SHASHIKANT VIJAY KHAIRNAR,DHULE vs. PRINCIPAL COMMISSIONER OF INCOME-TAX -1, NASHIK

This is an appeal filed by the assessee directed against the order of ld. Pr. Commissioner of Income Tax- 1, Nashik (PCIT) dated 20.03.2020 for the assessment year 2015-16.

Briefly, the facts of the case are that the appellant is an individual engaged in the business of trading in cotton seed cake. The return of income for the assessment year 2015-16 was filed on 15.09.2015 declaring total income of Rs.2,96,460/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward- 2, Dhule (‘the Assessing Officer’) vide order dated 20.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.7,26,150/- after making (i) addition on account of business receipt of Rs.2,04,069/- and (ii) addition on account of opening cash balance of Rs.2,25,618/-. While matter stood thus, the PCIT on examination of the assessment record formed an opinion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue for the following reasons :- (i) The Assessing Officer considered the entire amount of deposits in the bank account represents the receipt of assessee’s business without making any enquiries or verification. (ii) The Assessing Officer had accepted the gross receipts from agricultural activities on the basis of 7/12 extracts is Rs.10,88,325/- although the assessee had submitted only two sale bills of cotton produce which aggregated to Rs.7,65,680/-. The yield of 186 quintal shown from the land under cultivation of cotton of area admeasuring 2.17 hectares is abnormally high. Thus, the Assessing Officer had accepted the claim of net exempt agricultural income without carrying out the necessary enquiries. 3. In the above circumstances, the ld. PCIT formed an opinion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Accordingly, the ld. PCIT issued show-cause notice under the provisions of section 263 of the Act on 02.03.2020. Despite due service of notice, the appellant had not availed the opportunity of representing the matter before the ld. PCIT. In the circumstances, the ld. PCIT in exercise the power vested with him u/s 263 set-aside the assessment order and directed the Assessing Officer to frame the assessment order de novo after affording reasonable opportunity of being heard to the appellant.

Being aggrieved by the above order of revision u/s 263 passed by the ld. PCIT, the appellant is in appeal before us in the present appeal.

It is submitted that the assessment was selected for scrutiny for the purpose of verifying the cash deposits in bank account and the assessment order cannot be termed as “erroneous and prejudicial to the interests of the Revenue” as the Assessing Officer after due examination of the issues which are sought to be revised by the ld. PCIT had passed the assessment order.

On the other hand, ld. Sr. DR placing reliance on the order of the lower authorities submitted that despite due service of notice, the appellant had not availed the opportunity of representing the matter before the ld. PCIT by responding to the show-cause notice issued u/s 263 of the Act. There is no glory mistakes in the order of revision. Thus, it is submitted that the order of revision should not be interfered with.