account before the Dy. Commissioner of Commercial Tax, Pilibhit in which he had accepted the sale and purchase disclosed by the assessee. He contended that this fact itself proved the availability of Rs.70,00,000/- deposited in bank. He further submitted that books of account were not rejected. He also submitted that the agricultural income disclosed by the assessee was reasonable and there was no error on the part of the Assessing Officer in accepting the same. He placed reliance on the books of account and written submissions filed in the course of appellate proceeding in Income Tax Appellate Tribunal.
(F) The learned D.R. for Revenue submitted that the mere fact that purchase and sales vouchers were produced along h the books of account before the Commercial Tax Authorities, did not mean that the Assessing Officer was not required to make inquiry into the cash deposits amounting to Rs.70,00,000/- made by the assessee in the bank account. She drew our attention to the fact that the Assessing Officer did not make any inquiry with regard to the assessee’s claim of agricultural income and with regard to cash amounting to Rs.70,00,000/- deposited by the assessee in bank account. She contended that the assessment order was passed by the Assessing Officer without making inquiries or verification, on the issues of cash deposits amounting to Rs.70,00,000/- made by the assessee and claim of agricultural income amounting to Rs.3,21,830/- which should have been made. Accordingly, she submitted that the impugned order passed u/s 263 of the Act should be upheld.
(G) We have heard the rival parties and have gone through the material placed on record. We are in agreement with the submissions made by learned CIT, D.R. for Revenue. The assessment order passed without making inquiries or verification that should have been made is deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue, within the meaning of section 263 of the I. T. Act. The assessee side has failed to show how impugned order of the learned Pr.CIT is not in accordance with law in the light of the facts and circumstances of the case. It is crystal clear that the Assessing Officer passed assessment order dated 28/11/2019 without making inquiries or verification that should have been made. No case has been made by the assessee’s side to persuade us to interfere with the impugned order of learned Pr.CIT passed u/s 263 of the I. T. Act. In view of the foregoing, all the grounds of appeal are dismissed.
(H) In the result, the appeal of the assessee stands dismissed.
(Order pronounced in the open court on 11/02/2025)